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Natural selection

May 1, 1996 12:00 AM


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Selective binding and ink-jet addressing remain "must have" technologies in mid-size and larger printing operations

Selective binding, along with ink-jet addressing, has spread from niche opportunities to must-have status among mid-size and larger publication and catalog printers. Despite this industry trend. the use of personalization actually has declined in consumer catalogs and, with a few exceptions, has yet to be developed in the magazine world.

Catalog merchandisers are using selective binding techniques to reduce production costs, as well as to target specific audience groups. However, individualized and personalized messages, ink-jet printed on the bindery line, are all but disappearing from the consumer catalog world. But, ink-jet addressing, both on the back cover and on the inside order form, has virtually taken over the catalog arena.

The use of magazine selective binding has become an available option, primarily used for broadly targeted split-run advertising. There also exists a small handful of publications whose very existence centers upon selective signature assembly to create highly targeted editorial and advertising versions, each with a limited circulation. The large mass of magazines with small- to mid-size circulations have, however, eschewed both selective binding and standalone ink-jet addressing.

When selective binding is used to create different versions of a magazine or catalog, ink-jet addressing also is used to place the correct address on a specific customer-targeted version. Virtually all selectively bound products are ink-jet addressed. However, many catalogs and some magazines are ink-jet addressed even though they do not use selective binding. Many magazines still use paper labels.

Ink-jet messaging and personalization, printed on the bindery line, also is used to create targeted publications without using selective signature assembly techniques.

The most powerful targeted marketed products are created when the combination of selective signature assembly and ink-jet individualization is used. This is one of the key findings of "An Analysis of 1995 Selective Signature Assembly and Ink Jet Imaging Usage in the Catalog and Magazine Publication Fields," prepared by the PrintCom Consulting Group (Charlotte, NC).

PrintCom has conducted an annual study of catalog industry usage of ink-jet technology since 1985. Magazines were added to the study in 1992 when publishers indicated a high level of interest in the technology. In addition, at that time numerous industry forecasts predicted the creation of magazines with unique editorial features as well as targeted and personalized advertising. As the 1995 analysis shows, this high level of interest unfortunately has been slow to be translated into production.

The 1995 PrintCom study analyzed selective binding and ink-jet usage in 3,150 mailed catalogs. Usage data obtained by examining these catalogs was supplemented by telephone interviews with catalog merchandisers and their printers.

As a part of its catalog study, PrintCom sorts and matches the catalogs in its sample. Catalogs are collected at seven separate locations. Of the 3,150 catalogs gathered in 1995, 809 were found to be exact duplicates. Of the remaining 2,341 catalogs, 764 were identified as being selectively bound in a total of 347 selective signature assembly match-ups.

After removing the selective signature duplicates from the sample base, there were 1,577 unduplicated catalogs plus 347 selective editions or a total of 1,924 catalog titles.

On this basis, 18.0 percent of PrintCom's sample was found to be selectively bound. This is an increase from 13.6 percent in 1994 and 6.0 percent in 1990.

Complicating the count and the analysis is a difference among catalogers regarding their definition of selective binding. Some catalogers only vary the front covers or cover wraps to create different-looking versions.

These "different" covers are printed by conventional offset and personalized and addressed off the bindery line. While most of them are individualized by ink-jet, an increasing number are being produced using high-speed laser electrostatic printers. Some experts believe the image quality produced on these printers is better than that possible using ink-jet.

Costs for laser imaging have been declining, making this cover printing approach more competitive, but still more expensive than ink-jet addressing. Covers of this type, addressed, personalized and sorted in zip code order off-line, may be fed onto the bindery line as a standard cover.

In some cases, several covers may be used for a single publication, with the selects being made on the bindery line. Some stitchers provide as many as four to six cover feeders. Selected covers may be ink-jet addressed on the bindery line or handled on a mailing table after trimming using ink-jet or, in some cases, paper labels.

In the PrintCom market analysis, if no selects were made on the bindery line, the product was not counted as a selective signature publication, even though covers are individualized and appear different. If covers were selected on the bindery line, then these publications were counted as being produced by selective signature assembly methods. However, some catalogers consider off-line cover-only preparation to be selective binding.

Telephone interviews with a broad range of small and large catalog merchandisers, as well as printers, indicate that 20 percent to 25 percent of all catalog titles are selectively bound. However, major catalog printers indicate that 50 percent to 60 percent of their 48-page and larger catalog titles require selective binding. Thirty percent to 40 percent utilize some form of ink-jet messaging in addition to addressing.

The PrintCom study estimates that 20 percent to 22 percent of all catalog titles utilize selective signature assembly at least once during a calendar year.

The study of catalog samples also reveals that 28 percent of consumer titles and 39 percent of business-to-business catalogs use some form of messaging.

While a few catalogers use a complex mix of selective binding, sometimes augmented by ink-jet messaging, analysis indicates that the vast majority of catalogers use this technology in a relatively straightforward manner. What might have been a six-bin catalog binding job is increased to an eight-bin job offering a single select option. Ink-jet imaging is limited to addressing or a few simple messages.

