Competing in VDP Conway AR

Variable data printing is a hot topic among printers right now. Recent industry surveys report that at least half of the printing companies are offering some sort of VDP service. Most are providing text support offering simple mail merge.

Big printers ($15 million in sales and up) interested in VDP recently converged on Anaheim, CA, for the PODi Application Forum. The annual meeting brought together vendors, print providers and advertising/marketing companies that were providing VDP solutions as well as Web-to-print services. With almost 500 people attending, VDP and Web-to-print services are becoming common in the big shops in a market. Can smaller printers compete?

I think small printers can compete in the VDP market. The big printers are focusing on Fortune 500 companies and firms that have a national presence. Quick and small commercial printing companies can bring VDP to their business-to-business customers. VDP work can be produced on a smaller scale, but big margins can still be achieved. Quick printers have historically brought "big business" technology to their small business customers. VDP will be another example.

What is VDP? Variable data printing is used to produce printed documents that are customized to the individual. A document is designed once, but different text and graphics elements within the document can be varied for a specific individual. For instance, a brochure can be prepared by a company that includes specific information based on the customer's buying habits as well as a photo of the salesperson who deals with the customer. The personalization gives the document more impact on the person who receives it.

Pictures could vary. Text or paragraphs can change. Colors and fonts can be altered. Each piece will look like it was printed specifically for one person.

Already There

VDP allows the sender to target a specific customer and deliver a personalized message. It has proven to be a marketing tool that increases responses and drives customers to action.

Most printers have experience with mail merge. The process of adding individual names and addresses to a static letter is VDP in its simplest form. Making the next step to more graphic-intensive VDP can be simple since most printers already have the equipment and software needed to produce VDP work.

Printers can design a VDP job using standard graphic software programs. The variable elements of text and graphics are placed in a database or spreadsheet. The database is linked to the graphic file and the variable elements are automatically placed in the proper place as the digital device prints the file. Any printer with Quark, InDesign, Publisher, Microsoft Excel, and a digital printer can enter the VDP market.

VDP vendors are lowering the entry costs for the small printers to get into this lucrative new field. VDP software programs used to cost more than the digital printers themselves. Today almost all of the major suppliers offer a "lite" version of their product. Printable offer Fusion Pro Desktop for less than $400. Meadows Publishing offers DesignMerge. The Adobe and Quark websites offer dozens of plug-ins that give their programs VDP capabilities.

Many small printers already have the equipment, the technical skill set, the customer base, and expertise to do simple VDP projects. Any printer involved in mailing is already doing basic VDP. The output issues become speed and duplexing. A printer will need the biggest, fastest RIP to handle robust variable projects. Since many VDP projects have variable data on each side, the digital printer must be able to print on both sides automatically so the right information will appear on the piece.

A successful VDP project combines a well designed piece with a good offer going to a good database. Data is the key. Printers will have to work closely with their customers to get good lists so that when the project is completed, the customer will get a good response. A great design and offer will not overcome a bad database that puts the piece into the wrong hands. Third party database list companies can help a printer obtain a good list for the customer.

Demonstrating the power of VDP can be simple. Some printers add VDP elements to their own company newsletters. This gives their customers an example of how personalization can impact a document.

Higher Margins

The hardest thing for printers to do with VDP is sell it. Most VDP projects have a longer selling cycle because of the need to educate the customer to the benefits of VDP and getting the customer prepared to do the project. The printer will have to demonstrate to the customer the power of VDP. The printer will then have to work with the customer to develop variable information. Many small businesses collect data, but they don't have it in a form that can easily be imported into a VDP project. The printer may have to do a great deal of editing to the data files or help the customer buy a good data list from a third-party vendor.

The printer will probably have to help the customer with the offer. A VDP project is usually asking for a particular action from the individual receiving the piece. The offer is what spurs the individual to take action. If the VDP piece doesn't get the recipient to do anything, then the project is a failure. This means the printer will have to work with the customer to measure the response of the project. Did the offer work? Was the call to action successful? Did the project achieve its expected outcome? As you see, there is more to a VDP project than just the printing. If printers want to produce VDP projects for their customers, they have to understand more about marketing and become a valuable partner and resource to the customer.

Adding the marketing expertise to the printing project allows the printer to sell the job for a much higher price. The customer doesn't care if the price-per-piece cost is high if it can generate more sales or more money. The opportunity for printers is to price on the value of the VDP project and not the costs. Most printers can provide the customer with the mechanics of a VDP project, but the money isn't made in constructing the project, but selling its value to the customer.

For many printers, the only way they will make any money with a VDP project is to partner with a marketing or advertising firm and let them sell the service to the customer. In this scenario, the printer provides only the printing. According to various PODi reports, the printing costs amount to only 10-20% of the total selling price. I visited a marketing company recently that showed me a four-over-four post card they were purchasing from a printer with a Xerox iGen3 for 49 cents. They were reselling the same card to their customer for $5. The company representative said they had other printers wanting to sell them the same cards at even lower prices. This company was making a great profit on the backs of printers who were trying to provide the printing portion as a commodity.

VDP is another service that printers can sell to customers, but how they sell to customers is going to make a difference in the profit margins. The printers can partner with a marketing firm and expect to see the same profit margins as traditional printing. Or they can learn about marketing and add marketing services to their selling arsenal. The selling margins can be much higher because the printer is giving more value to the customer.

The printers who first bring VDP to their customers can enjoy a higher selling price and bigger margins because they are the only VDP suppliers. As more printers add VDP printing services, VDP printing will become more of a commodity and margins will shrink. If a printer wants to maintain their VDP profit margins they will have to add marketing services to the printing services. Printers will need to learn about data mining, PURLs, marketing measurements, mailing services, and much more. To be successful in VDP, a printer will have to know more than just how to put ink and toner on paper.

Printers who are already getting in front of customers who sell something to someone or ask someone for money will be successful with VDP. These printers know that customers buy based on value. Printers who are selling commodity printing will not be successful with VDP. They will focus on a cost plus pricing system and attempt to be the low cost providers.

Which type of printer are you? What type of customers do you have? VDP is doable in the small shop, but you don't want to do it unless it will make you money. VDP has the potential to make printers a lot of money if they find the right customers and know how to show the customers the value in the VDP project.

Contributing editor John Giles is the owner of The Giles Group, a training and consulting firm specializing in digital file issues. Giles conducts digital audits for quick printers to assure they can accept digital files easily. He also conducts training seminars for printing customers on how to prepare files properly for a commercial printer. He is the author of several books and "The DTP Pricelist on Disk." Giles also serves as technology advisor for CPrint. Contact him by voice or fax at 304/552-5363, by e-mail at john@johngiles.com, or visit his website at www.johngiles.com.