Market Update

61- 2023 Q1 Market UPDATE

In our Q1 2023 market update, we discuss recent industry events (EPS Connect and Hunkeler innovationdays), new product announcements, market trends and data, along with what’s ahead with Artificial Intelligence and ChatGPT.

  • VIDEO TRANSCRIPTION

    • [00:00:00] Pat McGrew: Hi, I am Pat McGrew with The Print University, and I'm here today with my colleague Ryan McAbee. We've got something special for you. This is our end-of-quarter market update, and there's a lot to talk about, Ryan. It has been a really busy first quarter. 
    • [00:00:19] Ryan McAbee: Yeah, it really has. There have been a handful of events.
    • There have been new product introductions that we'll roll through here, both on the software and the hardware side or equipment side. Then there's also the market data that we'll talk about. What's going on in the market and in the world of print? We'll wrap it up with a little bit of a teaser of what we're seeing that's just really starting to bear any weight or effect on the industry. You would probably position it in that larger world of artificial intelligence, and we'll get to that. 
    • [00:00:47] Pat McGrew: Yeah, we absolutely will. Know that every vendor in our industry is watching all of these things very carefully because it directly impacts their ability to create the products and services that they bring to their clients.
    • We started the year together, which is unusual for us. We started the year together in January at ePS Connect 2023. You may know the name Connect, but this is the first time that we called it ePS Connect for eProductivity Software. That is the software piece that used to be part of EFI and was spun out and created as its own entity. It got to keep the Connect show because if you've been in the industry as long as I have, you remember when Connect didn't belong to EFI. It was somebody else's. Right now, as we look at eProductivity Software, we're watching them stretch their elbows out in the industry and lift their brand quite a bit. Connect was really the coming out party, and we found a lot of people there, Ryan. 
    • [00:01:54] Ryan McAbee: Yeah, it was a well-attended show. I think the top takeaways were that they're really positioning it, now that they're outside of the EFI umbrella and standing alone as ePS again, that it's an industry event, not just specifically a user group type event.
    • The telltale for that was really that HP, for the first time, was in the partner pavilion area of the main show floor. They were talking about how they are integrating some of their products together. Some of the MIS solutions from ePS, and then also some of the workflow solutions from HP.
    • That was very exciting. Honestly, we've been to several Connects in the past, and I think this was the one that probably had the most diverse mix of partners in the show that I can remember. And there were some really interesting ones that we've obviously done some work with before, like PlanProphet. These are add-ons where you can add some automation into your MIS world, but there were also LoyaltyLoop and PrintSpeak, and those are not common names to anyone in the industry probably at this point, but probably ones worth paying attention to from a partner perspective too.
    • [00:02:54] Pat McGrew: ISCorp got my attention as well because ISCorp does something that is a little outside of the box. They're a private cloud provider. As we talk about cloud-based solutions for a lot of companies, the software that they have in hand right now doesn't always naturally flow into the cloud. It's a little harder to make cloud native. ISCorp had a pretty cool solution that they were showing, and they work with ePS to use their solution set for customers who are looking for that cloud solution and want to maintain their ePS environment. 
    • There were some great keynotes. We heard a lot of interesting keynotes. I think for me, the Flexographic Association did an amazing job of explaining just what we're all trying to accomplish when it comes to things like sustainability and what the challenges are. We had someone from the UN Global Project talking about the language of sustainability.
    • Ford Bowers came to talk about Printing United Alliance, and of course, ePS is expecting to be there. Always my favorite is when Nick Benkovich stands up and gives an overview of the software. Did you have any favorites? 
    • [00:04:09] Ryan McAbee: Yeah, Nick does a great job. Of course, Print Jeopardy - for anybody that attended, that's always good fun, where you go through trivia of the print industry and try and pick the right answer. In terms of the keynotes, I thought it was a very interesting kind of juxtaposition of Jessica Lobo, who was the Global Goals and Climate Program Manager out of the UK for the UN that talked about the big picture stuff in terms of sustainability. It was a framework of 17 sustainable development goals, as they call them, that you could use as a guide to figure out where you could take your individual company across the mix of industry and companies to be more sustainable. 
    • Then coming down to earth, in some ways relevant to our very specific industries, was Alison Keen from, like you said, the Flexographic Association was really brilliant. What the audience - especially ones that don't deal with the packaging world every day - what it really brought to the forefront is that we are moving more toward Europe in terms of this thing called extended producer responsibility. That's where the brand and or maybe, because this legislation is really all over the map in the US so far, according to Alison, it may end up being that the producer, the actual packaging converter, has some shared responsibility to do with sustainability going forward. What's important to note, and we'll talk about some other privacy legislation, but these two kinds of legislative worlds are really something to pay attention to.
    • Obviously, if you're in packaging, you should have already been aware of this and keeping an eye on it. But to the greater print audience, we'll get into a little bit of privacy regulations, and those are marching forward to their own beat as well across the states here. 
    • [00:05:37] Pat McGrew: One of the things we'll remind everyone is if you didn't attend Connect and you want to know more about the partners that were there and a little bit more about the event, Ryan and I were part of a project with ePS to capture the interesting things about each one of the partners who were populating the exhibit area at the show.
    • You can find those online, and you can get to them both through LinkedIn and through ePS and also WhatTheyThink was there as well. And they were capturing all sorts of videos. There's a lot of video content that came out of Connect, and I think it's all worth your time if you're in this industry. Know as much as you possibly can, and there was a lot of learning. 
    • [00:06:18] Ryan McAbee: Probably the last thing that was of note for us as we were in some of the sessions, Pat, was the fact that for once, and it's probably the first time I had seen such interest in the scheduling aspect of how to manage print.
    • I think that's good in a way because that means we've figured out the foundational pieces. Estimating's not as much of a mystery anymore, and ticketing and all that stuff is not a mystery. We do that every day. It's now figuring out how to be more efficient and automated and electronic with scheduling instead of using T-card systems or whiteboards or whatever other manual stuff.
    • [00:06:50] Pat McGrew: Standing Room Only sessions. They were dragging chairs in from other rooms into those sessions. That meant that they were really important. People made a point to get to those sessions, and they were taking notes, and they were asking questions. That's a sea change because we really hadn't seen that as much in previous years. All in all, it was the perfect kickoff to the year. It was a great way to start it. 
    • Then the next big event in the world that we live in was Hunkeler Innovation Days. This takes place normally every two years, the pandemic notwithstanding. The last one was in 2019. It takes place in Luzerne, Switzerland. You might say, "Gee, it's a European show, why do I care?" You care because every single hardware vendor brings their newest to this show, and they're all lined up in interesting stands where they're one after the other in a row and connected to Hunkeler or Hunkeler partner equipment. They run the entire show.
    • Vendors use this as a way to bring their newest, their best, and to test ideas because attendees come with a shopping list and a checkbook. There are two halls in the Lucerne Messe, in the convention center where they have it. One hall was all the hardware vendors and all the finishing hardware all just going at it.
    • Then the other hall is a lot of software vendors, paper vendors, services vendors, and all sorts of interesting things. Then there's this big sort of cafeteria area. There was almost no time over the four days of the show where that was empty. There were always little enclaves of people doing presentations off their laptops and signing deals. There was a lot of business being done at Hunkeler, and we had more attendees than we had in 2019. I don't know that any of us thought that was going to happen. 
    • [00:08:40] Ryan McAbee: That's a great positive. The thing that always strikes me about Hunkeler Innovation Days is that I can't think of another industry event where it's almost coopetition, if that's a word. Where you have all the vendors there, but what's so neat about it is the fact that if you're a print equipment manufacturer, you're connecting it with some other third-party equipment on the backend. To show an end-to-end production scenario on the show floor, which is unique to the industry trade show world.
    • [00:09:09] Pat McGrew: That's how you get your ticket there. If you're a vendor, you've got to be willing to participate. The interesting thing is that we saw inkjet, but we also saw toner. We saw all manner of bookbinding, inline, and nearline bookbinding solutions. We saw all manner of inserting solutions. 
    • Pretty much everything that you need to do with a printed sheet, you could see being finished at the show. There were a bunch of announcements there as well. Because there were so many, we have a couple of slides to walk through them because they're worth paying attention to.
    • Our friends at Ultimate Technographics brought their new BetterPDF solution. Their BetterPDF solution is one of a growing number of PDF optimization software solutions we're seeing come to market. Solimar has one. Crawford has one. The folks at Ultimate brought theirs. This was the real launch of BetterPDF, and they were doing a lot of demonstrations. 
    • The role of PDF optimization software in your life as a printer is to take the PDF your customers are sending you and make it better and make it more efficient so that it goes through the rest of your production print workflow more effectively. It was really delightful to see our friend Andrew Bailes-Collins and his team bringing that, but there was other software, too. 
    • Our friends at Ricoh used Hunkeler to announce the new Ricoh TotalFlow Producer. It is a cloud-based solution. It is designed to automate job onboarding. They've been listening to the market very carefully. It's designed to work with Ricoh Supervisor, which is a hardware-agnostic solution designed to help gather information on all the different processes in your print shop, whether they have a Ricoh label on them or not. Producer then also helps you in a sort of device-agnostic way, bringing all these things together. They can work with or without, in most cases, Ricoh Process Director, which is the Ricoh end-to-end workflow solution that they talk about a lot.
    • It was good to see them bring it. Lisa Oakleaf came from the development team to talk about it. It's not going to be available until later this year. Just based on the number of people that I saw standing around the big screen, clearly, it goes back to what we were saying about that job scheduling session at Connect. 
    • Anytime somebody had on a screen in their stand anything about job onboarding or job scheduling, there were people who were willing to stand there and listen. We're going to talk about an unusual one on the next slide, but let me finish the hardware because the hardware that came was fun.
    • We saw the HP PageWide Advantage 2200 at PrintingUnited in Las Vegas this year, but it hadn't come out in public in Europe yet. This was its European debut, complete with searchlights and popping champagne corks. It was the first thing you saw when you walked into the hall. You couldn't miss it. It got a lot of attention because of the footprint and because it was not what HP has always brought to this show, which is the T200. The big arch, big heavy machine.
    • The Advantage 2200 is a really cool machine. It uses one 40-inch print bar and runs the paper over it twice to print duplex pages. That means it's got a shorter footprint than a lot of what we saw on that show floor. If you walked down the floor, you had the Advantage 2200.
    • You had the Ricoh VC70000e. You had the Canon ProStream and their VarioPrint solutions. You had the Screen Truepress Jet solutions. You had the Xerox Baltoro, and you had the Kodak Ultra Prosper Ultra 520 all there. From a footprint and the ability to snug up against a wall, and from a height perspective, the 2200 is a really attractive-looking machine. It doesn't take up lots of room. The one they brought to Europe was configured with two dryers, not the three. It was just happily running the whole time. It was there, which was great to see. 
    • [00:13:16] Ryan McAbee: To me, the HP Advantage 2200, especially if you're used to any of the prior T-series press, the thing that comes to mind is that movie Honey, I Shrunk the Kids. It's like they literally, from an engineering perspective, did that with the 2200. What makes that so interesting is that they can go into different environments from a physical footprint point of view. The other thing that's different for it as well, especially compared to the T-series but also to a lot of the competitive equipment, is that it doesn't probably need as much of an electricity draw, which is becoming more important to everybody. It doesn't require as much cooling and drying as maybe some others.
    • [00:13:51] Pat McGrew: Very efficient on that. I was standing with another analyst during their press briefing, and he made a point that I hadn't actually done the math in my head. The maintenance cycle on the 2200 is really quite small. You're not having to stop the machine to purge it. There's no purge cycle on it at all because it's a TIG press. The maintenance cycle for the press is in weeks and could be months at times, not in hours and days. He said he was doing back-of-the-envelope. That means if I don't have to stop the press every so many days for this many hours, then I'm getting all this time back, and I'm getting all this capacity back that I can now turn around and sell, which means that I'm able to make this much more money with this particular press.
    • You have to stand next to a mathematician to have the little light bulb go off. And I went, holy cow, you're right. 
    • [00:14:40] Ryan McAbee: It adds up quickly. 
    • [00:14:40] Pat McGrew: It's a different story, right? We don't often talk about it. 
    • [00:14:44] Ryan McAbee: Now, the other ones, Pat, correct me if I'm wrong, but I think they're all existing kinds of lines of equipment with updates to them for specific things that we've mentioned here. Correct? 
    • [00:14:53] Pat McGrew: Yeah, mostly. The odd man out on this list is that Xeikon SX30000, which is their toner-based machine, they brought to be able to show using a roll-fed book production line that was in line. I brought home some of the books that they were producing, and they were coffee table books. They were museum replica books. You'd be proud to have any one of these books on your bookshelf or on your coffee table, for that matter. They were beautifully produced in combination with that book-finishing system. It was pretty cool to see. It was great to see all of these things just standing there, actually producing end-to-end.
    • The Ultra 520 was announced last year. The only thing about Hunkeler is that it was really its first appearance in Europe. Whereas the Advantage 2200 was brought to the show with an upgrade over what we saw at the show in Las Vegas. It's got some speed improvements and some other improvements on it.
    • That's the hardware, but I wanted to pull out the software because there's a name here that surprised me. 
    • Let's start with Canon. We said that we'd be talking a little bit about artificial intelligence, and here's one of your first examples. Canon is partnering with a German company called Autley that is giving them AI-driven template and imposition automation.
    • If you've been around like Ryan and I have been for a while, you know that's not necessarily a new thing. There are a lot of companies in the marketplace that are using AI and Machine Learning techniques to do template imposition and run through all the options as fast as possible to figure out which option is best for you.
    • Canon is doing this in the digital space, and it was remarkable to me that they were bringing this as a solution for their IX. It just seemed to work really nicely. Had an intuitive user interface. All the things you like to see in software.
    • The one that made me stop dead in the aisle was Xerox. I have to tell you, I did not expect to stop dead in the aisle in front of Xerox. They were actually the last stand at the end of the hall on the right. Yes, there was a Baltoro there. Yes, absolutely. There was an Iridesse there. Absolutely there was, but the entire front of the stand were giant screens showing workflow.
    • Not only did I stop, it's like everybody else was stopping too because they brought their FreeFlow, and they were actually doing demos of it pretty regularly so that you could get a sense of what they were doing. It was a solution from Xerox I wasn't expecting to see, not in the context of FreeFlow.
    • [00:17:34] Ryan McAbee: They've been extending the FreeFlow product family for years now. They were one of the early ones in terms of visual processing and being able to lay out your workflows in that manner. They were also one of the early ones on cloud delivery of that workflow.
    • [00:17:47] Pat McGrew: Yeah. 
    • [00:17:47] Ryan McAbee: For the audience here, the thing to know about dashboards is that we're really talking about data. Data, we believe, is really going to be the foundation for how you are competitive going forward and how you remain profitable going forward, and how you can make data-driven decisions on your business end.
    • Now, the challenge to date is that every OEM out there has its own flavor of dashboard, and usually, that has very unique features or functions related to that equipment manufacturer's hardware. The thing that I would look at is you really need a holistic and agnostic view of your production. That means finding a software solution that can accommodate that as well. Now to that end, some of the OEMs and equipment manufacturers have opened up this data through maybe API, Application Programming Interfaces, or some other way to get at the data so that you can ingest it into a holistic view. I still see that as the challenge around data and dashboarding as we sit here today in March of 2023. 
    • [00:18:46] Pat McGrew: Some of them try to use JDF or XJDF as the new style of doing things, and not all flavors of JDFs are created equal. Not all APIs are created equal. So the burden is on you as the printer to actually ask the tough questions of the vendors who are offering you dashboard options. 
    • I believe in dashboards, but it's got to be a dashboard that's actually going to make your life better and not make your life worse or tell you the wrong things. That's really a key part of it.
    • Some of that comes up in the things that HP is doing with their controllers and their approach to dashboarding. Zaikio is another company that we know, that's owned by Heidelberg. They launched at the show, their Mission Control platform, which is intended for you to plug things into. It doesn't actually do anything itself. It's just meant to accept a whole lot of feeds and past data among a bunch of different solutions. How they were showing it was with their Calibrate solution primarily, but also as a partner doing Enfocus Switch and PrintX. 
    • Then the last one I'll mention is Bronte, which is a company out of northern Italy. I've been watching them for years. They are an Ingram partner, and they built their book publishing application to provide a solution for Ingram to sell the whole Ingram catalog across Europe, but also to make it possible for independent booksellers and independent book dealers to order books in small quantities for small footprint bookstores. I only need three copies because I'm in a tiny little town, and I just don't need a hundred. That's a lot of what Bronte can bring to the table, so they were there showing their solution.
    • It was good to see software there. It was good to see software people doing demos and actually having really rich conversations with the people who came.
    • And that was Hunkeler, right? It was a great show. And the next one is in 2025. 
    • [00:20:44] Ryan McAbee: Even the theme of the show was very future-oriented. I forget the tagline, but you probably know it. 
    • [00:20:48] Pat McGrew: It's Next Level Automation. For what we think of as a hardware show, we thought that was really interesting.
    • I had a chance to interview Daniel Erni, who is the new CEO of Hunkeler. He's the first non-family member who is the CEO, and one of the things that he said is that he believes software is their future. The combination of software workflows working with their hardware is what's going to take them to the next generation.
    • So Next Level Automation was absolutely the theme. 
    • [00:21:14] Ryan McAbee: I think we did a good job of introducing people that might be joining us to what ePS Connect was in terms of the event, but I don't know that we did that with Hunkeler. So let's do that now. It historically has been centered around anyone in the industry doing high volume, high-speed digital printing output. Those can be applications like book printing, or it can be direct mail, or it can be transactional printing, of course, those types of things, correct? 
    • [00:21:39] Pat McGrew: That is the primary focus of the show. It began 14 years ago as a show that happened at their factory. You actually went to the factory to see how they built everything, and then over the years, it got bigger and moved to Lucerne to the convention center there. Today it is not the biggest show you will ever see. It's only every two years. Certainly, there are some vendors not represented, anybody who's not actually a partner with Hunkeler would not be there. But for one-stop shopping to understand what the current state of the market is, it's a brilliant show. 
    • [00:22:11] Ryan McAbee: Yeah, very good points. 
    • When we were at ePS Connect we heard this feedback from the participants in one of the sessions, but we've been talking about this sort of thing outside of even that trade show. And that is really something that's impacting the industry that we think is a best practice that we want to put forward here. I'll let you take the lead here on what is a staging server and why it is important from a workflow and even business continuity perspective. 
    • [00:22:35] Pat McGrew: Staging servers are those places that you might call the sandbox - some software solutions call it their sandbox solution. What you do with a staging server is - when a new product update comes in from one of your software solution providers, when you're buying new software, and you're integrating it - the best practice is to not integrate that in your live production environment, because if you break it, you get to keep both pieces.
    • The best practice is to have a staging server where you have a mirror of your production environment, and that is where you put your upgrade. You run jobs against it to see if anything breaks, see if any of the fields move, and see if it behaves differently - see if it's slower than it was before or if it's faster than it was before.
    • It's where you try to find the best path to integrating, right? Between APIs and SDKs, there are a dozen ways you can integrate a lot of these pieces of software. Some of them are great, some of them not so great. They might all work, but they might not be exactly getting you the speed that you want with the solutions that you're operating in.
    • At Connect, we were in several sessions where people were talking about problems that they were having with their ePS software. To be fair to ePS, they weren't having a problem with the software. The problem was that they had built themselves a problem because they were trying to integrate upgrades in production on the fly.
    • Imagine flying a plane and trying to change the tires before landing, right? That's what they're trying to do. The community there was really very interesting because, in these sessions, a bunch of people would turn to whoever was asking this question and go, “You do have a staging server, don't you?” And the person would go, “Oh, no we don't pay for a staging server.” And they say - tell us who your management is - we're happy to have a talk with them for you. These were other printers. These weren't ePS people.
    • Companies that take the time and spend the money to build a staging server for their software upgrades and integrations are not reporting problems. That's part one. 
    • But there's this other thing you want to think about - all the security frameworks. If you're in any piece of the printing business where you work with data, so we all work with data somehow, some way - but if you're working with customer data, financial data, personal health data, anything like that - the guidelines from all of the organizations that review these areas, the people who are the auditors, say that you should always have a staging server for all of your software upgrades, for any changes to your database templating, for any change that you're making to your environment. It should be rolled out on a staging server first. That's the best practice.
    • It's not just that we're saying it, and it's not just that all the printers who were sitting in the ePS Connect sessions are saying it - this is actually the best recommendation from ISO, NIST, and from PCI. If you work in any of those spaces where you know those initials, these are also the people who are telling you that staging servers are the safest way to bring new software in and upgrades in, but also to avoid downtime and to give yourself some breathing room whenever you need to make a change.
    • [00:25:53] Ryan McAbee: I think that question that was posed - “Well, don't you have a staging server?” - was the nice way of saying, “Why are you doing it that way?” 
    • [00:26:00] Pat McGrew: Yeah, and you could watch the poor guy's face fall. It was as though he'd walked into a room where everyone else knew the secret password, and he didn't, and they're questioning why he didn't know, because it was written on the door on the way in. It had that feeling to it, and I almost felt bad for him, but that happened in other sessions as well. 
    • As much as I like to think that everybody has a staging server - I've been in the software industry for a long time - the reality is that it's still a fight in a lot of companies because all they can see is expense. All they can see is, “I'm standing up another server. I'm paying for an extra license.” This is a conversation with the vendors, right? Because a lot of the vendors will allow you to host a staging server license at either no extra cost or minimal extra cost. It's in their best interest for you to have the staging server.