This basic approach often is utilized in the production of self-covered catalogs in which the only signature select utilized is for the cover and associated cover signature pages. This approach can be used to produce several versions of a single catalog edition or to concurrently produce two consecutive editions that appear to be different but are the same except for the cover signature.

In some cases, selective binding techniques are used to co-mingle publications so that different publications are simultaneously produced and enter the mail stream as if they were a single issue. For smaller publications, this approach permits a significant savings in postal costs.

The number of pages in individual versions of selectively bound catalogs often is varied according to the classification of the catalog recipient. For example, the "standard full page version" of a catalog might be 144 pages. However, only repetitive customers who purchase a variety of products will receive this full-blown version.

Customers whose purchase history indicates that they buy only a certain type of product from a company's total offering will frequently receive a scaled-down version of the catalog. Product sections in which the reader shows no interest (based on purchase history data) are eliminated. In addition, new customer prospecting versions of the catalog typically are abbreviated versions.

This customer targeting is made possible by using a merchandiser's database to create groups of signature selects made on a binding line with selective signature capability. The net result is a more effective merchandising effort and savings in postage and paper costs. Catalog merchandisers indicate that these techniques have helped them cut costs for a given issue of a catalog, making it possible to maintain the mailing frequencies while avoiding cost increases.

The study data shows that there was little change in catalog mailing frequencies from January through September 18, 1995. However, in the prime Christmas holiday mailing season, during which mailing frequencies usually escalate, there was a reduction in the number of catalogs received by any one customer from a single merchandiser.

While this makes it appear that frequency rates went down when compared to prior years, data from catalog-producing printers suggests that frequency levels remained about the same but mailings were more targeted.

For printers, this translates into shorter run lengths and increased use of selective signature assembly.

Once limited to saddle binding equipment, selective capability and ink-jet imaging now are available on perfect or flat-back binding lines. Usage is increasing, binding lines are becoming longer, and most saddle and flatback equipment being shipped has selective and ink-jet capability, notes Mark Scheibelhut, Sheridan Systems director of bindery engineering.

Ralph Box, Muller Martini executive vice president, notes that having selective binding and ink-jet imaging capability is an entry level requirement for catalog printers and demand is moving in a similar direction for some segments of the magazine business.

"While it's not an easy task," continues the Muller Martini exec, "printers who can innovatively apply today's generation of quick makeready, high-speed bindery equipment to customer requirements create a competitive advantage in the marketplace. The technology is there to do it," observes Box.

In spite of this fact, even the most aggressive printers rarely utilize their selective binding capability more than 60 percent of the time. Although these binding lines may receive a higher utilization rate for straight run work, inability to achieve full utilization for selective and ink-jet imaging can leave a significant amount of capital investment idle.

Ink-jet imaging long has been viewed as one of those innovative technologies that would enable catalog producers to individualize and personalize their products. The use of ink-jet imaging makes it possible for catalogers to make specific price and merchandise offers to customers based on their purchase history and a wide range of geo-demographic and lifestyle information.

For example, the response rate improves when a prize or some "free" gimmick is offered. These types of buyers can be identified in a database, and various promotions developed specifically for them, enabled by variable ink-jet imaging.

After an auspicious start in the 1980s, the use of ink-jet messaging and catalog personalization has failed to reach its original forecast levels of use. While 95 percent of the consumer catalogs and 85 percent of business-to-business catalogs analyzed in the PrintCom study use ink-jet addressing, most of it is done inside on the order forms and on back covers. A much smaller group does messaging, and even fewer personalize messages.

Twenty-eight percent of the 1,850 consumer catalog titles studied contained a message of any type in addition to the individual's address. This is down from a high of 38 percent in 1988, when only 65 percent of catalogs were ink-jet addressed.

The 1988 messaging high mark included 17 percent of the total messages that used a highly personalized and specifically targeted approach requiring use of a database to select multiple variables, which then were embedded in the text of the messages. Twenty-one percent were non-personalized or general messages that did not rely on a database select.

In 1995, the number of personalized messages of any type declined to less than two percent in consumer catalogs.

When catalogers that have discontinued or sharply curtailed the use of messaging were asked why, the most common answer was, "It's not cost effective." Many former users of messaging are now devoting that catalog real estate to selling another product. The profits realized from the sale of this additional product are, according to some catalogers, greater than the bottom line benefits of messaging.

As a result of this comment, PrintCom examined a large sample of the personalized messages in its consumer catalog database. It is apparent from this examination that the primary cause for the ineffectiveness of messaging is that the content was never designed to invoke a consumer response. With few exceptions, the messages run from the inane to the irrelevant in a presentation that is obviously unlikely to generate a consumer action. The problem, therefore, is with content, not the mechanics of generating the message.

A number of catalogers commented that while ink-jet technology was fine for addressing, it was not good enough for graphics and for messages that could be expected to motivate a consumer to action.

