Print management - Better out than in?

Outsourced print management is highly convenient for some direct marketing clients but anathema to DM printers protective of their own expertise, says Caitlin Fitzsimmons.

Print management - Better out than in?

Managing printing contracts can be an unwanted hassle for direct marketers busy with a hundred other tasks. And with the growing prevalence and power of procurement departments looking for the best price on everything from print to coffee, it is not surprising that companies offering print management services have been so successful.

The result is that traditional DM printers are operating with ever-tightening margins and, in some cases, have gone out of business, with the print sector contracting over the past decade. DM printers are fighting back by expanding the range and complexity of what they do - and some have even added print management to their offering.

One printer, who declined to be named, described the relationship between DM printers and print managers as a "turf war". "I absolutely detest print management companies and I am doing everything in my power to remove them from our business because I don't think they add any value," he says.

Yet print management companies appear to be in the ascendancy. Last year, Williams Lea clinched a deal with publishing giant Reader's Digest to handle the company's vast print requirements, including direct mail. The global deal, covering 19 countries including the UK, involved the transfer of 100 Reader's Digest employees along with 70 Williams Lea staff. It covers $1bn (£503m) worth of business over the length of the contract and is expected to generate $130m (£65.4m) in savings in the first three years.

The Reader's Digest deal is notable for its size but scores of corporations throughout the UK, including Capital One, have struck similar deals. The main advantage is cost. Print managers will usually aim to deliver a ten per cent saving in the first year, and five per cent in the second and third years.

More than money

Cost is not the only advantage, according to Lucy Mold, product manager, legacy marketing, at PDSA. The charity uses DM Print, the print management arm of Direct Marketing Group, for its expertise. "When print-buying is only one element of a job role, it is of great benefit to have access to production expertise in order to produce quality items," she says.

Sue Tuck, new-business director at Charterhouse, which looks after print for clients such as E.ON, Which? and the Woodland Trust, claims there are no downsides to print management and that the service suits virtually any client. "Our clients range in size from £400,000 a year to £8m - it depends on the print needs and where we can add value," she says. But she concedes: "If a firm has small, straightforward production, print management might not be for them because we can't add so much value."

DM printers question the "value added" claim. Tim Smith, category director at Polestar Applied Solutions, asks: "On straightforward mailings, what value does an intermediary add?" He says a direct relationship has benefited many of his clients, such as Toys R Us, which feel they have sufficient expertise in-house to manage the relationship. "By working direct, a printer can build a relationship, gaining greater knowledge of a customer's expectations and objectives."

On the other hand, Andy Young, managing director of printer Dsicmm, points out that straightforward print jobs are commodities, and so this is an area where print management companies can most easily force down costs. His business is fighting back by specialising in the more complicated print jobs, and value-added services such as intellectual property security and data-generated applications. "Thomson Travel used to send out invoices in its own internal code," he says. "We redesigned them with a four-colour application and simplified the layout so they looked clean and fresh, and converted them to plain English. There is also space for customised advertising."

Young says most of his clients are direct, but he is not prepared to slash margins to the bone to secure high volumes of business. In one case, a financial services client hired a print management company, and while Young was prepared to cut costs on envelopes, he refused to discount his data-driven Transpromo print service because it was the heart of his proposition. He retained the business and still holds it three and a half years later.

Lucy Edwards, marketing director at printer Howard Hunt Group, says printers now offer creative services and can save their clients money by minor format changes. Print management companies might claim to offer this service, Edwards says, but their understanding won't be as detailed or specific. "There are certain formats we can print cost-effectively that other people can't, and it's not possible for print managers to know the specifics of every single printer out there," she adds.

Edwards argues there is more accountability in a direct relationship, so companies with strict environmental requirements or tight deadlines should avoid a third party: "If a company is very reactive to the market and needs to get to market quickly, it is better off with a direct relationship because we can move heaven and earth to get stuff out quickly."

Many printers believe the sector is already lean and that it is not possible for management companies to squeeze costs further without the risk of partners going out of business and leaving them in the lurch.

Print managers, for their part, have started to broaden their services and encroach upon the traditional territory of DM agencies, offering data analysis and campaign management advice. Tuck says her firm can offer this strategic advice, especially when it has staff based permanently at the client site. Similarly, this is a growth area for DM Print. Production director Louise Daker says it offers data cleaning and analysis services to most of its clients, including Swinton Insurance and Age Concern. It once found a ten per cent rate of deceased and gone-aways on the database for insurance seller QuickPages.

Best of both worlds?

The battlelines have been drawn, but are being blurred by hybrid firms. Printers such as Communisis, Polestar and Dsicmm have adopted an "if you can't beat 'em, join 'em" approach and added management arms. Meanwhile, print management companies such as Williams Lea have bought production capability. For some, this represents a conflict of interest. Tuck says a management firm should remain completely neutral and it is difficult to achieve this if it also has in-house production facilities.

However, Polestar's Smith says any conflict is at "an acceptable level internally and externally" and points out that the company's online print management service is being used by other major print management companies. DM Print's Daker says the parent company has printing facilities within the group, and this is beneficial because it is an added resource.

For some direct marketers the potential cost savings or simply getting the job of print management off their desk makes outsourcing worthwhile. But if strategy is important - as it is for most clients - the decision is one to be weighed carefully.


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Client: E.ON

Brief: Complete print management

Supplier: Charterhouse

E.ON outsourced its print management to Charterhouse three years ago and the energy company has not looked back since.

The company, which rebranded from Powergen last year and has about 16,000 staff in the UK, does regular business-to-consumer and business-to-business direct mail campaigns, as well as sending customer statements through the post.

"For the rebranding campaign in particular, the mailing was around six million and we do a few campaigns like that each year and smaller individual campaigns as well," explains Tammy Rockley, UK brand planner at E.ON.

She declines to reveal exactly how much money E.ON has saved as a result of the outsourcing arrangement, but says it is significant. However, she adds that the main benefit is that it has removed a burden from the campaign managers.

"There was a huge amount of post-production work required in campaign management and it was taking up an awful lot of time that could be more effectively spent on studying the market intelligence and planning campaigns," Rockley says.

She believes E.ON gets more from the relationship with Charterhouse than it would from a traditional DM printer because its print management staff are in situ at E.ON and privy to company strategy.


- Outsourcing print management can typically save a client ten per cent of their costs in the first year alone

- Some DM printers have added print management arms to their line-up of services.