    • Even at that, and with the cost of servers coming down and everything else, the resistance is way more than I would've expected it by 2023. 
    • [00:27:01] Ryan McAbee: To me, the best way to look at this is like an insurance policy for being able to continue the business at any point. If we take it to the base level outside of our industry, everybody's probably updated their Microsoft Windows or their MacOS, and then something didn't quite work the same way it was right before that.
    • The same thing applies to any software, whether it's our industry or not. This gives you a testing environment where you can sort that out before you roll it over to your live production and then find out that you're now not able to print in the worst-case scenario and get the actual work out.
    • I know you've been looking at this organization - whosmailingwhat.com -for quite some time. They monitor campaigns and what's being mailed through the postal service here. Walk us through what we're looking at.
    • [00:27:44] Pat McGrew: Who's Mailing What is a lovely group of people. They came under new ownership a few years ago and really started going out and looking even deeper into the industry than they had been before. What they do is look at direct mail campaigns that are across the most regular campaign segments, and they monitor the number of newly launched campaigns.
    • What I like about it is that it gives me a rolling sense of where the industry is. Do the numbers on the far left, which are the number of campaigns, do I think that's the most relevant piece of the chart? It's not. The most relevant thing about the chart is the up and down and the segments, the color-coded segments. Who's doing what, and how are they doing it? 
    • I have to apologize. I've slammed together two of these charts, and you can tell right about November of 2022, that's where I slammed it together. What I was trying to show was a good run of months of what's been going on in our industry.
    • If you are a print and mailer, either in the transaction space or in the campaign space, you may have noticed some of the things that I see here. I have this conversation with printers and some user group calls and in some different organizations. This really does seem to follow that retail started to come down from November, but that's not an unusual thing. In a normal year, retail tails off in November because all the Christmas campaigns have gone and the holiday campaigns have gone. It actually came from the middle of summer, retail was actually riding pretty high, along with finance. Finance seems to be stabilizing itself. The folks in nonprofits seem to have really dropped off and gone in a way that I didn't really expect for the start of the year. A lot of times, we see a lot of campaigns at the start of the year for nonprofits, charitable giving, that kind of thing. We often see that, that healthcare and education are also a little bit more robust at the beginning of the year. Actually, since last summer, they've been performing rather flat. 
    • So what does this say to you? What I'll tell you is you can go to that URL, you don't even have to have an account. You can sign up for a free account, and you can get the dashboard all the time. It's always there. You don't actually have to pay for that service.
    • If you want to do deep dives into any of the segments, they do have a subscription program that they're happy to offer you that could be worth it if you're serving certain markets and you're trying to provide some differentiated information to them. At the very least, understanding who the big mailers are in direct mail, knowing that retail and finance and nonprofit healthcare, telecom, and education are the big ones. Knowing where they are on the rollercoaster could be useful as you're having conversations with the clients you're trying to serve.
    • [00:30:28] Ryan McAbee: That's a good point because if you are a direct mailer who has one of your largest accounts in a retail space and you notice they just fell off the map in terms of their order volume, then you can cross-reference this and see is it an industry thing or is it a client specific thing that I need to figure out? Because maybe we're not servicing them the way we should be or whatever else. 
    • [00:30:46] Pat McGrew: Aware that a lot of their competitors are out there doing campaigns. The nice thing about Who's Mailing What is for the top campaigns they actually tell you when they were mailed and what the taglines were and even have little thumbnails of them so you can see what they were.
    • [00:31:01] Ryan McAbee: It's brilliant. Since we're talking about mailing and those sorts of things, we always have to keep an eye on what our US Postal Service is doing. They're doing a lot lately that's making the headlines, but this is talking about some promotions that printers can take advantage of in terms of mail cost.
    • [00:31:15] Pat McGrew: For anybody who's a print and mailer, you should probably have a thumbnail or a quick link in your browser to the USPS promotions calendar, just to keep an eye on it. Every year when they release it, we always take a look to see what's new, what's different, and what they have changed.
    • This year there were actually some decent changes. They increased the percentage discount for some of the campaigns. They added some new campaigns that we hadn't seen them do before. The thing to remember is that these promotions are designed for people who mail a lot. You're mailing on behalf of retail stores or healthcare companies, or insurance companies, and you are used to lodging a campaign on their behalf. 
    • The thing is that you have to do some work to get these. These discounts, they don't just happen magically because you lodge a campaign with the post service. You have to apply to them, tell them what the campaign is, and which one of the promotions it actually hits. You have to show how it meets the criteria of the campaign, and you've gotta get the approval before you can launch your campaign and expect to get that discount. Because if you launch it without all those things, you don't get the discount. And if you already passed the discount along to your customer, that could be a bad thing.
    • It's not just for direct mail. That tactile, sensory, and interactive that applies to the envelopes for transactional mail as well as for direct mail marketing for brochure marketing, and catalog marketing. It's basically just creating an interactive experience, and they have criteria for how you prove that you're doing that.
    • There are an awful lot of interesting things going on in this space. We've seen them emerging in advanced tech. They like VR and AR for that. They actually like approving those. 
    • I do not know if you get Informed Delivery. I live with it. Informed Delivery is a program that the USPS offers. You can sign up for it and get an email every morning that tells you what's going to be in your mailbox that day. They started leveraging that by giving the people who were putting mailers into your mailbox the opportunity to tell you what was going to be in the mailer. "Hey, do not forget to open up to page three, where there's an extra discount for dog food, whatever." There are all sorts of interrelated things they do with Informed Delivery that make it really useful. 
    • The link is there at the bottom. It's something that I watch every single month, and I try to go back into to see how they're doing - and all the information is on the USPS website.
    • [00:33:45] Ryan McAbee: It's a pretty thorough website as long as you can navigate to where you want to be. Now, we teased this at the beginning in terms of legislation. We talked about some of the sustainability stuff that's happening in the packaging world that was discussed at ePS Connect. But this has been percolating for a while here.
    • Obviously, a lot of legislation starts in California, in the United States, and then expands from there or maybe New York too. That's what we're seeing with the privacy legislation. Are we modeling what's been happening in Europe for a while with GDPR? Or is it slightly different flavors because we're 50 states, and we do 50 different things sometimes? 
    • [00:34:18] Pat McGrew: And territories do their own thing. So I would tell you, Ryan, that I think that there was this big push coming into 2020. There was a big privacy legislation push that we were watching really carefully. Then over the pandemic, as legislatures couldn't actually meet in person, their attention was turned to other things. It's not that it died, it's just that it slowed down a bit. At one point, we saw legislation proposed in every single state and some territories.
    • Everybody had privacy legislation on the docket. As you can see today, this is the most recent one, updated at the beginning of March of 2023. We now have a lot of states that don't have anything at all in play. They've stepped away from the privacy conversation.
    • The ones that you see in green are signed. Those are ones where the legislation is already in force or will be enforced on January 1st, 2024. I happen to live in a state that already not only passed it, but it's already been put into force. California, as you said, was the leader. California privacy legislation was looked at as the sort of arbiter of what everybody else was going to do. At first, we saw a lot of other states take the California bill, white out Californi, a type in their name, and kind of throw it at the legislature. In reality, the ones that have been passed are not carbon copies of the California bill. California's a very consumer-forward kind of state. They put a lot of the burden on people like list brokers and anyone else who was handling your name, your address, and certainly any personal health or personal financial data. 
    • In the end, what I'd say is that this is an accurate map of where we are right now, and for me, I'm going to be watching really carefully for the next four to six months to see if any of those grays turn blue or start to turn green. What starts to happen is once you come out of a pandemic, and of course, we came out of an election cycle, all sorts of things get thrown up in the air, and legislatures start rethinking what's important to them. I think this will come back around because of some of what you mentioned at the start.
    • We have a lot of things in the EU, right? We have GDPR, the data protection acts. If you are an American mailer mailing into Europe, they apply to you. You don't get a pass just because your corporate headquarters is in Deer Park, Minnesota. You still have to abide by them. It's already started there. Then on top of that, we have EU legislation around all sorts of sustainability things and all sorts of other things related to packaging that are making their way into the US a little bit faster than data protection has. There's a different kind of conversation being had in printing sites about what they have to pay attention to.
    • Do I have to pay attention to data protection? Do I have to pay attention to sustainability? Do I have to pay attention to recyclability? Here's the bad news. The answer is yes to all of that because this will come back.
    • [00:37:33] Ryan McAbee: To baseline it. If I am a printer who's not in the data-heavy segments of printing like transaction, but I'm just a printer that's in Kansas at this point that hasn't introduced any kind of privacy legislation. I'm probably sitting here thinking, this doesn't apply to me. Why do I even care? And what would you say to that? 
    • [00:37:52] Pat McGrew: The next time there's a data breach that touches people who live in Kansas, somebody in your legislature is going to go back and go, "Oh darn, we had legislation for that and it fell off the docket. Maybe we should introduce that again."
    • I promise you that over the next couple of years, most of this gray is going to turn blue or green because data breaches do happen, and every time they happen, there's this tidal wave of concern about data management. Now, to be honest, if you are following good data hygiene and good data auditing practices, you don't have anything to fear. You're already fine. 
    • If you're one of the quick printers or you're a pure commercial printer who doesn't deal with data at all, I don't want to say you have nothing to fear. What I would say is you want to look at your policies with regard to what your customers send to you. If they send you a mailing that has name and address information, even if there is no other personalization on it, in some iterations of the legislation we've seen, there's a liability if they didn't have permission to do that mailing, and somebody gets mad. The first piece of litigation that happened in California over their privacy rules was from somebody who did not live in the state of California, but it was printed in the state of California. 
    • [00:39:14] Ryan McAbee: There you go. That's how messy this legislation can get.
    • [00:39:18] Pat McGrew: Because we don't have federal legislation.
    • [00:39:19] Ryan McAbee: Exactly, and that's reason enough to keep aware, particularly in your own jurisdiction. 
    • [00:39:23] Pat McGrew: That's why we keep an eye on it. 
    • [00:39:25] Ryan McAbee: Yeah, exactly. We have some research that different organizations have brought forward in the first quarter of this year. WhatTheyThink had their annual Printing Outlook 2023, which you can go grab. NAPCO had it for 2022 and 2023. Then we have some others here from Broadridge. All this is pretty fresh, and I think we pulled out some of the most interesting pieces. Though, this is just scratching the surface because there are many parts of this. Some of this, like the Broadridge research, is publicly available, so you can go grab it, and even some of the other research reports are only nominal fees.
    • [00:39:56] Pat McGrew: All of this can be found, right? We're giving you the logos. My favorite trick in Google is to take some data point and actually type the sentence into the search engine and see what pops up. All of these are publicly available. Broadridge, we know them as a payment processor. We know them as a printer. We know them as a CCM company. They are actually doing their own original research. One of the things that caught my eye with Broadridge -  I was on one of their CCM State of the Union webinars not very long ago. The thing that I took away from it is for as much as we talk about customer communication management and we think that everybody understands what it is, what became really clear in that webinar was that it's a very small percentage of companies that actually understand how to do multi-channel communication out to a customer base. By multi-channel we mean print and eDelivery and maybe text messages or to Facebook or to WhatsApp, or whatever else you're trying to do. What came out of that was that it really was not as fully baked as it seems. We're going to show a chart on that in just a second. 
    • But to complete the circle, NAPCO was born in the offset business. They've expanded. They understand flexo. They understand in-plant. They understand commercial. They understand DM. They talk in all of these different areas and they're very optimistic. I thought it was really interesting how optimistic they were. I think that's good for all of us, but they focused on controlling costs, knowing that controlling costs was going to be a really important piece of profitability for printers in any segment going forward.
    • For the WhatTheyThink folks, they find that inkjet is where the money's being made. Companies that are moving into the inkjet space and either replacing offset or replacing toner or augmenting with it and putting their most challenging jobs on the inkjet devices. They're the ones who were seeing higher degrees of profitability. So it was a good data point there. 
    • I bring up Market Reach because they're the ones I go to for a European, UK kind of eye. I often look at Europe as a harbinger of what's heading this way. People always say, "Oh, what's going on in the US because I want to know what's going to happen." It actually starts in Europe in a lot of ways because the sandboxes are smaller. They can practice different things. They can throw different things against the wall and see what works. One of the things that has been very positive coming out of the last year is that there are more and more campaigns being launched. There is more and more print communication being put into the mail stream. Catalogs are coming back, magazines are coming back, even newspapers are coming back. Not at the giant print run lengths, but they are coming back and they're serving different kinds of markets so the formats are really interesting. 
    • [00:42:39] Ryan McAbee: The thing across all this research, if I had to put a label on it, is it seems that the industry is cautiously optimistic. The cautious part is coming in because we're still coming out of the shock and awe of the pandemic with those supply chains. All the material costs have gone extreme in some cases. Our point of view, because of research that we've done in some of these areas, is that you might have to get used to some of these higher prices, particularly with paper. Systemically, the industry has changed, and the paper mills themselves have changed. Availability seems to have come back and become a little bit stronger. But even in the WhatTheyThink research, the top challenge from the respondents was still the availability of consumables in their supplies. So ink, paper, that sort of thing. And then also the actual pricing of that. It's still a challenging area. We think it's going to improve slightly, but within the industry, there seem to be a couple of big issues. 
    • One is just the conversion of the mills to non-graphic arts paper. They're moving more toward the packaging materials. 
    • Then the other thing is this is just decades-long, let's face it. We put our head in the sand for decades, but this decades-long problem around labor and getting educated labor into our marketplace because a lot of the sources that                                                                                                                                        were existing for that have gone away, which is why we created what you're listening to right now.
    • [00:43:54] Pat McGrew: The Print University. That's why we're here. If you go to the next slide, I think that they drive that point home. 
    • The Broadridge data was interesting because they interviewed people who are in what they considered leading companies, innovative companies. By leading, they mean innovative people who are taking advantage of technology and software to try and build more efficient environments.
    • Then they interviewed people who they put in the non-leader category. And it was interesting to see the challenges for leaders versus non-leaders. What became really clear is that for those who haven't already embraced technology to solve the labor challenges, the how do I communicate on different paper challenges - they are suffering for it.
    • If you haven't embraced technology, it's very likely that the means of production is costing you more than your competitor, who is more innovative and who has invested in that efficiency. Working with inflexible legacy systems was called out. Not providing a sufficient budget to make sure that you can be innovative. The one that killed me was staff resistance to constant change. The funny thing is that in non-leader environments, in non-innovative environments, you tend to see that more because it's not structured. The change isn't a structured change. Everybody isn't brought on board. Everybody isn't empowered to help it grow along.
    • When you look at where the leaders saw the challenges, it was more around balancing the innovation, right? How do I balance continuous innovation with actually getting work out the door right? A staging server can help there. The other thing is inconsistent data quality coming from customers, and that's file quality, that's design quality as well as data quality. All of those things are impacts, and they hurt the folks who are running most efficiently more if they aren't able to optimize the files coming in the door. 
    • There were a lot of really interesting takeaways from Broadridge, and I thought it was an interesting cut to look at the difference between those innovative leaders versus those who were still trying to make do with what they had.
    • [00:46:02] Ryan McAbee: Yeah, I always like research that looks at data that way. A lot of times, it's more from the big research terms, McKinsey, and so forth. It's nice that Broadridge took that approach for something that's more related to our industry here. 
    • Looking ahead and even today, this is a buzzword out there in the public. Obviously, the ChatGPT kind of artificial intelligence has really taken a hold of everybody. Every industry. You can use it to write copy. You can use it to create the Dali equivalent to that. You can use it to create, say, "I want a picture of a dog in the style of Picasso," and it'll come back with a rendering. Some of it's better, some not. I've found that, particularly with people's faces, it really does a horrible job right now on the image creation side of that.
    • The text in the conversational aspect of the generating the text is pretty impressive already. 
    • [00:46:48] Pat McGrew: You mentioned ChatGPT. I went out and played with it too. You try the things that you do every day. "Oh, let's see if it can write me a marketing plan for this kind of company." Let's see if it can write me a blog post. Frankly, what I found that it brought back to me was so predictable it's not anything I would ever deliver to a client. I understand the temptation in big agencies that are paying hundreds of copywriters to try and find a shortcut. To try and find ways around it.
    • I think that some of the fear is that these kinds of AI solutions could end up replacing people. I think that's a valid fear. But the reality is, the way it works is that it's going out and looking at everything that's already out in the data, right? It's looking at everything that's online, anywhere it can get ahold of it.
    • The challenge is if you're in an unusual area, an unusual segment, it could be plagiarizing like crazy, right? Because if there's a very limited amount of information available on a certain topic, then it is very likely that what comes back is not as original as they would like you to believe it will be.
    • That could be dangerous. There are all sorts of interesting legal questions. I was having a conversation with a friend who is a college professor who did not know about ChatGPT. I started the conversation with, "Hey, have any of your students turned in work that looks like it was done by ChatGPT?" Then I had to explain what that was. After we had a long conversation about it, and she's religious about using plagiarism checkers with the stuff that she grades, and she teaches both the undergraduate and graduate levels, she said, “I reached out to our provider of the plagiarism software, and their answer was, yes, we're aware. We are trying to find a solution to identifying things that were written by some sort of chatbot. We don't have it at the moment.” I know that some have come online in the last few months. She said it scares her from a university standpoint that now, even the students who smile at her, who she likes, she has to question whether they actually wrote what they turned in. Especially for the classes that she teaches online where she doesn't even feel like she can get a measure of people. It's not just an education, it's in research. It's in customer communication. It's in customer communication management.
    • Every segment of business has a potential impact. And just for fun, guess what I got today? 
    • [00:49:16] Ryan McAbee: What's that?
    • [00:49:18] Pat McGrew: I got a note from Google to let me know I can sign up for Bard, which is their ChatGPT. 
    • [00:49:24] Ryan McAbee: It's been an armament race with the big tech companies because Microsoft did a big partnership with ChatGPT. Google's trying to rush its Bard equivalent. To me ,if I'm sitting here in the graphic arts industry, I think this kind of comes into to a couple of different ways. One is as a reproducer of content, because that's what you are as a printer. Who owns this copyright? Who owns this IP? And do you have rights to reproduce it in the first place? That's a big kind of concern from a legality standpoint. 
    • You get into some of the more technical questions. Is it delivered in a kind of format, particularly on the image side, that I can actually generate well and color manage and all of that sort of thing. I'm guessing that's less of a concern really at the end. 
    • But then, on the creative front. As we go forward, it's really going to democratize. What that means is open it up to laypeople, the ability to create very sophisticated-looking graphics and imagery without having to either know the toolset or even know how to creatively put it together at all. You see this even outside of the ChatGPT. Adobe, if you pay attention to their forward-looking technology prototypes that they at their annual event.
    • [00:50:34] Pat McGrew: Adobe Max.
    • [00:50:35] Ryan McAbee: Yeah. For years now, this is where they've been heading too. They want to do it for two reasons. They want to free up the creative process so that you can really spend time on things that make it unique to a human and let the machine take care of the rest.
    • [00:50:50] Pat McGrew: They want to create an easy button, right? 
    • [00:50:51] Ryan McAbee: They want to create an easy button. 
    • [00:50:53] Pat McGrew: One thing that I have seen a lot of creatives point out: These bots are going out onto the internet, and they're looking for images, and they're looking at formats, and they're looking at color uses and palettes.
    • A number of artists have actually popped up on the forum saying, that's actually my work. Your bot came and found my work and then delivered it to someone else as something that they could use without copyright concerns. And it's not really clear to me how that's going to all litigate out. But it will litigate out. There is no doubt about it.
    • [00:51:30] Ryan McAbee: As a printer, you might want to start asking the question, where did the content come from? Just to be on the safe side of things. 
    • [00:51:36] Pat McGrew: Work with your legal team to create clauses in your contracts that hold you harmless from work that's delivered to you. Many of you already have them because you figured out there was a concern early on. But if you don't have those clauses in the contracts for the work that you take into print, this would be a good time to do that. 
    • [00:51:54] Ryan McAbee: I completely agree it's going to be a legal contest here, but it could end up looking like something with the Digital Rights Act and what the music industry went through. We were using your IP and your creative content, but you're getting a royalty now. It's a fraction of a fraction of a royalty, but it may end up looking like that kind of model in the end.
    • [00:52:13] Pat McGrew: Just a set of metatags. That's a set of metatags that can be embedded by the software. You're right, that could. In fact, the Digital Rights Management solutions are pretty robust and mature now, which could be a way for artists to protect themselves.
    • [00:52:27] Ryan McAbee: That is summing up just three months here in 2023. So a lot's happened. I imagine that when we come back and do these quarterly updates, you'll be inundated with a lot more information, and we try and keep you on the pulse of what's happening in the industry. Any last parting words here, Pat?
    • [00:52:42] Pat McGrew: Just to let us know if there are things you want us to be watching for. I think there's a lot of diversity in the printing industry. We will try and look at it as much of it as we can, but let us know what you're looking at. 
    • [00:52:53] Ryan McAbee: Perfect. Thank you for joining us, and we hope to see you at a future episode here at The Print University!

