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WHO'S MAKING VARIABLE PROFITABLE?

Jan 1, 1998 12:00 AM


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Charles Martin says he can imagine going on a Web site and picking out the elements of his dream house. "Everything -- the wall paper, the tile in the bathroom, the outside trim, even the house's geographical location." And then, the very next day, he receives in his mailbox a four-color brochure with lavish graphics of exactly the house he had in mind.

Meanwhile, back on Planet Earth . . . Martin is director of marketing for Harper House, a $7 million Dallas-based trade shop and member of Agfa's PrintCast network of nine sites nationwide. Although his company does some highly creative and personalized printing projects, these jobs fall under the heading of "selectable" printing, of which Harper does about 100,000 impressions monthly, according to Martin.

Selectable jobs are not 100 percent variable but contain a combination of dynamic and static elements: the former might be the names and addresses of contact people at Harper's primary customer accounts, plus photos of salespeople linked to these addresses through their ZIP codes.

Even this kind of simple data can be the backbone of a powerful direct mail project, in this case, Harper's own. Around Academy Award time last year, Harper printed up postcards announcing the company's "awards for excellence." One side of the cards featured a photo of Whoopie Goldberg on the left, one of Mel Gibson on the right, and the recipient's name in the middle, along with a photo of the appropriate Harper salesperson on the reverse side.

Variability, as a process, is nothing complicated, Martin points out: it's simply a merging of text and graphics from a database (usually either ACT or Filemaker Pro).

Martin believes that Chromapress users, at least, will receive a big boost toward true one-to-one variability when the market learns to make good use of Personalizer-X, the new Quark extension, and Intellistream, the Chromapress output manager reportedly enabling 100 percent page variability.

And selectability can mean much larger projects than postcards. Example: the massive Toets International "9220" project now underway at Moore Interactive Marketing Solutions (Grand Island, NY), through which telephone browsers will soon be able to select (through voice response) items from 40 product categories (amounting to 3,500 individual pages of home furnishings, computers, electronics, financial services, etc.) to automatically compile their own custom catalog for delivery within 48 hours.

Projected for rollout in Canada around mid-year, the original partner with Moore in the Toets catalog was KPN, the Dutch telephone and postal service. The project integrated database, print-on-demand and telecommunications technologies to produce high-quality, full-color custom catalogs from Moore's Xeikon digital presses.

Moore states that the response rates for advertisers in the European test program for Toets 9220 increased by a factor of 15.

Despite these healthy signs, Michael Reiher says that in terms of true 1:1 variability, "we're not there yet." Reiher, a marketing manager with Moore Interactive, says that most of the variable color work being done today falls into the category of selectable. He also cites a number of "gotcha" factors that commercial printers and trade shops moving into variable work should keep in mind.

* MIS support: Make sure the customer has good technical people.

* The right database: It usually makes sense to build it from scratch, and certainly don't try to wrestle with multiple client databases (one with product information, another with sales histories, etc.).

* Finishing issues: Make sure you have a guillotine cutter, saddlestitcher, trifolder, scorer, etc., available, if that is what the job will call for.

Another shop committed to variability is the digital marketing division of the Miner Group (Minneapolis), the fourth largest commercial printer in Minnesota. Miner's $140 million in annual sales is based on a mix of web (both heatset and non-heatset), flexo, packaging and prepress business.

Division co-founder Joel Hoefle says he and his partner are both from marketing, rather than printing, backgrounds and believes that may have helped convince them to take the plunge into variability.

While he concedes that hard information on variable response rates is scarce, Hoefle cites the Direct Marketing Assn.'s own number of a 23.6 percent average response to personalized direct marketing, a substantially higher figure than those typically cited for conventional direct mail campaigns. (Moore claims that 45 percent of the Toets 9220 test customers purchased within 60 days of placing their request for product information.)