However, John Beljan, Videojet national sales manager, notes that there have been substantial improvements in ink-jet quality. "Array printing is underutilized when just used for addressing. Catalogers and publishers must enhance their databases to include selected images of graphics. Everyone talks about selective graphics, but few actually are doing it. Those who have are very successful," he notes.

Today's ink-jet controllers can regulate the use of several different styles and brands of ink-jet devices, as well as do more than control the production line. "Customers are demanding that the selective controller gather statistical data and report this information back to a higher level plant management system," points out Mike Amerian, Videojet graphics product manager.

In addition to Videojet, Scitex Digital Printing and Domino Amjet (whose selective control systems and ink-jet engines are part of Sheridan Systems binding line equipment) offer improved, higher quality ink-jet imaging.

Business-to-business catalogs use more paper and pressure-sensitive labels and do less ink-jet addressing than their consumer counterparts. Business catalogers, however, do more messaging and personalization than general audience catalogs.

Thirty-nine percent of the 650 business catalogs included in PrintCom's sample used some type of messaging in addition to ink-jet addressing. Fourteen percent of the sample used personalized or versionalized messages.

Both messaging and individualization are growing rapidly in the business-to-business segment primarily because of growth in the office products, computer, business services and telecommunications hybrid catalog market. A hybrid catalog is one with products that are purchased in substantial quantities by both consumers and businesses.

The sharp growth of the home office, business teams, the Internet and similar phenomenon have stimulated the growth of catalogs in this market segment. PrintCom expects that the use of selective binding and messaging will show continued growth in this segment during 1996, probably plateauing in 1997.

If the hybrid and office/business service catalogs are analyzed separately from the business-to-business segment, PrintCom estimates the use of personalized messaging to be about five percent, still substantially more than is found in consumer catalogs.

Magazine publishers long have been intrigued with the concept of creating highly targeted and custom-tailored versions of their standard products as a way to capture more advertising dollars and improve reader appeal. However, only a well publicized few have taken steps to implement what can be described as database-controlled publishing.

Many magazines have been unable to implement the creation of targeted databases. They simply do not have the in-depth database necessary to control advertising or editorial insertion on the bindery line.

Although most magazines boast how well they know their subscribers, in reality subscribers are rarely understood as individuals. For example, most magazine subscriber information is obtained through surveys of a readership sample. On the basis of that sample, using sound marketing research methods, the survey data is projected to represent the characteristics of the total magazine subscriber base.

The magazine, therefore, can accurately characterize its subscriber base in terms of income, marital status and a variety of geo-demographic and psychographic characteristics. However, being able to characterize a subscriber group is far different from having specific, accurate and up-to-date information on individuals.

However, even basic address information can be used to create interesting customized publications. For example TIME uses state locations in conjunction with zip code data to create a Congressional voting record tally board for each of its individual subscribers.

With a database mentality and a vision of how mass customization techniques can be beneficial to their advertisers and readers, even a magazine that is database poor can use selective binding and ink-jet technology to its advantage.

Some publishers, initially convinced they must build comprehensive subscriber databases, have subsequently backed away when they found high per-reader startup investment costs as well as high database maintenance costs. The enormity and cost of the database creation and ongoing management frightens off some publishers, who have decided that the expense and pain are not worth the advantages.

Whether or not selective binding, ink-jet imaging and the customized products that these technologies can produce will actually yield improved bottom line profitability is a high-risk gamble, in the view of many publishers. It is not clear to them that the production costs will be more than offset by increased revenues from advertising and/or increased circulation.

In this age of advertising discounts and off-rate-card deals, there's also the daunting task of convincing advertisers to pay a premium for targeted selectively bound advertising. Some publishers offering selective binding require advertisers to purchase the full run and then pay a surcharge for breaking up the buy into different versions. While this may work for some national advertisers of multiple market products, it is not a suitable approach for all advertisers.

To accommodate those advertisers that only have a need to buy a portion of a run, most selectively bound magazines offer partial runs at a hefty per thousand premium. For example, an advertiser that wants to buy half of a magazine's circulation is likely to pay about three-quarters of the stated rate card price. For major publications, publishers then can generate about 1 1/2 times the revenue by running two targeted ads with complementary target audiences instead of one full-run ad.

As the complexity of the selected splits goes up and as ink-jet imaging is used to personalize the ad, the premium escalates. Advertisers can be scared off, especially those measuring ad costs in terms of the cost per thousand readers.

Nevertheless, magazines such as Farm Journal and American Baby, along with Time, Inc., have proved that creating custom-tailored publications can be a profitable and high-powered fuel for driving both circulation and advertising revenue.

While the task of creating versioned publications can seem overwhelming, it appears that the ability to target small groups and individuals is the way to success in the future.

Catalog and magazine printers that want to profitably survive in the era of target marketing and one-to-one selling should consider innovatively harnessing database publishing. Of course, printers with production tools such as selective binding and ink-jet imaging can use these systems to provide a competitive advantage in the industry.

WILLIAM C. LAMPARTER Contributing editor and president of PrintCom Consulting Group, Charlotte, NC