64- 2023 Q2 MARKET UPDATE

In our Q2 2023 market update, we discuss new product announcements, market trends and data, and some interesting updates to generative AI, specifically ChatGPT.

  • VIDEO TRANSCRIPTION

    • [00:00:00] Ryan McAbee: Hello and welcome to another episode here at The Print University. We are sitting here in the middle of June and we want to share the market update for the second quarter of 2023. And as always, Pat, there's been a lot that's been going on in the printing industry.
    •  We have some industry announcements. Pat, we've been in this industry for a while, so the announcements will probably be a little thin for the next, what 10/8 months. We're leading up to another major industry event and usually that's when you see a lot more activity. 
    •  There are some interesting takeaways from this set of announcements that we'll go through. One of them is the fact that between now and drupa coming up next year, the industry is going to be overloaded with artificial intelligence and everything linking to artificial intelligence. Trying to figure out from a vendor community what to do with it, and then how that impacts our part of the world.
    • [00:00:49] Pat McGrew: Everybody and their brother has some AI thing to say right now. And in a lot of ways it's expected, right? We've known for some time organizations that had already started using AI and machine learning techniques in the infrastructure of their code. You look at people like Ultimate Technographics and you look at people like Tilia Labs, now Esko, and a lot of these companies leverage those techniques to add speed and to allow for smarter use of things.
    • But when ChatGPT burst on the scene, all of a sudden the conversation elevated a bit, not because there was something necessarily new and special about using AI and machine learning, but because it felt democratized. It felt like it was now accessible to any size company, any individual, even, smaller software developers could leverage the things that ChatGPT and the other generative engines could do to allow them to do faster testing, faster development, faster implementation. And. It's been interesting to watch. 
    • On this list we have a number of people who are using AI and ML techniques in their software and have actually been doing it for years. They just never talked about it. Now all of a sudden it's a feature. I'm happy to see it because anything that will make code more efficient, I am a huge fan of, because the more efficient the code executes, the more efficiency you get out of it, the better situation you're going to be in.
    • The other thing though to remember is that you need to be up-to-date with your software. You and I have had this conversation for years. One of the things printing companies are not always great at is keeping their software up-to-date. And so the problem now is if you're a printer and you are working with code that is five levels back, or you are working with software that you haven't updated, you aren't going to be able to take advantage of what this software can do.
    • The caveat here is as the buyer, you need to be prepared, right? You can't just buy it and hope it all works magically because I promise you, there is no magic in software. It just doesn't happen.
    • [00:03:16] Ryan McAbee: The machine learning aspect and some functions of artificial intelligence have been used wide widely in the industry for years now. One of those areas is in imposition, in layout creation. That's what Ultimate Technographics, the first one on list brought out a feature component of ImpoStrip to where you could do that true shaped nesting, which is really targeted more so with the wide format space but it has applications in other places too. 
    • The other couple that mentioned artificial intelligence was in the, what we would probably traditionally define as the customer communication management space, CCM space. That's Crawford and then on the next screen was also the company that you exactly MessagePoint, which you had a chance to get a better handle on.
    • [00:03:55] Pat McGrew: Yeah, I got the demo. It was nice. 
    • [00:03:57] Ryan McAbee: Implementing ChatGPT. It does seem like I've seen more activities so far on the CCM side of the industry and that does make sense. If you're talking about generative artificial intelligence, basically being able to create content, audio, video, text you were talking about coding as well, that probably does highly automate and lift labor from what person has been doing in that CCM space. Can you elaborate on kind of the use cases that you're seeing in that part, because it'll eventually trickle over to the rest of the industry too? 
    • [00:04:29] Pat McGrew: On the CCM side, one of the massive challenges in any customer communications management environment is where is the content going to come from that you're going to put into your customer facing letters, customer facing communication?
    • We all get the letters, we get the emails, and you can tell they don't have a lot of emotion in them. They're not really exciting to read and that's a ding that CM engines have taken off for a long time. 
    • With the rise of generative engines that tend to include sentience — emotional indicators, qualitative indicators, not just quantitative indicators. That's really the power that a GPT based solution has. And that's what you're starting to see in the CCM space. Maybe you have an existing content library, it will actually help you go through that library and identify if it's actually qualitatively effective piece of communication that you're sending out. 
    • MessagePoint you see here on the bottom, our friends out of Toronto, they've been deep in the heart of tuning customer communication for a very long time attached to the popular document composition products like Quadient and the Extremes over the years. They have a product called MARCIE. MARCIE is their platform for building the customer communication content libraries. Now they've basically infused MARCIE with ChatGPT, so that MARCIE can now tell you if what you've written might be perceived as a negative instead of a positive. It can help you tune even suggest words to swap out in your communication to give a more proactive impression. But it can also help you become more demanding if you need to. It's not just about creating happy talk which is a tendency. If you need to send those dunning letters, which, in the collection space it, it happens every day.
    • What these tools can help you do is find that balance of you owe this and you need to pay it and there are consequences without becoming over authoritarian. 
    • A lot of the people creating the content that's sit in these libraries are new hires. It's the job you get when you walk in the door. It might even be interns. They're just saying, "Hey, write a letter that says your new debit card is coming in the mail. Write an email that says, your your pin number is coming under a separate cover." They sit down and they go, "your email, dear, duh, your pin number will be in coming to you via priority mail or express mail within the next five days. Very sincerely customer support, fill in the blank here. We look forward to serving you again. Let us know if there's anything else you can do." 
    • With these tools, you can change that. Weirdly, you can make them sound more human by using the generative AI technology. That's why you're seeing companies like MessagePoint and, OpenText and a lot of others use these for the CCM space. Don't forget that it is actually being used in other spaces.
    •  That Crawford solution is all about fast pathing your way to creating the profiles you need to create the content that's going out the door to be able to set the different, toggles and levers and dials to be able to set those faster. What I see happening over time is that technology, either in the ChatGPT form or the AutoGPT form or the other emerging versions of generative technology on the code platforms will allow you to not have to go through 57 dialogue boxes in order to set up the job you want to run, right? Instead, you can set a couple of things and it will heuristically develop it based on its understanding of all the work you've already done and all the work that it understands in order to create a profile that's actually going to do the work that you need it to do. That's where I really see the value in these technologies starting to really get applied to the print industry. 
    • [00:08:38] Ryan McAbee: We're just starting with the usefulness of the technology and it's exciting to see where it's going. There's going to be bumps along the road, as with any new technology and immersion technology, but there's definitely going to be applications that benefit the industry.
    • Couple other things, just to wrap up the industry announcements. If you are an Apogee user or an Agfa CtP user that the company did get sent off from the parent Agfa. I hope that's a very good thing because I think it will allow that division to have more flexibility, more autonomy, really listen to the voice of the customers maybe a bit better than what they had been able to do in the past being part of the larger organization. That's what we see sometimes when these types of events happen. 
    • The other thing is just speaking of trends, the going to the cloud with everything in the industry, software as a service, that's also highlighted here in some announcements. You have hybrid with MyCLOUDFLOW workflow, which is the automation suite that they're now offering in that way, instead of just on premise or host it yourself.
    •  Also Kodak, they announced this earlier, but PRINERGY Access, which is also a cloud product for easier onboarding of work into the PRINERGY kind of world.
    • [00:09:43] Pat McGrew: It's now available worldwide after the initial implementation or the initial rollout.
    • [00:09:48] Ryan McAbee: Moving forward I haven't heard the term as much as I've heard in the past, probably month or so, but sexy print. That has everything to do with the capabilities of embellishment and probably the reason we're talking about it today, because that's been around for a long time, but the fact that you can do it digitally is really the game changer that we've had over more recent years. Talk to us a little bit about what you're seeing there. We had some research, I think that came out from our friends at WhatTheyThink around this topic, and also that was in partnership with...
    • [00:10:19] Pat McGrew: Taktiful.
    • [00:10:20] Ryan McAbee: But the rise of embellishment. What's the thing, the takeaway here for everybody that's listening in?
    • [00:10:26] Pat McGrew: Embellishment is not new. We've been doing foiling and, lenticular printing all sorts of weird things. Spot varnishes adding color to them for decades and decades. Over the last 10 years, we've seen the rise of solutions for embellishment, which is adding some zing, adding some sexiness to the print. We've seen the rise of equipment that we think of as digital embellishing machines. 
    • They leverage the design files that come out of, InDesign or Illustrator or QuarkXPress or whatever. A layer identifies what is going to be embellished. The equipment has a digital front end that then controls where foiling will be applied. Where spot varnishes would, where holograms will be applied. So from a technology perspective, we've married a computer to a foiling machine, and we get some of the benefit of that.
    •  Companies like Scodix have been around for the last 20 years trying to continue to grow in that market. MGI out of France is another one that you'll see, but then there are dozens of others. They come in all sizes and shapes.
    •  If you think about the Iridesse from Xerox or the Revoria from Fuji, those are also digital embellishment machines. How much embellishment they can do is a function of how much you're willing to spend on the embellishment consumables, right? How much are are you willing to pony up the money for the gold foil or the silver foil or the holographic effects?
    • For a long time, the challenge has been finding that cost model and not just the cost model, but the talk track. There was always a suspicion that if you added a touch of foil, a touch zing here, a touch of zing there, that your customer would pay more money for that. You would be able to actually charge a, get a higher margin for it because of the value the customer perceived. It's a hard talk track to sell. You gotta go after the high end in the market to really get established with that. That's why you see a lot of the luxury brands adopting the foiling and the special varnishes and the holographic effects because they're willing to spend the money to promote their brand because they're at the high end. It's a little harder to bring downstream.
    • What's really happened over the last few years is that the talk track has started to come downstream, and some of that is because of the availability of machines like the Iridesse and the Revoria that actually have decent cost models associated with them and make it possible for organizations that would never invest in a a hot or a cold metal stamping machine or foiling machine. 
    • This lower right graph is actually from a brand new study just came out at the beginning of this year. It's Taktiful working in concert with WhatTheyThink.com. They wanted to look at what the real value proposition of adding digital enhancement of as a finishing technology and what the business opportunity really was.
    •  We're not hugely surprised to see that ramp up. We really started to see HP had their GEM machine. You saw Kurz machines which had traditionally been in the offset space, starting to move more into the digital space.
    • We saw a lot of it just really growing in that space. And when, and then well, COVID hit. The thing that like stopped dead was being able to tell a story around spending a little bit more money to add enhancement to something when you weren't really sure if you still had customers. It was a little bit harder deal to make, but as we're coming out of it, see that far right, 21 into 22 and we think that is going to keep on going. It'll level at some point, but we think that it's going to keep on going because we're getting back into that original bump that we saw from 16 into 18 where the brands do see the value of adding adding all sorts of embellishment technologies. 
    • The cost of doing it has actually come down a bit. The machines are acquirable. The footprints on a lot of them have come down, are a little bit smaller. We've even seen some of the franchisees buy machines because they find that they can sell it because the people that are in their customers that are interested in getting that pop of foil on business cards, or they're interested in getting that pop of varnish and maybe a hologram on marketing brochures.
    • I don't want to say it's come down market, but it has become more accessible as something that a printer can offer and it's a way to create differentiation in your shop.
    • [00:15:11] Ryan McAbee: My takeaway is if you're trying to get into this space I think it's well worth taking a look at the research because that's going to give you some insights, not only in the demand for it, but also start thinking about the selling strategies around it. Like you said that's often been more of a limiter than the technology ever was. So you've gotta figure out your market and how to approach it. 
    • [00:15:32] Pat McGrew: I definitely recommend reading the things on WhatTheyThink that, that come from the Taktiful team. It's Kevin Abergel, Joanne Gore, Warren Werbitt works with them a bit. I actually was talking to the mc Graphics Canada. They were definitely walking around talking to people about the value proposition of moving into embellishment if you're not already there and growing your embellishment story if you've already got one.
    • [00:15:57] Ryan McAbee: I find this pretty interesting here, Pat, the fact that 2021 versus 2023, that we're seeing quite a bit of a drop off in the number of campaigns for this quarter. Can we chalk that up to the economic uncertainty and the marketing and ad spend pulling back, or is this something more structural that's going on here?
    • [00:16:18] Pat McGrew: It's like everything in our industry, there are a lot of different influencing factors. I think concern about the economy. No doubt about it. It is absolutely true that there's a lot of concern. I. In our industry, especially on the marketing focused print part of the industry, one of the things that happens is when they start getting concerned about the cost of mailing and the cost of print, they go to e-marketing, right?
    • They pull back and they start the big email campaigns, the mobile marketing campaigns. In looking at the IAB numbers the advertising bureau numbers, you are starting to see those tick up a little bit. That usually indicates that money's coming from somewhere else, right? There's only a finite marketing bucket available in any given, day, month, year, quarter. 
    • I think in the rollout of the pandemic, we saw print get really popular again for marketing campaigns. We saw a lot of direct mail going. The charities trying to refill their coffers. We saw the educational institutions trying to reconnect with alumni as well as with potential new students. We saw all the brands trying to figure out how to have the conversation. We saw a lot of the internet online only businesses moving to catalogs and direct mail to their stories. We saw a lot of print really diving into the market in 2021. We absolutely saw just a tremendous number of of campaigns. 
    • We've come down quite a bit over 2022 and we've seen a lot of variability. There might have been some overspending in the previous year and a half. Hey, we have to get out there. We're going to move heaven and earth in order to do it. 
    • I think there was some of that going on, but now there's also two other things going on. We're coming into that point in the second quarter of the year is where marketers are looking at the holiday season. They're trying to figure out what they're going to have to spend in order to get those sales driven in that October, November, December timeframe. It almost feels like the pullback for retail marketing has a lot to do with saving pennies towards third quarter marketing to drive fourth quarter sales.
    •  The other thing that's happening is that there's a lot of uncertainty in healthcare and insurance right now. We have had just a tremendous number of impactful events in the home, life, auto space of insurance, which is normally a very big area for direct mail marketing. One of the things you often see when you get a season that's really bad is that the marketing pulls back in order to fund the claims activities. 
    • Even in healthcare, with all the uncertainty around Medicare funding, all the uncertainty around the availability of certain drugs. There's been a lot of holding off on major marketing campaigns waiting for Congressto decide what they're going to do. The drug companies to figure out what they're going to do now that the the big spending around covid healthcare is being pulled back, the marketing for healthcare is also being pulled back. Overall what we're really saying is that in all of the sectors we normally follow, government, retail, insurance, banking, finance, and education. Right now, all of them are in a slight pullback mode with their overall spending. I think it might go into the third quarter and that makes it a little bit trickier if you're in the direct mail service space. 
    • [00:19:55] Ryan McAbee: You're right, some of those verticals really are dealing with our own issues.
    • I can't remember a time that I read a headline that said a major insurance carrier was pulling out of a major state of even offering the service. I think that's the magnitude for that industry. 
    • [00:20:11] Pat McGrew: And there are high population areas, which were, was driving a lot of marketing mail, right?
    • Now, three, four major insurers pulling out of a state means that all that mail is pulling out of that state too. 
    • [00:20:23] Ryan McAbee: That ties into what's going on in the postal service and the promotion calendar . It seemed to me that the talk that's been pretty consistent from the postmaster general that we have now, is that there is obviously major funding shortfalls that's been the case for some time. Basically everything more than likely is going to increase from a cost basis. I don't think it's happened yet. The first rate stamp increase. 
    • [00:20:49] Pat McGrew: July. 
    • [00:20:50] Ryan McAbee: It's coming up shortly, but across the board it seems that it's going to cost more to mail anything into the US Postal Service at least. That makes it more critical to take advantage of these promotions as a mailer that you can then either pass onto your customer or not.
    • [00:21:07] Pat McGrew: The rates are going up, anywhere from five to 9% depending on what type of mailing you're doing. If you can take advantage of these pretty good discounts, it really helps. The caveat with all of these is that you only get the discount if you follow the rules. Go to postalpro.usps.com and make sure that you read the rules before you try. If you're not experienced in working with post office on promotions, go read the rules. Get pre-approved. You can't just show up at the bulk mail center with a bunch of mail trays. You actually have to show up with the correct paperwork and they have to have pre-approved it in order for you to be able to get the discount. Follow the rules and the discounts are good for you.
    •  It doesn't have to be a big mailing to pay off. It could be a thousand mailers. Take advantage of the discounts. The reply mail is an easy one. The informed delivery one, they make it so easy for you to participate in Informed Delivery. If you're not familiar with that. Informed Delivery is the US Postal Service solution for sending you an email every morning to tell you what's in your mailbox. 
    • By the way, for our listeners who are not in the us, Canada has similar promotional program and similar ways of communicating. Pretty much all of the national posts around the world do some sort of discount programs for marketing mail these days. Even the ones that are grumpy about marketing mail have have solutions that you should act absolutely be looking at. Anything that can save your, you and your client money, whether you pass it along to your client or not is definitely worth investigating.
    • [00:22:42] Ryan McAbee: That takes us to some industry research that just came out. Speaking of the postal service, the GEnerational REport dropped in this past quarter. The thing that I find interesting about this and we've seen this repeated in multiple studies, there doesn't seem to be that big of a difference generationally in how they perceive mail when it comes to marketing and so forth.
    • [00:23:04] Pat McGrew: It's interesting to watch. I think there was this talk track that evolved in the industry. It began around millennials. Oh, millennials were never going to touch mail. Everything was on their phone. They weren't interested in looking at mail, receiving mail. We had that conversation a lot around, oh no, they don't want to get bills in the mail. They don't want to get anything in the mail. They never checked their mailbox. It got layered onto the Gen Z people as well. That nobody was looking at mail anymore. Mail was dead. The truth is that the data doesn't support that. 
    • The reality is that today there's huge value in direct mail going out regardless of the age of the recipient. The sort of the heuristics we use around mail is that a third of the population is interested in getting only mail. They don't want email, they don't want text messages. They don't want any kind of mobile marketing. About a third of the market actually prefers only digital communication. They only want email or they only want text. A third really want both. They want the ability to pick and choose the communication channel based on their lifestyle at a given moment, not even, for a month or a year.
    • What that tells us is that two thirds of the population are delighted. I'll overstate it. Delighted to receive mail. You should be including direct mail as part of your program. We don't live in a world where it's all or nothing. It, we live in a hybrid world. The generational reports are interesting because we have this year on year survey that goes out where they're literally tracking it. 
    •  As we sit here in 2023, mail is a really appropriate way to get ahold of someone. The hybrid story is important because what we're seeing here in that top right is that people receive direct mail and a large percentage of them will go to a website to interact with the brand that sent the mail to them. That is an important thing to make easy, which is why the design of your direct mail is so important. Make sure you make it easy for someone, whether it's a QR code, something that makes it easy for them to get from the piece that you send them to that order platform in real time. 
    • [00:25:19] Ryan McAbee: Hitting briefly on the other three here. IBIS World is a research company been around for a while. It shouldn't be a surprise if you've been in this industry for a while, but it's a highly fragmented one. Meaning that it is the big, the largest printers you can think of are a small fraction of the overall industry. The fact is it looks very much a pyramid, right? Where that base of what we would consider small printers that may be fewer than 10 employees really dominate the number of printers that are out there in the market. 
    • The thing that really raised an eyebrow for me though, was the Straits research that you've put in here, Pat. Anytime I see a compounded annual growth rate of 26% or anywhere around that kind of growth rate in our industry it makes me go, hmm. They're talking about global print on demand market going from basically a little over 5 billion globally to 39 billion by 2031, and that's only, eight years away from now. How do you think they are getting here?
    • [00:26:12] Pat McGrew: For me, looking forward eight years I think it's a relatively reasonable growth and here's why. The vast majority of the world still doesn't have a lot of web to print in their markets. It's still a growing area. I always laugh. I feel like there's a web to print developer on every street corner in every major urban area because there are so many of them. There are tons and tons of platforms to choose from. Many of them are really excellent, thought out based on working with customers. They take feedback; they improve. But there are a lot platforms that are still looking for customers that are still only maybe serving 20 or 30 or a hundred customers.
    •  when you think about the number of printers worldwide and all the markets where we serve print worldwide, I think there's still an opportunity for growth. Now, is it 26.2%? I think that the trajectory is right. I think it's directionally correct. I think that we're going to see more and more web to print sites, and I think we're going to see more and more print on demand sites because that is a business model that is manageable by a small business operation in terms of the number of people that it requires in the front of house and is scalable based on the investment made in the back of the house in the print shop.
    • [00:27:32] Ryan McAbee: I think another leading catalyst for that growth trajectory is the fact that if you, like you said rewind the clock eight years ago. Look where we were at with just the analog-to-digital transitioning of things and how that really has grown. It's grown because the technology has improved so much. That's why we were having the conversation around inkjet earlier. As that moves downstream, you're going to be able to do more print on demand. I agree. It's directionally right. We'll see what it bears out eight years from now.
    • [00:28:00] Pat McGrew: Eight years ago, offset printers, weren't really very interested in bringing inkjet into their shop as a rule. Some of them more forward thinking ones did, but it was still a really hard conversation because the substrate range wasn't as good. The print quality we were still trying to get the color profiling right, all those things. Today we take for granted the fact that we can make an offset equivalent using digital technology. For an awful lot of print work, it's possible to do it and yet for all of that digital print is still a very small percentage of print overall around the world.
    • [00:28:33] Ryan McAbee: Closing it out here, we're going to revisit one of the topics that we talked about last quarterly update, but also earlier in this episode and that's some interesting things we're seeing around the generative AI space in this case ChatGPT. I'll give you two interesting things I've seen in the headlines . One at a very high level and one a past colleague was trying to do with this stuff. One is that I'm seeing headlines that are at the actual tech companies, many of who have this kind of technology are telling their employees to keep their code and personal information out of these engines. That's because there's IP concerns about what happens if it goes into someone else's platform that may be doing something with it. Then the other one was on a much low more individual user base, which is that one of my old colleagues was actually using this technology to write a children's book, but had posted a question to say, "Hey, I've created this character for my children's book, but they wanted the bird to look the same in every design", but have it do different things. Close its eyes, opens its eyes, walk this way, walk that way. I thought it was interesting that they threw the question out, is that possible? By default, generative AI is creating unique instances based on your prompts that you put in. Apparently there is a way to get hopefully to that end result where it looks the same each time in your design. Those are two headlines I thought that were interesting. But you found one about the fact that maybe making stuff up. 
    • [00:29:58] Pat McGrew: It does appear that there are more and more instances of the generative AI making leaps that perhaps it shouldn't. We have a number of instances now where people in the legal profession have relied on things like ChatGPT and some of the other GPT engines to write legal briefs and submitted them to the courts. In at least one now well-documented case, not a single piece of case law cited in the brief actually existed anywhere on earth. It was literally made up by the engine. Links were provided in the brief to case law that does not exist. 
    • The caveat, the warning, is please be careful if you are using generative AI. The use case we talked about in terms of things that a Crawford might do in terms of making it easier to build profiles for software or what MessagePoint is doing in terms of creating and testing user facing content. I think you're in more control of that but if you are just going to one of the publicly available engines and posting a question and asking it to write for you, those engines may or may not be accurate. You may discover that somebody's IP has turned up in the answer that can be a problem for you. It has already happened in art where artists are finding their art easily identifiable within things that were generated by some of the art-based engines like a Dall•e or some of the other ones that, that do that.
    • Just beware that it is really amazing technology. Just because you screen scraped it out of a ChatGPT chat or a copy.ai or even GrammarlyGO does not mean that you shouldn't be reading it very carefully and editing it very carefully if you intend to publish it. You could find yourself on the wrong end of an infringement lawsuit.
    • Remember that ChatGPTs data bucket goes back to 2021. If you ask ChatGPT, what the current statistics are on anything, the first thing it tells you is that it's bucket ended in 2021. It doesn't know current statistics. It doesn't know every in industry intimately. It doesn't know the print industry intimately. It doesn't know advertising intimately, so it has a tendency to stutter and to repeat itself. I was talking to somebody who asked ChatGPT to write a blog for them, and they were really disappointed because it came back with the same sentences eight times in order to make the word count they asked for.
    • [00:32:34] Ryan McAbee: I think our recommendation at this point: Be intrigued, use them, test them, but be very cautious about how you actually use any of the things that it generates. 
    • The other thing to keep in mind is that you might want to strengthen any kind of contract language that you have around identification, and also the fact that the customer signs off that they own this content or have use rights for that content, which many of you already have but you may include a clause now that has some statement around generative AI.
    • [00:33:04] Pat McGrew: A lot of the industry associations have started to produce some good boilerplate to help protect you. Definitely talk to your industry associations. If you're a franchise holder, talk to your franchise group about how to protect yourself. You would not want to be. Put on the line, for printing something that someone didn't have the right to print.
    • [00:33:22] Ryan McAbee: Absolutely. 
    • Pat, thank you for joining with this quarter two update for 2023, and we hope that you'll join us here for another episode at The Print University