The key to profitability in this area, Hoefle submits, is staying away from commodity jobs. "These are high value-added workflows. And the demand is definitely there, if you remember not to compete with laser output," he advises. His division runs two Indigo E-Print 1000s and a Docutech 6135 (for black overprinting).

One current project for Hoefle's group of 20 employees is a joint venture with a national real estate company. The program includes a newsletter, 8.5 x 11 sell sheets, postcards and other collateral materials, tailored for the client's 4,000 agents and their prospects. As a financial services company, this customer fits the general criterion for variable printing jobs of high-end, rather than commodity, businesses. (Other examples of likely industries for variability: electronics, travel information, automobiles, healthcare services.)

"Adding value in this way is what will take printing back again to its origins as a craft process, and that's profitable. We can't just be a manufacturing process," in Hoefle's view.

Very few shops have reached the point of needing five Chromapresses for their digital work, but L.P. Thebault has apparently done so. The Parsipanny, NJ-based printer is a $100 million high-end color shop that claims to be the largest privately held commercial printer in the U.S. Since June, the Thebault group has had a massive personalization project underway with General Motors, its EDS subsidiary and McCann Direct.

Bill Furo, director of operations for Thebault's digital group, says that its large (but rather closely held) GM project has led him to a number of realizations. First, he believes that no vendor currently offers true end-to-end workflow for full personalization. Second, some inhibiting factors remain, such as the cost of consumables. For example, if the cost of ink for a conventional offset job is usually around two percent, "for toner/ developer costs in a big digital job, figure on 30 percent of the total, especially if you've got 50 percent-plus heavy color coverage," Furo adds.

One advantage Thebault has in the GM project is the strong partner EDS represents, pretty much guaranteeing that the data from GM will be perfect -- which is not always the case with customer data for these kinds of jobs.

"EDS is actually building and refining our variable database as the project rolls out," Furo says, noting that this project will have multiple phases.

According to the approach taken by Thebault's digital group, this kind of mass customization, still in its pioneering phase, means that every document is based on a customer's profile (i.e., individual preferences, demographic and even psychographic information, etc.), all of which will drive the final choice of text, images and even page layouts. This kind of work is a level above the Toets-type selectable catalog and represents a different level of resource commitment from all players.

So how can a mid-sized shop get into the variable-data business? "Company size does not really matter," suggests John Kent, demand imaging director for Quebecor Printing (Leominster, MA), "so long as you've got about $1 million in your capital budget -- exclusive of finishing equipment -- available for equipment." Kent's group has a Barco front-end (with its FastRip) driving an IBM 3170 device, with the typical job showing 40 percent to 60 percent changes in each page.

And Kent expects Quebecor's variable business -- most of which is selectable data for catalogers -- to expand. "Lots of folks who could utilize this technology aren't ready as yet. To sell the concept, they need to see a live sample of product."

Other caveats from Kent: the consumable costs for this kind of work can be substantial, both in terms of specialized papers, replacement drums for the press and the toner/developer -- "which are like gold dust," according him.

Is this business for everybody? It depends on your market. "We've never had a customer ask for it," says Rich Vitale, president of Speed Graphics, in the heart of Manhattan's financial district. Once, his shop had three Indigos but now runs only two, feeding the devices short-run on-demand work. "In lower Manhattan, we have a kind of unusual niche. Personalization work just doesn't seem to come up."

Even with customers looking for short-run color output, technology for full personalization may not be needed, argues Forrest Robinson, president of TR Digital Production in Atlanta. This prepress shop had a Chromapress but sold it, and now plans to add a second Quickmaster DI to its equipment lineup. "We just found too many awkward things about personalization," Robinson says. "The client's database may contain little things that can kill you -- like inconsistencies in the use of 'Jr.' or 'Sr.' in names. And how many companies really need to target markets for runs of less than 500 or 1,000?

Most printers feel that the choice to pursue variable-data business depends on their customer mix, as well as workflow and marketing issues. Those shops with the right blend of customers and skills stand a good chance of taking variable data to the bank.