67- 2023 Q3 MARKET UPDATE

The Q3 market update focuses on new trends in finishing, Artificial Intelligence uses in the printing industry, and industry updates from the quarter.

  • VIDEO TRANSCRIPTION

    • [00:00:00] Ryan McAbee: Hello, and welcome to another episode here at The Print University. We are going to talk about everything that happened in Q3 of 2023, so basically the last three months here. It wasn't really overwhelming abundance of updates and everything. Obviously the industry modulates. Things change. Things evolve, but I wouldn't say there was anything monument or earth shattering.
    • Would you Pat? 
    • [00:00:26] Pat McGrew: I think what we know is that we've got some big shows coming up. So we've got big show coming up in October that takes the oxygen out of the room for a while. We've had some European shows that have come and gone in the last three months. There has been an interesting flurry of open houses and user group meetings that have been going on that have been serving the function of keeping people engaged with new product updates, new software updates conceptual vision things. During the summer months, it's really harder to get people to travel and to get people to really stay focused. So it's not that nothing's happened but the last big thing that happened was, Label Expo in Brussels, and we saw a lot of Americans there who were trying to get a leg up on the announcements they knew are coming for the rest of the year.
    • [00:01:20] Ryan McAbee: A lot of sweltering Americans, right? Because it was pretty hot. 
    • [00:01:23] Pat McGrew: It was 90 degrees in Brussels on the Monday of the show, the Monday the show opened, which is the highest recorded temperature Brussels has ever seen. And we are used to going to that show and having it sleet and snow and rain on us and to be bundled up. This was one of those real anomalies. Where it was just so hot. If it's 90 degrees outside, imagine the temperature on the inside of the building once you start all those machines up and you've got all the people in the building, there's no air handlers in the world that are going to make any kind of real difference. It was challenging for everybody who brought equipment because trying to keep it running and not heat checking you start to understand why most print shops need to be in need to be cooled off somehow some way in order to make things work.
    • [00:02:12] Ryan McAbee: One of the themes that really did come out of Label Expo that it's a broader thing for the industry, not just for the label segment, is a renewed focus on the finishing aspect of things. We know that there was some research that came out earlier in the year. We talked about it on the last quarter of the update where we're seeing a lot more talk to leverage embellishments. That's things like foiling and everything basically to enhance CMYK print. We know that improves customer engagement, that it's more appealing. It has that wow factor especially if it's a product that sits on a shelf or it's going to be mailed in the postal service.
    •  There was also things around equipment manufacturers doing turnkey finishing where you could almost take kind of paper printed paper in and end up almost with some kind of finished product. 
    • [00:02:57] Pat McGrew: I think that the thing that was remarkable for me for this Labelexpo was how much of the emphasis was on getting to a finished product as efficiently as possible. An awful lot of new innovations in smaller footprint in-line label cut roll types of machines.
    •  We did see big machines, right? We saw some great machines from Bobst. We saw some innovation from Durst and Konica Minolta with their toner plus inkjet solutions. When you started to go up and down the back aisles, what you started to see is that the people serving that mid market and the smaller market in label production are now getting access to some really innovative finishing options to bolt on to their smaller narrow web label solutions that make it possible to go from blank in to finished piece out. And dump into a bucket for sorting for delivery to customers. 
    • Wide format finishing was also on display at label expo. The interesting thing was, we call it Labelexpo. But to be fair, there's a lot of label printing and finishing, but you see a lot of wide format solutions. Some design for banner printing, textile printing all the different applications. 
    •  Robotics have made their entree into that world, mostly in the form of robotic arms to lift and move big rolls. We're starting to see a lot more of that, but also pallet handling for substrate on the inbound side, as well as pick up on the outbound sign programmatic robots and co bots to make it easier to handle the large format pieces. After a while, even foam core gets heavy.
    • I think that my big takeaway was that for label expo, it's always the place we see things introduced in a test mode. When you look beyond labels and you look at wide format and even production print for commercial, you'll see ideas tested there. The other big thing I saw was a lot more signs with it JDF ready on them. There's a lot more concern and a lot more interest in having those sensors embedded in both the print and finishing devices and feeding that information back to centralized dashboards. Saw a lot more of this time than in 2019, the last time the show happened. 
    • Embellishment was just everywhere. We know from the study that, that the folks that Taktiful did that there is interest. What I saw this time was just all the different varieties. It's not just slapping some foil based on a template. Now you have so many variations in digital embellishment, so you can get those holographic looks. The lenticular looks. One I saw on display was water-based lenticular printing for labels, which was brand new coming out of Japan. Now, it's not just, add some shine at a little spot varnish. Now, it can mean all these different, specialized effects. It can be raised effects, textured effects. There were a lot of stands that had not been at the show in 2019 that were bringing brand new variations and very appropriate footprints for an average size printer. 
    • [00:06:19] Ryan McAbee: One of the things that we'd seen in previous events and as technology rolls out, and I don't think there's really an industry term for it yet- I'll call it variable finishing. That from order to order, from job to job, that's on the equipment it can be a variable size. Also because of a laser driven cutting and and all these other technologies each piece can be unique. Was there a lot of that on display as well? 
    • [00:06:41] Pat McGrew: I did. The term that is weirdly applied to it is VDP. We think of it as, variable data printing and that thing that lets you, make it dear John dear Pat, dear Mary, dear Ryan. The concept of variable anything, whether it's changes in color themes in the middle of a print run, or it's changes to the final finishing. The ability to move from one size to another as you're cutting labels, the ability to use motion cutters to get different variations.
    • We're talking about it in terms of VDP, but when you asked them what the DP meant variable stuff. Yeah, it was a talk track and I did see a lot of interesting things demonstrated. They're coming from both well established finishing vendors and net new finishing vendors coming into the market. I think one of the big changes we've seen over the last 10 years is with micro motors that are able to deal with heavier substrates. It gives you the freedom to design machines with a smaller footprint that can do some pretty amazing things on the way to creating unique output. And most of the samples that I saw, Ryan, were with respect to luxury goods packaging. It's where you see a lot of the innovation because luxury packaging is where money will be spent.
    • [00:08:06] Ryan McAbee: That makes a lot of sense for the finishing and the embellishment side. 
    • [00:08:09] Pat McGrew: Yeah, they'll buy into the upscale to get a unique box for their perfume or for their for their moisturizer or whatever. It seems to be, you see it there. 
    • When you start talking about things that are innovative, inline folding carton there were a lot of displays that talked specifically about being able to meet the requirements of pharma.
    • And so I hadn't really noticed that as prevalent in 2019, as I did this time where meeting the needs of the pharma industry was definitely a talk track throughout the show. 
    • [00:08:45] Ryan McAbee: Interesting. Let's switch gears and talk a little bit about mailing, what's going on with the USPS promotions, and then we'll get into one thing about regulation that's just recently changed .
    •  In terms of mailing it's probably not surprising, but I think we're seeing an uptick here as we go into what's traditionally a busier season. 
    • [00:09:02] Pat McGrew: I've shown you March of 23 through August of 23, which is what appears on the Who's Mailing What dashboard. You can see that we've seen, over 11, 000 net new campaigns lodged in the marketplace finance is heavy. Retail's heavy. Nonprofit is heavy. Healthcare is certainly big. The thing that I would note Is that if I laid March of 22 to August of 22 over top of it, we are down quite a bit in terms of average mailing volumes than we were a year ago and two years ago.
    • Some of 2021 was a COVID spike, right? I couldn't talk to people so I mailed them, right? We saw a lot of direct mail marketing go into the mail stream. A lot of people using direct mail that hadn't used it before because they didn't have other options, right? They couldn't invite you to their office. They couldn't come visit you at your house, so you got mail in your mailbox and we saw some of that weighing a little bit in 2022, but it wasn't a big drop. This is a good 12 percent drop on average from last year. 
    • If you look at the Bain and company studies, they've just released their holiday marketing forecast. Mintel is also released some of their, holiday predictions. They're seeing that there's a pullback on the part of retailers to be putting really big flashy direct mail campaigns into the marketplace.
    • It's not that they're not mailing. It's that they're being more targeted as to who they are mailing to. They're looking at their data more closely to see who is a more likely target to actually shop with them. It's not the scattergun effect that we saw over the last couple of years.
    • Now it's paper costs, ink costs, cost of printing, cost of mailing, everything's up a little bit. It feels like even though we've done a soft economic landing, people are still being a little bit cautious. That is actually having an impact. Oftentimes when we see that, what happens is we see non profit tick up. You're seeing non profit tick up because they can't rely on people to just give. They need to actively recruit their donors and actively talk with them and they often find that email is not an effective way for them to have that harder conversation about why they need more money. 
    • You start to see the tick up in retail, but we're not really sure if that's going to continue to tick up over the next couple of months. That this line drew the line on August 31st. I think that what we have definitely seen is that education and healthcare are staying really flat. The reason we mentioned this is it doesn't matter which print segment you're serving, whether you're a franchise, a small commercial shop, a large commercial shop, or you're even an in-plant the fourth quarter will probably be a little bit squishier in terms of turnover and revenue and volumes and plan for that. 
    • [00:12:05] Ryan McAbee: Just quickly, do you think for the next 12 months in the U. S. market, we're going into political season again, so there'll be a spike in that kind of mailing.
    •  Have you seen any data in the past that shows how that affects or does it affect at all these other segments? Do they go up with that or they stay where they were or they decrease their actual mail volumes. The logic there is the mailbox overwhelmed because of one political season.
    • [00:12:29] Pat McGrew: What I'll tell you is that a lot of the political mailing experts that I've been reading lately have been making the case that there's no such thing as a political mailing system season anymore. It's always there. It's because of the cadences of local elections versus, county, state, federal elections.
    • [00:12:48] Ryan McAbee: Timings are all staggered. 
    • [00:12:50] Pat McGrew: They're all staggered now and special specially called elections, just pop up out of nowhere. What you typically see are people who are specialists in political mailing, they have enough work to keep them busy all year round. When things ebb a little bit, they might start to seek out some sort of retail oriented direct mail.
    • We were talking to a printer not long ago, Ryan who is doing exactly that. But the bulk of the business is political mailing, and it's going to stay political mailing because it is very lucrative. I don't think that political mailing unduly influences direct mail. I don't think any of the political mailing experts actually care how overwhelmed the mailbox is. They just want to get their candidates postcard into your mailbox so you can see their smiling face and and get a sense of who they are.
    • [00:13:40] Ryan McAbee: It's a speed to mailbox kind of scenario.
    • [00:13:42] Pat McGrew: Yeah and retailers might be a little annoyed at that. They might be a little bit more sensitive to how much mail is in the mailbox. But as they are being more targeted and we're coming into that catalog season. There's going to be a lot more catalogs in the mailbox, maybe smaller, but more targeted catalogs in the mailbox, a lot of invitations to special retail events in the mailbox and in the upcoming season. 
    • [00:14:05] Ryan McAbee: So moving on to the U. S. Postal Service, any promotions that are worth really focusing on? It looks like it's a retargeting one for the time that we're in. 
    • [00:14:13] Pat McGrew: By now, either you've already lodged your reply mail piece. You're taking advantage of that. You might be taking advantage of the emerging technology promotion, which runs until the end of November. Informed delivery promotion, which kicked off in August and runs through the end of the year is one that is very interesting because what it allows you to put a piece into the mail stream, but also include digital content. That gets delivered through the informed delivery emails and so if you aren't using that.
    • It's certainly worth talking to your customers about this retargeting campaign. This is a brand new promotion this year. They've never offered it before. It has 5 percent Credit that's available through the postal promotions. Again, you have to lodge it, but once you get it lodged, you can run it anytime in the September 1 to November 30 timeframe. And if you aren't taking advantage of the promotions you should be. Remember, as a printer, you can choose to keep the discount. You don't have to pass it to your customer. It can just become additional funding for the things that you're trying to do.
    • We should get the calendar for next year in the November, December timeframe so that we can get a sense of what's going to go on in 2024. We had more promotions this year than we did last year. We had 2 new ones added to the calendar for this year, So maybe we'll get a few more. Anything that can help drive mail into the system I think is good for retailers and all the other people who do mailing mail based fundraising and communication.
    • This is an important one. Look, the map so that the last map cut was August 4th of 2023. The green states are places where some kind of privacy legislation has been signed and is either currently in force or is in process of moving into enforcement. If you are in any of these states, it pays you to take a look at your legislative website and make sure that you're following whatever rules they've set up.
    • But wait, there's more. If you mail into any of the green states, you are equally liable for any of the rules the states have enacted. Even if you are not in the state of Montana, but you mail into the state of Montana or any of the other green states, you want to you want to make sure that you understand what rules apply to you.
    • The blue states are those where they've where new legislation has been introduced. Pennsylvania, New Jersey are interesting because , they keep trying and then they don't ever get the legislation over the line. They seem to have a much more active attorney general right now who's actively campaigning to get this legislation in place.
    •  The gray states are the ones that have an active bills, but a lot of times they have an active bills because they've looked at what other states have done and have decided that they'll just play by those rules and not enact any legislation. So just keep an eye on that and this is IAPP and if you go to IAPP. com, you can download the information, sign up for the newsletter. 
    • Now, the other thing I want to alert you to is a lot of you do have relationships with other countries in that customers that you mail for, you deliver work for even if it's not mailed, it's delivered on pallets goes into Europe.
    •  As you may know, European privacy laws are quite a bit stricter than what we have here in the US. 
    • On July 23rd of 2023 a new privacy framework went into effect. It's one that's been under discussion and study and revision for the last couple of years. It is a follow on to an earlier version of data privacy rules that were already in effect. In this particular case, what they have now done is firmed up the framework on how data can move between European Union states and the U. S. It is a formalization of what you have to do in order to be able to accept data from a European client and what you have to do to transmit data to a European client.
    •  There are some very specific rules around moving personal data, opt in information, notification of customer, notification of people whose data it is you're moving. Just all sorts of rules. The people who often get caught up. In this are our big multinational retailers. Who somebody gets an idea for a really great, wild and crazy campaign, but it relies on personal data. If that campaign originates in the U. S., you'd have to be very careful about that campaign being mailed into Europe. 
    • Here's the guidance. If your customer brings you a really cool personalized campaign and they hand you a mailing list and some of the addresses on that mailing list include mailing into Europe, you want to go back to your customer before you accept that piece of the address list to find out if they're playing by the rules.
    • [00:19:05] Ryan McAbee: Very good points there. How does this interplay with GDPR at all? Obviously, that's the opt in kind of portion of this framework. 
    • [00:19:12] Pat McGrew: it is it and GDPR is the general data protection regulations that are the European regulations. They are part and parcel of this framework that fundamentally GDPR typically is thought of as applying to work that originates from GDPR.
    • Data that is held in the European Union states and those that subscribe to GDP are typically violation of GDP are, which basically I, as a citizen of one of the EU states. I feel that my data has been violated. I got something that seems to know more about me than I have allowed any of my vendors to know. I have a right as a citizen to go petition for redress. Basically, I can go to the the authorities and I can get them to lodge a fine. I will tell you that there are a lot of cases in Europe. There are a lot of fines being levied and some of them include some of the things you might have read in the news about fines being levied on Microsoft and Google.
    • [00:20:14] Ryan McAbee: Moving on to some industry announcements. We'll start with what we're calling impactful mergers and acquisitions. These are big ones that you don't see every day. One was that in the finishing landscape. Tecnau acquired all the operating activities at SITMA.
    •  How do you see that evolving relationship and how is it going to impact the market from the finishing aspect?
    • [00:20:35] Pat McGrew: Oh, I think we're going to start to see some really cool stuff. I have been a fan of the SITMA approach to finishing for a long time. It's always purpose built. They build to a very specific spec and customers I've worked with over the years who have SITMA equipment would never give it up. . It's just very high quality, built finishing equipment and typically brings innovations along the way. They have some interesting approaches. 
    • Tecnau has an equivalent reputation of serving print environments with reliable, good footprint types of solutions. Their Libra book line is very popular because it's got a small footprint for book finishing. It's a very capable machine. 
    • When you put these two very smart companies together and you combine their R& D groups, I think you will start to see even more interesting finishing innovation. Especially in-line innovation. One of the things that we have seen tech now get really good at is building in-line finishing that will keep up with the modern digital presses. SITMA didn't really have that speed reputation. They had complexity reputation. Now you marry that ability to do really complex finishing with the people who really understand how to do it at speed. I think the next couple of years are going to be interesting to watch and see how they bring it all together.
    • [00:21:56] Ryan McAbee: Another big headline was this joining and creating a really global force in the packaging space. Yes, a giant to the tune of 40 billion U. S. dollars in turnover annually, if this goes through.
    • [00:22:09] Pat McGrew: And it does. What I read yesterday was that it is expected to go through. They've gotten past all their T's and C's. Typically in a deal like this, you wouldn't see them announce that they are merging unless they felt like they had already pre tested everything with the regulators that are involved. So this one looks like it's going to be done. 
    •  You look at Smurf at Kappa and you look at Westrock, they each have different strengths. They're both giant organizations, but they have each kind of focused on some specific areas of converting. Westrock has made major investments in digital print for packaging, digital print for corrugated for more innovative packaging, and cut options and building solution sets that are designed for shorter run. Smurf at Kappa, you think of them as the big brown box people. they just do kilometers and kilometers, miles and miles of that kind of production. You bring these guys together with the power of their sales force and their R& D teams and my hope would be that it brings innovation to short run packaging faster than we might have otherwise seen it. Because one of the big complaints among those who would like more versatility in short run packaging today is that it's expensive to get into and it's expensive to operate which means you have to charge more for the packaging. Which can make it less attractive to short run buyers. People who only need short runs for innovative packaging. It's easy to do short run brown boxes. It's a little harder when you want to do any of the kind of embellishment or full color printing or take them up a few levels.
    • [00:23:49] Ryan McAbee: Two more things really to touch on the announcements. One is that in just a little over a month on October 25th, it's a big International Print Day, which is also coinciding with this Print Across America. You want to tell us, give us a soundbite on that? 
    • [00:24:02] Pat McGrew: These are efforts from Print Media Center, Deborah Corn. International Print Day was something that she started talking about, a decade ago, and every year it used to coincide with a big event. Trade show and then it trade show went away. But every year it's 24 hours of people talking about print online and it happens on twitter. It happens in instagram. It happens on facebook. It happens on linkedin and it we've had the UN global compact. People have been involved in it. Printers from all over Africa have been involved in it. It's it can be quite a party. 
    • I think Deborah does have her ear to the ground listening to a lot of the universities and the students who are in different print programs. One of the complaints is that they don't get a chance to get into print shops. A lot of the programs that used to require that you go intern in a print shop don't require it anymore. Sometimes it's just hard to find an internship if you're really interested in one. She had this idea that if she could convince printing companies to sponsor open houses and universities to bring students to those open houses that there could be some synergy.
    • And she got a few sponsors to sign on to help create some content. There is a magazine that comes along with Print Across America. The content is all being developed. And the files are being sent out to the printers who are sponsoring open houses so they can print and finish them in their shop. That just gives everybody some buy in, here's how it happens. Here are all the pieces. We actually have an article in the magazine as well. We'll be participating in International Print Day, the online conference on October 25th. If you're not aware of international print day or print across America, type it into your favorite search engine and all manner of information will come up.
    •  I know Deborah appreciates all of the the participation and it's just really a big, cheerleader for the industry. And that's what October 25th will be about. 
    • [00:25:56] Ryan McAbee: There were some other industry announcements we're going to touch on in a little bit when we talk about what's been happening in the industry around artificial intelligence.
    • There was some equipment updates and but they were more, I would say, iterative in nature where it's just an extension of an existing line. Put that into your favorite web browser search engine and find all more about those as well. In terms of industry research, I know that we pulled this one from the UK in terms of what's been happening with their mailing.
    • I think there's probably synergy sometimes that we find what happens over there sometimes trickles over here. What's your thoughts on that? 
    • [00:26:27] Pat McGrew: I have always watched UK mailing because they're two very real things. One, they have a group that is attached to the Royal Mail and the private versions of mail delivery that exists in the UK now, that is a research arm. They very specifically keep an eye on and keep a pulse of what's going on in mail. Every quarter they are testing what's in the mail? How many campaigns what's being delivered? They're testing return mail. They're looking at digital communication against physical communication. They do deep research and they do it on an ongoing basis, which provides a view of a market that we don't get from almost anywhere else. Because with the U. S. P. S. We have to wait for the yearly Household Diary to get a lot of information. A lot of the things that used to be tracked by market research companies aren't tracked anymore, just because there's not enough staff to do it.
    •  I was really I was interested to see that they were able to identify a rebound of people going into brick and mortar stores. A lot of that driven by mail campaigns, inviting people to come to the brick and mortar store. It's not that online buying has waned. It's that the brick and mortar store buying has gone up. 
    • In addition to the UK data and that JICmail. org. uk, you can download it. We were taking a look at some data from the American Forest and Paper Association that recycling and sustainability is such a big talk track. We certainly heard it at Labelexpo, but we hear it pretty much everywhere now that their brands and print buyers are asking about the recyclability of the things that they're buying.
    • The American Forest and Paper Association say that 68 percent of paper consumed in the U. S. was recycled in 2022. That speaks to the fact that we all have it in the back of our mind that, things should go into recycle if they can. The other innovation that we're seeing among the paper producers is that they are becoming more adept at weaving recycled content into the substrates that they're producing and it's not all paper. One of the things that I did see a lot of at Labelexpo were substrates that were based on plastic. Then we're seeing also variations of wood pulp. A lot more bamboo being wound into recycled to give them more substance. I think, that's all really great news. It's just something we're going to keep on watching because I think we're going to see more and more regulation around recycled substrates going forward. We've already seen it in Europe. We've seen it in South America. Some of the strictest recycling laws are in Brazil.
    • [00:29:03] Ryan McAbee: Yeah, the trend line has been consistent. The other trend line has been consistent this is from this year, from the Trend Tracker at Two Sides is that consumers really do want the preference of how they're delivered content in terms of their bills and statements. Not only digital, but to have the paper option.
    • And I don't think it's a surprise, but it's a good data point to have if you are a printer talking to these brands. The majority of people don't want to have to pay extra to get the paper version of the statement or bill either. I know I definitely fall into that camp. You probably do too. I get it all, every channel if possible, I say send it to me. 
    • [00:29:36] Pat McGrew: Yeah, people are busy. I always want to look at my bills because I want to see what I'm being charged. I want to make sure that nobody's hacked my card, hacked my bill. I want to know what it is I'm paying for. What I have noticed is that the quality of the information provided on the paper bill is better than the quality of the information provided in online equivalents, unless they're actually doing a PDF of the page that's been generated.
    • [00:30:02] Ryan McAbee: And there's a convenience factor if you're one that sits down at a certain time of the month and does your accounting and your reconciling and all of that. It's just more convenient to have your stack of paper statements to go through without having to pull them from five different, six different portals. I think the research continues to bear that kind of information out. 
    • [00:30:18] Pat McGrew: And it doesn't seem to be age specific. Here's the weird thing. Everybody kept saying, oh millennials and Gen Z, they don't want paper. Not true. Just not true.
    • [00:30:28] Ryan McAbee: The other thing that we keep are keeping a close eye on is everything that's happening in our industry about how artificial intelligence is being applied and how it's evolving. I think it's amazing actually for me to see the speed at which some of the vendors are leveraging this technology. They've been using it from a machine learning aspect for years now, but we're really starting to see some useful off branches of that to where it's practical, helping you as a print shop on a daily basis.
    • You want to talk about a couple of these, Pat, I know that you saw Global Graphics, Smart DFE option in person. 
    • [00:30:59] Pat McGrew: Vendors have been working with AI algorithms and machine learning algorithms for decades. Their R&D people are very familiar with the concepts and have been trying to find ways to leverage it. They didn't talk about it, right? You didn't want to let the world know what your secret sauce was as you were bringing innovations in hardware and software to market. As the whole chat GPT thing exploded and it became more accessible to more companies, we started to see some really innovative uses. I'll get to SmartDFE in a minute, but Quadient. I'm actually hosting a panel at Xplor in November with some of the folks who are working at Quadient and at MessagePoint and at Crawford Technologies, who have all brought AI solutions to market.
    • Quadient went after a problem that has existed in our industry forever. What happens when there is generational change in the composition engines that are being used by the insurance companies and banks and the creative folks? You can wind up in a situation where the source of the creative content, whether it's a bill statement proxy or it's an advertising layout, can be so old that it can't actually generate what you need anymore.
    • The cost and time and effort to try and rebuild it in some new tool can be prohibitive. You wind up generating something that you then do document re engineering on and you generate a new version. You wind up really adding a lot of noise in, into the files that you intend to print, and it makes them print less efficiently. One of the things that Quadient took on was this idea of re engineering jobs for different printing equipment, using heuristic AI to say, what is it supposed to look like when it prints? Now I'm going to use my tools to generate new source code so it will look just like it looked in the old source code. It's a monumental piece of engineering and it's they rolled it out and beta tested it with some of their larger customers who seem to be quite happy with it. I think we'll start to see that kind of technology trickle down into other types of composition solutions.
    • We see a MessagePoint has a solution that is using AI to test whether the text that you wrote in the letter or the email that you're about to send to your customer is going to make them mad or not. It's sentience testing. Not everybody is a good writer and a lot of times the people in the marketing departments don't always have tact. They can actually annoy customers instead of getting them to pay late bills. They're actually using sentience testing to help their customers create outbound customer communication that has the right tone, whether it's in print or it's via email or text.
    • The SmartDFE technology from Global Graphics is not something that you or I would buy. It's technology that's being licensed out, but it is AI based. It is designed to make it easier for people to make complex decisions about print files and how they need to be generated and produced in the very complex printing environments that exist now, whether it's for offset or for digital production. I got the demo at Labelexpo, and I found it very easy to understand. You do not need a computer science degree to engage with the technology when it's made available to you by your OEM. I was really very impressed with it. 
    • The HP Spot Master technology... I was impressed with because it again is using a to solve a problem that many agencies and printers who serve agencies have playing match the spot color globally. A game that we have often played is take a global brand and pick up advertising as we travel around the world and bring it back and lay it on a table and go that's an interesting variation of colors. Even Coca Cola red is not Coca Cola red everywhere in the world. And Spot Master is designed to go at it from a data perspective. Data combined with substrate information. HP also has the AI technology in Mosaic, which is a tool that allows you to take some piece of graphic content and then grab snippets out of it and create net new content.
    •  We actually used that technology for Drupa in 2016 to create the giveaway bags. Every bag was unique and to prove it, every bag had a serial number on it. 
    • [00:35:39] Ryan McAbee: Mosaic's really been one of the first generative technologies that was in our industry, right? To make that unique content based on samples.
    • [00:35:46] Pat McGrew: And now it's the old man.
    • [00:35:48] Ryan McAbee: And I think that's what's happening. We're seeing AI in general, helping us create content. And that's happening through all the creative tools, all of the solution sets, like the composition tools you mentioned from Quadient and MessagePoint. That's one aspect. We've already had it applied to the machine learning to make, to figure out how to identify, quantify and fix issues in the printing.
    • I think one of the next big spots that we're starting to see it here is around color and how to manage it across different entities. 
    • [00:36:15] Pat McGrew: Devices and substrates no matter where they are in the world.
    • [00:36:18] Ryan McAbee: Yeah, exactly. Also making the print workflow smarter. We haven't really seen that in the wild yet, but I have to imagine that we'll start to see it in the coming years. With the kind of technology that we have today, it should be able to analyze the content coming in and data coming in and figure it out intelligently, how to build a workflow to get it processed into the final product. So we're keeping an eye on this because it's a leap forward type moment just like we've had in years past, whether that was digital printing and that evolution or computer to plate. I think it's just going to be one of those pivotal moments for the industry. 
    • With that said, thank you for joining us today, Pat! We hope you've enjoyed this episode of The Print University and join us next time please.

70- 2023 Q4 MARKET UPDATE

Year End Review and Predictions for 2024.

  • VIDEO TRANSCRIPTION

    • [00:00:00] Ryan McAbee: Hello and welcome to this episode of The Print University. This is Ryan McAbe and of course I'm joined by Pat McGrew. We are talking about the market update for Q4 of 2023. What we're going to do for this one is a little bit different than the last. We're going to look backwards, see what happened this year that we thought was significant and important for the industry. Then we're going to shake our crystal ball, look forward to see what we think is going to happen and unfold in the coming year of 2024. With that said Pat, what do you think, looking back, was some of the most significant industry shakeups for This past year.
    • [00:00:38] Pat McGrew: We've had them on several different vectors. There's the printing company vector and then there is the vendors who serve the printing industry vector. Let me start with the vendors first. So most recently, right here towards the end of 2023 we had the announcement that Hunkler, the makers of finishing equipment, digital industry have been acquired by Muller Martini, who are known for, high end and really excellent finishing equipment on the commercial side of things, more analog. 
    • Now, the two of these companies are literally just like a kilometer apart in a tiny little town in Switzerland. They are actually intermarriages between the two companies. Everybody knows everybody at both companies, and they have partnered together for a long time to create complex finishing lines. The idea that that they would somehow eventually become, part of the same organization, it's not horribly surprising. The pater familias of the Hunkler family retired last year. The sons who've taken over continue to be involved in the business are very active. It is a big enterprise and Hunkler continue to expand there about a, maybe a quarter of the size of Muller Martini worldwide, but what they bring to molar martini is drop dead innovation. Digital finishing innovation that is just brilliant, and precise and Swiss. 
    • These are two cultures that will have to do a little bit of interesting shucking and jiving to get on the same culture expansion idea. I think that they will do it. I Think that they will be able to expand their worldviews a little bit in each other's directions. 
    • We're excited by it, but it's not the only hardware acquisition or merger that's happened because not very long ago, Tecnau also a maker of digital finishing equipment with a really amazingly robust reputation acquired SITMA, another maker of finishing equipment. SITMA was probably better known as an organization that made their bespoke things. While they did have some things out of the catalog, they were also well known for custom building machines for customers. You bring those two organizations where you've got that bespoke engineering mindset that is driven by innovation and you've got tech now they, they produce some really amazingly complex equipment with really small footprints. You start to see how those two organizations can really feed on each other. 
    • I think we've had more mergers and acquisitions specifically in the vendor community at the end of this year than we have towards the beginning of the year.
    • [00:03:18] Ryan McAbee: Let me ask you a question related to the finishing ones because it seemed like there was more activity there than we typically see. I know that when we had talked offline in the past about the Tecnau/SITMA that we both agreed that they were very complimentary. We didn't think there was going to be a lot of overlap in terms of their market coming together for those.
    • I look at that same situation with moving martini and Hunkler, because I always think of analog versus digital when I think of those two company's names. In all fairness, Mila Martini does probably focus some on digital as well. 
    • [00:03:49] Pat McGrew: They do, and they have the Connex workflow as well.
    • [00:03:52] Ryan McAbee: Exactly. It does seem that they're more complementary than competing, I think, in that way. If I'm a print service provider and I see these kinds of acquisitions, what should I take away ? Do you think it's going to be a net beneficial thing? Is there something to be aware of?
    • What's your take?
    • [00:04:08] Pat McGrew: I think that it's probably net beneficial to the market because it's bringing these people together. But I think it's easily 24 months before you really see the benefit; get realized in the marketplace. Now, clearly, these organizations have worked together before, which is how they came to do the mergers and the acquisitions the way they have.
    •  It still takes time to resolve. I'm going to use a sort of a weird phrase, but one throat to choke when it comes to the relationship. If you're a customer who has both Muller Martini and Hunkler equipment, how long is it going to take before you're only dealing with one administrative function in order to pay your bills, get your invoices. How many salesmen will call? All of the things that go into a vendor relationship, and it can take some time to get those systems figured out. They could choose to continue to operate separately, even though they're under one umbrella, at which point, customer would have to deal with both organizations. They could start to merge the administrative functions, which at the end of the day, you start to feel like that makes a lot of sense in order to get the economies of scale.
    • I think that it'll be the same thing at SITMA and Tecnau, just to figure out how you're going to get that economy of scale of working with them and for them to decide what working with them looks like 18 and 24 months down the road. What everyone will tell you is that it's not going to be an immediate change, right?
    • Yes, we announced it. Yes, we did the PR, but no, it's not really going to be immediate. 
    • [00:05:38] Ryan McAbee: I was just going to say the paperwork leading up to the announcement takes a number of months, but the real transition and implementation usually takes a lot longer than that. 
    • [00:05:46] Pat McGrew: Then when you start to look at, there, there've been a bunch of other kinds of murders and acquisitions that we've seen in the marketplace.
    • Printers buying printers. Printers divesting themselves of companies that they bought. The OSG group had bought a lot of companies in the U. S. marketplace. They're now divesting of some of those companies, so Communisis this is going to go back and become just Communisis. It's not part of OSG group. Some of the other companies that they bought along the way are being divested out. 
    • Smurfit Kappa acquired West Rock in the packaging space. That's not when I saw coming because they were both pretty giant and that's a pretty big merger. Smurf at Kappa is mostly known for being the brown box producing company, right? That's been their strong suit for years and the supplier of corrugated, brown, corrugated stock to the industry. West Rock known a little bit more creatively. I think they're the people who are producing a lot of the full color printed boxes that you see in the marketplace. And, of course, they were an early investor in digital production of preprinted roles that then got corrugated and turned into boxes. They've got a slightly different model that they've been running. For them to come together that's going to be interesting to watch and see how that goes.
    • [00:07:02] Ryan McAbee: On the producer, service provider side in terms of scale that was the most significant announcement of the year so far for 2023. Moving from what's shaken up in the industry. Let's go into the equipment hardware side. What was some notable takeaways that caught your eye this past year? 
    • [00:07:21] Pat McGrew: You can't look at 2023 and not notice some of the hardware introductions. At the beginning of the year, HP brought their Advantage 2200 to market. What makes it notable is that it's not just another T platform in their inkjet space. This is a brand new platform from the ground up, completely reimagined and reengineered with half the parts of its equivalent T series model. Yes, they now sell. 20 inch roll-fed presses, but they actually have different purposes and the Advantage was configured so that it could grow with you as your business grows. 
    • There is a model of it that is designed for sort of low coverage kind of applications. You might think transaction applications. It comes with one dryer, or you can move it, add more dryers to it. And drying is a big thing. We've talked about this in other episodes. And go all the way up to full coverage commercial work with it and very heavy stock with it. The 2200 is a really nice footprint because of how it's assembled and because of how modular it is. 
    • They announced that right for Hunkler right in the European market and right at the beginning of the year. And we actually had one live running at Hunkler innovationdays and. It was definitely a remarkable platform.
    • Some of the other things that we saw announced this year, Rico brought the VC80000 to market, which they just announced in the last few weeks, right here towards the end of the year. The 80000 is a reimagined platform as well, even though it uses that VC designation. It is a new paper transport, new drying system, new ink. While it looks similar to a VC 70000 or 60000, what's under the hood is really quite a bit different. I think we'll give them a lot of runway in terms of gathering in applications that are on heavier weight substrates, different style substrates; this is going to give them the platform to do that.
    •  You have to be watching Fujifilm very carefully because we know that they're going to start bringing some of their role fed inkjet solution sets into the U. S. marketplace. They've also made their Revoria platform bigger. They've taken it from being the smaller format cut sheet in enhancement and embellishment platform to being a wider format.
    • B1-style toner based sheet-fed enhancement capable platform that is going to, I think, give some of the other embellishment platforms a run for its money. Because it can do some really amazing work all on that platform. 
    • [00:10:00] Ryan McAbee: Fujifilm this year was the largest portfolio expansion of anyone, just because they were at the starting point to do that.
    • You mentioned embellishment, that's another thing. It seems to me that in the equipment world, the focus still of the industry and of the equipment infections is heavily leaning toward inkjet, which is understandable. 
    • [00:10:20] Pat McGrew: On the commercial and production side. Yeah.
    • [00:10:22] Ryan McAbee: But also a lot of the talk this year, at least in, in the media journals and so forth was around embellishment. In talking to printers that we spoke with through the year, I think what was interesting about that is no, the technology is not new, but it seems to be getting to that boring and useful state, which is when it really profitable for a printer.
    • [00:10:41] Pat McGrew: It's not just in the production of commercial space that it's becoming, boring and profitable, but in the wide-format space. You've seen a lot of introductions, from Roland and Mimaki and even HP and Canon and everybody who makes wide-format equipment. It's not like you're seeing giant step changes. What you're seeing is feature enhancement. Maybe expansion of color or media handling capabilities. Some features that make it easier for printers to use and integrate into their environment. More connectivity into a wider range of workflows without you having to hire an engineer to do all of that for you.
    • There has been a lot on the hardware platforms, both in the wide format space and in the commercial production space, we've seen a lot of inkjet work, a lot of toner work and a lot of enhancement work. 
    • Scodix 6000 is a pretty amazing beast. I know a printer who just put one in is very excited about what that allows him to do for his customers.
    • We've seen Landa this year finally come into the commercial market in a way that we've been waiting for, right? We knew it was going to happen. We've seen more and more printers buying their second Landas. Which is something that, a couple of years ago, there were a lot of naysayers, but the people who bought them have figured out how to make money with them, and they're investing in second and third Landas.
    •  It's been a hardware kind of year. 
    • [00:12:03] Ryan McAbee: Yeah, it really has. Switching gears again, what's been going on and more of the software automation space? From my perspective, the word automation gets thrown about, but I think it's anything to make a printer more efficient is obviously been very receptive from the printer side or a few years now because of all the bigger macro changes that have been going on outside of the industry and in the industry. So it seems to me that there was a little bit more focused this year on two areas. One is more interconnectivity to be able to get to that automation because like with Lego bricks, you got to connect them to be able to get something and get there.
    • And then the other part was that was the more disruptive part, I think for everybody. Was everything around generative artificial intelligence. Because we've had artificial intelligence coming into our industry before, but this one, it really has been hitting the creative content creation side pretty heavily already.
    • [00:12:57] Pat McGrew: And it's touching like a lot of different vectors. We did a conference in Florida last month where we were talking a lot about the impact of AI in the printing industry and on the content creation side, there is no doubt it's impact. You can buy generative AI produced images off a Shutterstock now, right?
    • And it, it's using the open AI Dali platform as part of Shutterstock, so you can. You can create image content. You can create text content. Absolutely. All those things are true. But the other place that we're seeing those same generative engines being purposed is in code creation for software developers who are trying to fast path their way into either new markets or to add new features or to rebuild code libraries in a more modern language than what they might have originally built in. A lot of the software we use in our industry goes back 30 plus years and the code bases are what we would call, yeah, yeah, Fortran, Pascal, early C plus, a little bit of C sharp, just for fun. Scripting and all sorts of fun things that we did to make our code work. And so a lot of that code that has been working just fine, but really needs to be modernized to become more efficient because a lot of that older code can't take advantage of the power of the processors that are available now, because they can't access those pieces of the memory.
    • So if you are sitting on top of a giant code library and you have been, throwing your hands up in the air going, "Oh my God, I'm never going to be able to make this more modern." along comes generative AI with an opportunity to get that work done. You certainly still have to go through regression testing.
    • You certainly need to make sure that your staff understands what's happening in that reimagination of your code. But it's going on and it's going on in shops all over the world, all over Europe, all over the U. S. We've had conversations with code developers who are finding that It's allowing them to do things at a faster pace, a pace their customers are demanding, and allow them to focus on adding, the people focus on adding new features while the generative AI solutions are helping them fast path, getting their platform built to accept these new features that they want to introduce, which is a really great use of that technology.
    • The other thing is in actual, in what I'd almost call middleware is the configuration of solutions that are in the marketplace. We've had a lot of the software developers, many pieces of software in our industry require a configuration, a setup, right? So that every job can be processed the way it needs to be done.
    • And that's often a person sitting there trying to guess their way through what needs to happen in order to get it processed correctly. And that's true, whether it's an optimization program or it's color management or it's variable data programming, there are all sorts of things that require configuration files.
    • And these same generative AI technologies are being applied to that problem. And you just look at the possibilities. The early adopters are already doing it and are already making the mistakes and helping us learn as an industry. But I would imagine over the next 3 years, 4 years, we're going to see more and more companies using this technology to update their own code bases.
    • Will they admit it in public is a totally different story. 
    • [00:16:19] Ryan McAbee: Yeah, of course. That last point though, in terms of a use case, that's where I'm interested to see where it's going to go and how they're going to, the different software providers and industry vendors are going to take it in 2024 is to be able to say, I have this incoming dataset content whatever you want to say, can I use that kind of AI generative or not just machine learning aspects to, to figure out what I need to do with it as a config, whether you want to call it a configuration file or you want to call it a predetermined, whatever templates, that sort of thing, can I figure out what to do with it automatically over time? Because it's probably not the first time I've seen this type of file or even from the same customers that it's coming from.
    • So I think it's going to be really interesting to see how fast that develops because... 
    • [00:17:03] Pat McGrew: there's a little bit of a fear factor, right? There's a little bit of fear factor. If you use a public. Generative AI engine. Be aware that means once you put your information in there, you're sharing with the world, whether you want to or not.
    • So what we find with a lot of software companies, especially is that they will use licensed versions that are locked down to within their four walls to make sure that their intellectual property does not escape into the large language model that is space. Chat GPT or BARD or any of the others. 
    • [00:17:37] Ryan McAbee: But I think for printers what this is going to mean when you net it out is that it is the fast path for them as well to get things done. At this point in the game it still requires a human being to do a revision final check. Make sure it's okay. Give it the seal of approval before it can be used. And in many cases, it has to be edited as well. But it's going to allow you to do get more done with less human capital input, labor, whatever, labor hours, whatever you want to define that.
    • So I think it's going to be a win for us going forward as an industry. So that's kind of software. Let's talk a little bit about services before we take a look ahead into 2024. The services are kind of anything that you can't define as equipment or software, right? It's the thing that enable business to, to happen.
    • And we often define that in the industry as professional services. Have we really noticed any changes behavioral or just the way print service providers and vendors look at these kinds of things? 
    • [00:18:36] Pat McGrew: I think a little bit. The running joke in the printing industry for as long as I've been in, it has been that when vendors start talking about professional services, the printers get out the garlic and crosses and you know, yeah, put their hands over their ears, go right there.
    • There's a lot of nobody wants to pay for those services because there's a sense that they should have gotten them if They bought equipment or they bought software that, there are a certain amount of that should come for free. I don't disagree with that, but there are things that happen in your shop that might be outside of anything you would want a vendor to be getting involved with.
    • You might be trying to do a transformation project. You might be trying to implement end to end automation, but you have made a decision not to use a single vendors end to end tool, or maybe your shop is complex enough that you need multiple inputs and outputs and you need some help.
    • That's where professional services come in and professional services is everything from somebody to help you do content creation for your marketing. That's something that you and I do all the time all the way through to. Actually coming in and doing project management for you to help you get your project from beginning to end without sitting there stalled.
    • And one of the reasons that professional services, I think is starting to change a little bit in the perception of it in our industry is that for organizations that are actually trying to do that kind of transformation or to optimize themselves. They don't want to take their very valuable staff off of the work they're doing in order to manage this new project and many of them take steps back and go, by God, we've been meaning to do this project for 5 years, but we've never had time.
    • And how do you get it done? You start to build the budget that allows you to hire someone to help you move it forward. Might be that you just need to hire one really amazing project manager who's done it before and knows how to get your people to deliver the goods so that they can make things happen right.
    • It might be that you need to hire a team, or it might be that you hire several teams over time. But I think there is less of a, hands over ears la approach to professional services that I've seen in 2023 and going forward than I've seen in the past. I think some of that's COVID too.
    • I think, with the 1 of the long lasting impacts of the pandemic has been a change in how we staff our printing plants. Not just because of who's available, but because of things that we may have done to create more automation to try and become as efficient as we can. And that means that when you've got a special project, you probably don't have the staff to do it.
    • So you still want the project. You need the project. It's part of your plan. That's where professional services is going to make a difference for you. 
    • [00:21:22] Ryan McAbee: Yeah. And I just think that going forward, that's going to be one way the people who really figure out how to leverage those external services or even manage services, if we want to call them that in some cases, that's going to, in my mind, separate the pack from your competitors, right?
    • Because you're going to be, you're going to be able to leverage the talent that you may not necessarily have in house. And the end of the bandwidth, you'll solve the bandwidth problem, the staff that you do have in house by augmenting these things where it's most appropriate. And that's really as the owner or the leadership in the business is figuring out what to divide and conquer in that way, 
    • [00:21:58] Pat McGrew: The other thing is that professional services can train your staff to do things on an ongoing, on a forward looking basis. So you might have someone come in who does your color profiling for you, right? And that's something we see people hire professionals for all the time or paper profiling.
    • And maybe they hire them on a six month contract to come in and out, on a regular cadence to do that. But then over time, the staff learns how to do that. That helps you move on to maybe hire a different kind of professional after that works done. 
    • [00:22:29] Ryan McAbee: So let's turn our attention to next year. We obviously have some significant industry events that are going to happen. Some of them happen every year, but we have a special one next year in May. What do we think sitting here now is going to be the most impactful things that happen next year? I think many of them are going to be just continuations of themes that we've already seen in place, inkjet, embellishments. These kinds of things that are just going to continue. But what do we see that might be a curve ball or something that's not expected or how do you see it?
    • [00:22:58] Pat McGrew: I think that we're probably going to see some things come to the events. And remember that there, there are a lot of events that are going to happen between January and June of 2024 in anticipation of the big 11 day event in Germany, right?
    • So a lot of the vendors will do their pre-drupa events. The open houses and announcement events ahead of time to tease some of the things that you'll be able to see live in Dusseldorf. There's a lot of other events that makes it a little bit harder for vendors to try and figure out, when do you expose the new stuff and when do you hold on to it for the big show? And then remember, we also have another show that will happen in October in the U. S. after that, and they'll want to hold on to some of that, right? So you'll want to have some announcements for that. 
    • I'm expecting to see some new printing platforms that may have been teased or semi announced, we haven't actually seen out in the open, in the wild, as we might say. So, I'm hoping we see a Ricoh Z75 Pro live and in color in their stand at drupa.
    • I don't know if we will. I'm hoping that we will. 
    • [00:24:13] Ryan McAbee: Which has been teased for a while. 
    • [00:24:15] Pat McGrew: So it's not Five years, we've been waiting for this machine now closer to six. So we're hoping, we'd like to see that. 
    • [00:24:22] Ryan McAbee: I guess to flip it around a little bit, of these ones that we're hoping to see, what's the net advantage that they're going to have in the marketplace? Is it the fact that we now, if it's inkjet, that it's continuing to expand the color gamut and continue to expand the substrate range? Or is it a speed thing? Or is it all these things are getting pushed forward with these latest generation of equipment announcements.
    • [00:24:45] Pat McGrew: You know what? Printing is a capacity game, and it's a capacity per square foot game, right? So the printing vendors, the hardware vendors, are working very hard to make sure that you can get the most productivity out of the least amount of footprint. And the people who win that race are the people who will Probably sell more of their hardware spaces at a premium.
    • There is no place in the world where space is getting cheaper. So if I can take three machines out and replace it with one machine that has the same capacity, lower power pull, fewer operators to attend, All of these things become really valuable. And so while I want to see hardware at drupa, and at any other event along the way, what I'm actually listening for is productivity stories.
    • I want to understand the use cases and the productivity stories that will help a printer make more money with a change in what they're doing now. No new piece of hardware comes for free. It's not just the purchase price, it's the installation's price, and it's the time to convert your existing production to this new piece of equipment.
    • Whoever makes that migration the least impactful on the business, I think is the one that sells more equipment and it's not really, it won't be clear to me until we get there. Who's got that story figured out. 
    • [00:26:19] Ryan McAbee: Right now. I think that's 100 percent spot on in terms of how the market looks at it, too, and what they want to see from the community.
    • [00:26:26] Pat McGrew: So look, we're going to see new book finishing equipment there that has very small footprint. We're going to see, new sewn book block, new perfect binding, new cutter, trimmer, new stackers. We're going to see a lot of, perfers. We're going to see the mailing inserting equipment. We're going to see a lot of equipment that's going to come with smaller footprints.
    • More data capture, right? More automation end to end. I think automation is going to be a big part of the story of what we'll see over the course of 2024. At every show we go to, I think automation will be part of the story. The question is who's going to tell the story and who can actually deliver on the promise.
    • [00:27:04] Ryan McAbee: And those two are the key points to the game. One other thing just in parting that I will be interested to see if it happens in 2024 is now that most of the vendor community has their solutions in the cloud. What kind of unique opportunities now does that offer for interconnectivity vendor to vendor and will the industry participate?
    • Will we eventually end up on some kind of standardization kind of method for that? 
    • [00:27:30] Pat McGrew: Does JDF actually become a thing? 
    • [00:27:33] Ryan McAbee: Always the question, right? 
    • [00:27:34] Pat McGrew: And it not only is it a big question it, one of the challenges is that a lot of vendors have spent the time and effort to put a lot of sensors and a lot of data gathering capability into their hardware, but they haven't really provided a means to use that data.
    • There's way too much data available, so the lack of a synthesis engine the lack of the ability to map it to a usable dashboard I think is still one of those things that's a work in progress in our area for AI to come in and it absolutely is, yeah. I think that maybe that can help us fast pass, fast path, the usability of the data that is available, but don't forget that there's still in our industry, there is a lot of equipment out there that has no data being captured on it.
    • Remember that there are vendors and they will be at Drupa who have the ability to post, basically retrofit data gathering capabilities to your analog finishing equipment, your analog printing equipment. And. It's worth looking at in order to create the best model of your business and figure out where your gaps in profit potential are.
    • [00:28:46] Ryan McAbee: Yeah. Yeah. Absolutely. Very good point. Thanks Pat, for all that insight into this past year and a little bit of look ahead for 2024. Thank you for joining us on this episode and we hope to see you at a future one here at the print university.

73- 2024 Q1 MARKET UPDATE

We take a look at the growing level of consumer privacy legislation and how that affects the printing industry before discussing a game plan if you are attending the drupa event this year.

  • VIDEO TRANSCRIPTION

    • [00:00:00] Ryan McAbee: Hello and welcome to another episode of The Print University. We are going to be talking about the market update for the first quarter of 2024. This is Ryan McAbee with Pixel Dot Consulting. And of course, as always, we have Pat McGrew from the McGrew Group. And during this particular episode, Pat, we're going to be talking about the privacy concerns and subsequent legislation that is proliferating across the country.
    •  And then we're going to take a sneak peek at the road ahead to drupa. So let's get started. 
    • So Pat, we're going to start with the legislation aspect. And I think every time I see this map update from you that you get from IAPP, it seems to be more filled in. 
    • [00:00:39] Pat McGrew: It is, and it's more filled in and in scary ways because there are so many states that are making decisions to jump into this that when IAPP started this tracker, they called it the state privacy legislation tracker because all the concern was around privacy.
    •  California was our sort of spearhead out there with C. P. A. What is now C. T. R. A. And California was defining the rules by which people could use information that had been shared with them. There has been a fair amount of litigation around what went on in California, but what happened in the following years, really, over the last 3. 5 years is that we not only have had states approach privacy legislation. So how do I, as a person, protect my data? And how do I control permissions to use that data? And this is extremely relevant for anyone doing direct marketing, direct mail campaigns, anyone who buys lists and anyone maintaining the data that feeds those lists, right? It's relevant for all of you. 
    •  What happened along the way is that they also started to have to think in terms of slightly different kinds of legislation. Today we're not only tracking data privacy acts, but we're also tracking consumer data privacy acts. The differentiation there is not only how an organization will manage and control and keep data secure, but also what notifications they're required to provide to anyone when they use their data. That is turning into a real interesting adventure. What you'll see here on the map is the normal color coding and you can see that color coding what it all means in the left. You're noticing that we're seeing fewer and fewer gray states where absolutely nothing is going on. What we're expecting is that next time we look at this map when they updated again for April and in May that we're going to see more color across that map because more and more states are already starting to draft legislation. They're looking at what other states are doing. But no two states are doing exactly the same thing. You and your team need to 1 be paying attention to the associations. You belong to who all have really great legislation teams, but also be paying attention to where you mail to. Where you do work from. 
    • The fun one that got introduced in Illinois was the Consumer Data Act and it is one that we're going to talk a little bit more about in a moment.
    •  What I want to note to you on the right side of the screen, what I tried to do was capture a bunch of the legislation that is out there and some effective dates. So what I've given you where the bill numbers and if you do something like search for Colorado SB 1 90, you can get to everything that you need to know, including some of the analysis. 
    • There's tons written on it. IAPP writes a lot on it. But so do some of the other print association. If you go to IAPP.org, they have this really great chart that will show you not only all of these, but also there's check boxes for the current status of legislation and litigation against the legislation that I'd really refer you to.
    • [00:03:57] Ryan McAbee: That website is obviously a great source, but I'm curious if you look into a crystal ball, how do you think this all is going to play out? Do you think as the print service provider, we're really going to have to pay attention and see how things evolve into every state that we might be doing business in and have data from?
    • Or do you think that the industry lobbying arm will get to a point to where we say, "Hey, 50 different solutions isn't going to work. We need 1 unified solution for the entire country", similar to GDPR in Europe. Or do you think there's going to be this boutique kind of industry that offshoots for this to help you manage this as a service that you pay for?
    • [00:04:35] Pat McGrew: I think the latter is more likely than the former. The former case of actually having us as an industry go to the federal legislators and say, "hi, this is silly, let's do something national" that the current state of the union is not one where they're looking for one more thing to legislate right there. They want a lot of the stuff to be managed by the states. The state's answer to their direct constituents. 
    • What's happening is that this push for privacy laws is bubbling up from consumers. It's not that someone in Washington or someone in your local state capital woke up one morning and went I think we should legislate privacy.
    • It's that they're being banged on by consumers who don't like the fact that their data is being used. They don't like the depths to which some of the available data mining tools have allowed people they do business with to not only come back and try to market to them very deeply. "Hi, we know you bought a blue car. Wouldn't you like a blue jacket to go with it?" But they're worried about how that information gets sold because so much of it does. I go to Pew all the time to look and see what their consumer sentiments are and what their sort of state of the market is. Their 2023 survey said 71 percent of Americans are worried about companies knowing too much about them. I think that number might be low. I know people who won't carry grocery store loyalty cards, even though they would get great savings and fuel points and all sorts of discounts because they don't want the grocery store knowing what they buy.
    • [00:06:07] Ryan McAbee: I think it's one of those things where if something is free as a service, at this point, we all know that we're the product, right? 
    • [00:06:12] Pat McGrew: Exactly. I think that's what's happened. And no matter whether you're me, you're my 92 year old, father in law, or you're my son or his kids, at the end of the day everybody becomes very aware of the fact that information about what you buy, how you buy it, whether you buy it online, buy it in a brick and mortar stores is being captured. Even by the smallest organizations, right? Etsy will help you profile customers to sell to as will eBay and everybody else. 
    • A lot of this ends up as state based legislation. The challenge is that now, if you are a provider of those data services, that becomes a challenge. So I do think it opens the door for as a service data management services around data privacy. If you think about the lift to build those services. I don't think we're going to see them immediately. You think about the insurance requirements, the cyber security requirements, they're just massive to get into that kind of business where you'd be managing that. And I think that has the very real opportunity of having legislation end up sitting on top of it as well.
    • Look, this is a big business global breaches cost the economy 12 trillion in 2023. I don't think a week goes by where I don't get a notification from LifeLock that tells me that they found my data on the dark web and sometimes it's just my name. Sometimes it's my address. I pay for a service because I know that I live online. Certainly the rise of things like LifeLock and a few of the others that are out there that will help you manage that it's possible, take insurance out on those things. That speaks to the fact that consumers are concerned because they weren't, no one would be buying those services.
    • [00:07:44] Ryan McAbee: I think the cybersecurity aspect really pushes where the consumer sentiment has been and what and why. We're seeing so much of a push for consumer privacy. I don't think it really stems greatly from What we've done as an industry historically I think the awareness comes when you get like you said, I think this year alone We've gotten three notifications at the house and we're only in march Yeah.
    • Yeah. I know basically like your data from this company has been breached. This is right This is what you need to know. 
    • [00:08:12] Pat McGrew: I got a notice from the state of Colorado. Their unemployment database was breached and because we own, several companies and we have employees. I got the notification that there that some of that data could have been wrapped up in some of these breaches. It's constant and you are at a loss to know what to do about it. But the net result in our industry is that these privacy laws and the consumer privacy laws we'll talk about in a second are what start to bubble up and they do impose some burden on the companies that are in our industry. In Europe, they solved the problem, if you will, by the General Data Protection Act originally, and now the variations that have come along. As global as we like to think it is as European and all encompassing as we like to think it is on top of GDPR, there are countries that have additional requirements on top of GDPR. Doing business in Germany with data is a multistage process. There are a lot of countries that have their own spin on how to interpret GDPR. It does on a regular basis catch, I would say innocent, but companies that thought they were following the rules and still managed to break them because they didn't follow some country specific variation.
    • And so that does make the idea of trying to create some sort of U. S. based law, a little tricky to navigate. One of the things that happened, we have this new one, the Illinois Consumer Fraud and Deceptive Business Practices Act. It's a mouthful it's S. B. 1440. and this thing got jammed through, I mean in record speed in Illinois. This thing, it didn't stop. It just get jammed through and it was actually legislated so it went into effect on the 1st of January of this year. So this thing is already in effect.
    • You might say, oh I'm not an Illinois printer, this doesn't bother me a whole lot. But if you mail into Illinois, if you have a client who is Illinois based, even if you're not mailing into Illinois on their behalf, these are things you need to pay attention to because. It dictates, and that is the correct word, it dictates how you have to notify recipients of marketing material about their rights as a recipient of this information. Their right to be taken off the list. Their right to demand how their data got on the list in the first place, their right to be used. To have their not only have the list scrubbed, but to be, but anybody you sold that list to needs to scrub you as well. It's a pretty wide ranging set of descriptions. And in addition to that, it dictates that you have to supply a toll free number, or a website, or both if you want to be safe. That would allow a consumer who received a communication to immediately rectify the fact that they're on this list. This bottom down where it says example, it says, this is not a bill. It's a solicitation for goods and services call this number or go to this website to be removed from this mailing list.
    • The problem that this Illinois law is meant to to solve is those notifications you get in the mail, very often business to business, but sometimes business to consumer. That look like a bill and it might be for automatic delivery of print cartridges to your house. This is one that we have seen. Companies have used it for mowing lawns and lawn care where they send you something that looks like a bill and you pay the bill and all of a sudden you have a lawn service you didn't really sign up for. 
    • [00:11:53] Ryan McAbee: I've seen warranties as well.
    • [00:11:55] Pat McGrew: Warranties are massive and software. Subscription to services where you get some sort of either physical bill in the mail, or you get an email that is really a sale of some sort of subscription service. And, you pay it because, you go, I, somebody in the house probably signed up for it and I just didn't know. Next thing you have a subscription that actually no one is managing and you're just shelling money out. Those are the things that this law was meant to address so that anything like that would have to have this notification on it. 
    • We're recording this in the middle of March of 2024 and it is not entirely clear by any of my legal friends who are watching this really carefully that there was sufficient notification into the marketplace to let them know what their obligations were. The state of Illinois says that they mailed notifications to everyone that they knew did these things like that, who would be in the supply chains but we know of people who never were notified. We know that there will be litigation coming out of this and it is already starting. 
    • What we would say to everyone listening is to please take a look at this law and please take a look at your customer list and the data that you're holding. And if you've got anything touch in Illinois please get with your legal counsel. Because we're not lawyers, but get it with your legal counsel. Talk to your association who I know have smart people who are very aware of these issues and make sure that you aren't going to be liable because the way this law is written. It is unclear who all can be sued if someone decides that they were inappropriately marketed to.
    • [00:13:33] Ryan McAbee: It's also worth taking a look at it because depending on what type of mailings you may provide to your customer base, there are some exceptions to this rule too, based on the type of industry and the type of mailing that you do. It doesn't universally apply. There's some, there's some nuances as usual with anything legal that you need to get.
    • [00:13:50] Pat McGrew: Always wiggle room. But I think that the best case here is, I would certainly, I think, start with your association. Talk to the teams in your association who are aware of this and get some guidance from them. If you have in house legal counsel, or you have contracted counsel that you work with regularly, I would also check with them independently to find out where your potential liabilities might be.
    • I would certainly have a conversation with my business insurer. To make sure that you've got coverage if it's possible. If someone were to choose to sue the settlement for these things could be high because personal data is involved and the juries in the courts have shown us that they tend to award high amounts in those cases.
    • [00:14:33] Ryan McAbee: Let's move on to Drupa which is coming up at very quickly. It's running from May 28th to June 7th in Dusseldorf, Germany, as it typically does. We've had a quite a bit of a gap here with the last one, because thanks to COVID and scheduling and all its fun stuff. But what do we really expect to see major themes? What would you as an attendee be looking for? And we're going to talk about that a little bit later at the show, Pat. 
    • [00:14:57] Pat McGrew: So I think that there are a lot of things that will be different about this Drupa. Many of you may have gone to Drupa and you're used to the idea that this is a lot of halls. It's a lot of floor space. It's a lot of different kinds of print will be on display there. There will be a lot of there were a lot of be a lot of manufacturers of the pieces and parts of printing. As well as makers of the finishing equipment, the printing equipment, but also software that you may know, or may be interested in learning about.
    • If you have never been to Drupa before plan your trip. Everybody wants to visit the vendors that they already work with. But make a point to at least reserve some of your time to visit their competitors and manufacturers of other kinds of solutions that perhaps you're not currently using, but might give you ideas.
    • There are not going to be as many announcements at this Drupa because the last physical Drupa we had was in 2016. So here we are in 2024 and vendors couldn't wait till 2024 to make announcements of new equipment, new hardware, new software. Most of the big announcements have already happened. It's the opportunity to actually go see it, right? Because an awful lot of the announcements have been made virtually.
    •  Because the show is long, it's 11 days this is a show where people will move equipment and have it operating on a regular cadence throughout the show. You'll actually be able to want to get a sense of the size of the equipment, which is sometimes hard, even from a video get a sense of. What it takes for it to operate. How do operators behave around the equipment? Who are the people they're really partnering with? Because even vendors that you work with regularly may not let, that they have a whole pantheon of partners that are actually equipped to help you make your workflow more efficient, make your color management more efficient, bring more operational efficiency to your shop.
    • There's a lot of cross pollination because a lot of times the finishing vendors who are partners with the printing vendors will have, print created in one shop, and then they'll be finished over in another hall where the finishing equipment is. Horizons, bringing 450 pieces of finishing equipment to Drupa.
    • Bring your pain points with you because the other thing that vendors do for Drupa is they bring their smart people so you will find that every major vendor is bringing their subject matter experts, their technical experts, their problem solvers. There will be all sorts of people who can answer questions and every vendor coming is coming there to help you. I think that's a fair way of putting it. If you bring your real questions, they can help you start to navigate to answers. You won't solve it on the floor, right? But you'll start a dialogue that will produce results for you at some point over the next few months, because they'll be able to dial you into the right experts and give you things to think about as you start to make your decisions for how to become more efficient as you're moving forward.
    • [00:18:03] Ryan McAbee: One of the things I do like about this type of show is that the vendors come together and show holistic solutions for a particular type of application. If you're attending, you can see how that's put together, but then go have individual conversations with the different suppliers that bring that solution together. So it's one stop shopping so to speak. 
    • The other thing I'm personally looking forward to, as I wonder the halls, is going to be what's happening in finishing. I think a lot of things are happening with automating finishing even more so than where we've been. Whether you're talking about booklet makers or you're talking about guillotine cutters or what have you it's really across the board. And then I'm also looking forward to finding. Finding where the interesting software vendors are hidden. 
    • [00:18:45] Pat McGrew: And we know they're hidden.
    • [00:18:46] Ryan McAbee: Yeah, because that's the challenge. You won't see a lot of individual booth space for a lot of the software community. We were talking about this a little bit before we started recording, but they're all tucked into other vendor stands. So you'll have to go hunting for them a little bit.
    • [00:19:00] Pat McGrew: Yeah you'll see a group of them on clustered and Hall 7A. Yes, and that will be a good place to walk because you'll see a lot of software with smaller kiosks located there. But yes, absolutely among the hardware, both print hardware and finishing hardware vendors, you will see their partners as well embedded in their stands.
    • You will see people with operational efficiency software, color management software, print MIS software.. There'll be all over the place. And so you do have to navigate and ask around. And if you're going there as a guest of one of your vendors, which I know many of you might, I know that most of the major vendors do host trips over to Drupa. Do make sure you get a chance to break away a little bit and beyond what they want to show you that you have a chance to walk the halls and navigate. 
    • Remember, there's education going on a troop, but it's not just a a sales show. The Drupa cube is where the Drupa team they bring in, high powered, informed people to bring futures to, to the story. That's always a really excellent program to take a look at. 
    • There's also Drupa DNA, which is there, there's no extra charge for it. You just walk up, sit down, listen to somebody. Those schedules would be posted. This is where Drupa DNA is Drupa Next. It's the next iteration, the next automation, the next things to look for.
    • So it'll be the things that hopefully we'll be talking about and, Drupa 2028. It's the kind of preview of that. There are packaging mini conferences; touch point packaging. Touch point textile there for those of you curious about those areas if you're not already in them.
    •  Pick up the Drupa daily every day because it can give you ideas of things to look at. It will be available all over the Messe. It is definitely worth taking a look at. You might recognize two of the authors of some of the stories in the Drupa daily every day. We're involved in that adventure. One of the things that we're focusing on is what questions to ask vendors. That series will be running as part of the Drupadaily. Remember, we're always available as an asset to you. If you can't figure out how to navigate to somebody to help you solve a specific problem, don't hesitate to drop us a note because we're always happy to answer those questions for you.
    • [00:21:19] Ryan McAbee: Yeah, that's a good point. If you want to meet, just reach out. If we can help you in any way we're always available. And with that, we're going to go ahead and end this market update for the first quarter of 2024. See you on the next one.

76- 2024 Q2 MARKET UPDATE

Live from drupa in Messe Dusseldorf, we reveal the key trends and announcements from the show that will influence the future of the printing industry.

  • VIDEO TRANSCRIPTION

    • [00:00:00] Ryan McAbee: Alright, welcome to this episode of The Print University, I'm Ryan McAbee and of course this is Pat McGrew, and we are together which see, we can prove it. Yeah. Yeah, I can touch it. Which rarely happens these days, but we're coming live to you from the drupa Trade Show at Messe Dusseldorf, which is located in Germany.
    • And it's been a while since this thing's happened, right? 
    • [00:00:44] Pat McGrew: It has. So it has been eight years since the last Rupa, but think about all the things that have happened in the last eight years. And in our industry, it's been no different. It has been a crazy wild ride the last eight years. So we didn't really know what was going to happen when we got here.
    • [00:01:00] Ryan McAbee: That's true. And we've seen a lot of internet kind of things because they, vendors couldn't wait on a trade show to release things. So they've been releasing them all through the eight years that we've been absent from this show cycle. But we do have some interesting announcements that did happen at the show.
    • So let's start with some of those. 
    • [00:01:17] Pat McGrew: We do. Canon has been very busy over the last few years, and many of you probably are familiar with their IX 700 platform. So they have now expanded that platform, so it goes faster it has newer inks, it has a wider range of substrates. So they actually brought that one to the show here, but they made a second announcement that we had a chance to be in on, and we got a chance to talk about.
    • to see, even though the device is not here at this show something called an IV7, which is a sheet fed press, but it is a long edge B2 sheet fed press kind of super B2 great ink solution, great substrate solution. If you are in the market for cut sheet It's certainly worth asking the Canon folks about.
    • [00:02:05] Ryan McAbee: And I think they said it's about 12 months out. It's about 
    • [00:02:07] Pat McGrew: 12 months out. That one will be a 2025 physical release. But in the meantime, the new IX 1700 series is available and has a lot of improvements on it. But they also made one other announcement that really caught our attention. 
    • [00:02:20] Ryan McAbee: And they kept that under wraps pretty well, I have to say.
    • They did, they surprised us. On both sides. They announced right before the show started the day before, that they entered into a Partnership, which is basically a reseller type partnership with Heidelberg. So that Heidelberg is now going to sell under their own branding. So it's actually called the jet fire, but it's basically the I X series 1700 or 3, 200.
    • I can't remember which one, but they're going to do both of those cut sheet inkjet production. So it gives Heidelberg customers a new digital print Avenue that's supported by Heidelberg sales and service organizations. And of course, it's going to bring along the Pronect workflow, right? Yeah. to tie everything together into the Heidelberg ecosystem.
    • [00:03:00] Pat McGrew: Right, and I think that's going to be interesting. They also, they brought their new ProStream 2000 series, they brought their new ProStream, they're talking about their new ProStream 3000 series. So Canon's been quite busy in the workshop, getting things together, building interesting relationships, so that was interesting.
    • We also saw Ricoh has brought their brand new VC80, 000 here, this, for this Drupal. Very few people have seen a VC80, 000 because it was just released recently. So it's really, it's European unveiling almost global unveiling, to be honest. 
    • [00:03:31] Ryan McAbee: And the thing that's unique about that one is it's almost top to bottom Ricoh design and components. 
    • [00:03:36] Pat McGrew: It is. So if you're familiar with the Ricoh platform in the past, they've used other vendors, They've done a, they've OEM bits and pieces of it. This time around, the VC80, 000 is all RICOH all the time, including AI algorithms that direct the maintenance cycles of the press, so that you can train, the press to understand when your busy times are and when they're not.
    • So it's some really interesting technology. As they said, it speaks ChatGPT. 
    • [00:04:06] Ryan McAbee: Now, also with inside of Ricoh they have some fun names for their new releases. I can't remember what the one was for the VC 80, 000, but I believe the dragon was the Z 75, which is the
    • [00:04:15] Pat McGrew: It was the mother of dragons.
    • Yes, it was. Yeah, and it's the heart. It's the heart. It's the Harpy, oh dear, it's the Harpy Eagle, I think is the VC 80, 000, they've gotten very nature like in there because they have the Jaguar series as well for the cut sheets owner. Yeah, so they've been having fun. Yeah. Our friends at Kodak have not really brought a new press here, but they're talking a lot about their new workflow opportunities and a lot of the enhancements around substrates and things.
    • [00:04:44] Ryan McAbee: And one thing that was definitely came out from Continenza of the CEO of Kodak, but we've also heard it through the halls from Canon, from Heidelberg, from Fujifilm. Is that, and I thought it was interesting because we all have been thinking for the ages that digital is going to completely overtake offset and it'll just be replaced and so forth.
    • And it's interesting that now I think both sides of that vendor equations really realize that it's symbiotic. It's going to be what's best for that application for that customer, for that pricing at that given time. And they're working together. 
    • [00:05:18] Pat McGrew: We'll see that here because here at drupa, there are a lot of hauls.
    • [00:05:24] Ryan McAbee: Yeah, just to give us some scale and perspective, there's 17 halls, right? 17 halls. I don't even know how many acres the campus is, but there's over a thousand vendors from 52 countries, and there are actually visitors from even more countries, about 60 countries here. 
    • [00:05:38] Pat McGrew: 1600 vendors. 
    • [00:05:40] Ryan McAbee: 1600. Oh, I had a low number.
    • [00:05:42] Pat McGrew: Over 1600 vendors, right? Yeah. And you're right with the country spread and everything. It's really fascinating. And if you go into the halls where you see a lot of the offset type of hardware, Heidelberg has a massive stand here. Just massive 
    • [00:05:57] Ryan McAbee: They brought a lot of equipment.
    • [00:05:59] Pat McGrew: They did. And then Koenig & Bauer have brought a ton of equipment with them. MAN, Roland Goss have brought a ton of equipment with them. Horizon, the finishing people that, for their book finishing and their cutting and pre and post pieces brought 480 pieces of equipment to the show.
    • [00:06:15] Ryan McAbee: I think you just hit on the fact of what makes Drupal unique versus some of the other events that we've attended over the years. Is that really the entire ecosystem of printing from the beginning to the end is represented here. Whereas some other shows, it's more print specific. You don't get so much of the hardware and finishing aspect, or maybe some 
    • [00:06:33] Pat McGrew: expensive to move equipment.
    • Typically a long show, this is an 11 day show. And it takes a show that long to justify moving such heavy equipment. It's expensive. It costs you a half a million dollars to move equipment to a show. That show better have some length to it. 
    • [00:06:49] Ryan McAbee: That's right. We're going to cover a couple of themes.
    • We're sitting here in the drupa DNA. So it's what's next, what's coming along, but let's cover a couple of themes from this show. Another thing that really seems the vendors have locked in on and truly understand and get these days is that we're all dealing with kind of labor issues, right?
    • Oh yeah. Finding talent, training the talent, keeping the talent basically rethinking how to run and build equipment based on the generational changes that are going on, obviously as people age out, new people come into the industry. What have we seen from the vendor side amongst everybody here that they're helping and augmenting the labor component for us?
    • [00:07:25] Pat McGrew: So let me start with the fun part. Here at drupa, there is a team of about a thousand people. dozen Cal Poly students who are running around they are helping out with the drupa Daily production and they are getting first hand experience in what a massive print trade show looks like. But everyone I've talked to is so excited because they're seeing things that they've read about in books, right?
    • So we know there's a next generation coming up that's excited, but I think from the vendor perspective, what we're seeing is more of an emphasis on, This is on software and user interfaces. And so every press we're seeing that's being introduced has what I would call updated user interfaces that are designed to make them easier to understand.
    • You do not have to be a computer engineer to figure out how to get a job to start or how to program a job so that it will go all the way through to its inline finishing and come off the back end. Workflow automation is a huge piece of this story and we're hearing it in stands in every call that. What they know is that the days of coding workflow by sitting down at a green screen and typing in code to make something happen, it's not going to fly.
    • So now we need more AI influenced, AI enabled tools. We need tools we can talk to. We need tools that can heuristically figure out what they need to do in order to make a job come in Get preflighted, color managed, ready to go if it needs imposition, if it needs hanging and nesting, making that most efficient based on whatever the substrate and the hardware is and get it all the way to the finished product.
    • [00:09:02] Ryan McAbee: So on the equipment side, we've definitely seen where they try to build the interface where you don't have to read a manual to understand what to intuitively do so that you can make the machine behave and take the next job and be able to run it. The other thing from the software perspective in terms of building integrating that.
    • data together and automating it together. It, you may not have heard it as much on the show floor, but it's definitely in the design approaches that they're trying to go low code, no code. So that out of the box, someone that is not a programmer can make things happen. So 
    • [00:09:32] Pat McGrew: think about your drag and drop interfaces, right?
    • So an awful lot of the workflows we're seeing now are coded by dragging and dropping. Object boxes that say this object describes what I want to do and off it goes. 
    • [00:09:46] Ryan McAbee: Yeah, exactly. And then the other thing that we're seeing on the show floor and we've seen it, a bit over the years, recent years at other events, but it's really taken the Robotics, and augmenting that part of the labor.
    • So I know hp with movie go it's a Movie go They've basically taken their automatic vehicles to where they can program to be responsive and know ahead of time to go get the pallet of paper in the warehouse and bring it to the feeder part of the Indigo. I think they were showing that on a 120K Indigo.
    • And then when the printing is finished, it goes back to the the delivery end of it and takes that pallet away to the next finishing step. And it 
    • [00:10:28] Pat McGrew: knows where it is. 
    • [00:10:29] Ryan McAbee: It knows where it is. It has awareness. 
    • [00:10:30] Pat McGrew: So even in a warehouse, it can actually. Pattern map the floor 
    • [00:10:33] Ryan McAbee: right 
    • [00:10:34] Pat McGrew: so it knows exactly where it is and where it has to get back to 
    • [00:10:36] Ryan McAbee: and that's the thing with Robotics the cost is coming down.
    • Yeah, the having to do expensive programming on it is also being mitigated over time and With that kind of approach you don't even have to have special Environmental things in your shop like you don't have to put tape on the floor or anything else so that it doesn't run into people 
    • [00:10:54] Pat McGrew: You get the old style robotics where you had to have bars that only the robots could work in certain areas.
    • Now, none of that is true. Now they are all extremely intelligent with multiple cameras mounted on them. One of the use cases that the folks at HP described was the situation in a print shop where, sometimes you can see the whole floor with no problem. But over time, your stacking pallets have finished work and robots were getting lost.
    • Because Oh my gosh, the things that used as markers were not there anymore, which is why they added a camera to the bottom of the robot to be able to pattern match the floor. 
    • [00:11:29] Ryan McAbee: Yeah, which is amazing. It takes a lot of math that floor the first time, but once you get it done, 
    • [00:11:34] Pat McGrew: you're there.
    • [00:11:34] Ryan McAbee: Yeah. And then the Fujifilm also, I don't know if you ran back there and saw that, but they had a bunch of, it was with their partner, with their finishing partner IOTech or something like that that they were showing different robotic arms and things to take literally lifts. Stacks of sheet off of a, off of the pallet and go onto the jogger of the cutter before it then made its way to the guillotine to start doing the cut.
    • [00:11:55] Pat McGrew: And you'll see some of that up at Horizon as well in Hall 6. There, I noticed up in Hall 6 there were a bunch of people who have really integrated robotics into their story. And they're doing it in really interesting ways. They're, if you think about it, one of the most common problems in a print shop is often worker injuries because they're lifting things incorrectly or they shift incorrectly.
    • And two consequences, you might lose that worker for a while, but you might lose what was printed too. And when you start adding robotic arms and automated guided vehicles into the mix, You take the burden of that lifting and twisting and loss of product out of the mix. So you start to look at, okay, I might have to spend some money to put that system in.
    • But if I don't have injured workers, I'm doing much better. And I can then also redeploy those workers into more valuable jobs. 
    • [00:12:49] Ryan McAbee: And I think that's the key when you do your kind of ROI calculation. It's not just the physical labor component that you're saving, but it's okay. What can they then do that's more value added and productive?
    • And there's always 
    • [00:12:59] Pat McGrew: going to be something more valuable they can do. 
    • [00:13:01] Ryan McAbee: Exactly. 
    • [00:13:01] Pat McGrew: And so we're hearing it in every hall. So we're hearing it from hardware vendors. We're hearing it from software vendors, which means that you should be asking your hardware and software vendors what they've got. on the horizon to help you.
    • [00:13:12] Ryan McAbee: Yeah. And in terms of just switching gears and going back, cause that's obviously a kind of intensive undertaking in terms of the capital expenditure. Yeah. But going back to something that's much more accessible to any size of print shop is the fact that we're seeing a lot more cloud based software that's coming.
    • So it's subscription based, usually pretty lower cost, maybe like 500 a month, a thousand dollars a month, whatever the case may be for different things. Yeah. But I'll give you three examples that we've seen on the show floor. Two of them are more in the print management round. So EPS is announcing a product called Nubium.
    • It's going to sit in between their print Smith vision product. And then EFI pace, it's going to go in the middle of that. And it is cloud based and they're going to roll. They started already rolling it out in the United Kingdom and Germany, and it's going to be in the U S very shortly too, if not already.
    • Yeah. And so that's one product to watch out for. The user interface is super simple. They're going for, again, that newer audience, newer, younger, higher to figure out because let's face it, estimators are like unicorns, right? Oh my gosh. 
    • [00:14:11] Pat McGrew: Yeah. You've got you're going to have to do that.
    • And the other thing is that it's very automatable. 
    • [00:14:16] Ryan McAbee: Yeah. 
    • [00:14:16] Pat McGrew: And that, so it will handshake with other systems, and I think that's going to be another real selling point for them. 
    • [00:14:21] Ryan McAbee: Yeah, and they're going to continue to build that out going forward. GoMake was a very similar example. They're a new start up from Israel, so it's not, their name is not widely known yet.
    • No, not yet. But this interface is super clean I got a demonstration of it earlier today I think there's good things to come from that eventually as well. Yep, that 
    • [00:14:38] Pat McGrew: evolved out of a printing company. Yep. They wrote it for themselves started showing it to colleagues who were also in the print industry.
    • and realize that there might be a market for it. 
    • [00:14:46] Ryan McAbee: Yeah, and even the more established vendors like Fujifilm and Heidelberg, they're coming with more cloud based tools as well, because one of the things that we've heard from multiple vendors again at the show was that they finally woke up to what we knew and researched for years now, which was the fact that you as a printer have to deal with so many more number of jobs.
    • But the quantity of those jobs could be of one, or it could be of twenty five, or a hundred, or whatever. It's much lower quantities than what we traditionally had a decade or plus ago. And so they're coming out with what, touch free workflows, whatever kind of name you want to give to it. Yeah.
    • But it's all basically the concept of, let me take in these jobs in a very efficient manner, however they're coming in, FTP, online, whatever. Let me then hold them and batch them according to business rules. And then let me figure out of the fleet of equipment that I have digital and offset or any other analog technology.
    • Let me figure out the best way to actually get those printed off and ganging them together or combining the jobs. To get that work done. So that was neat and, 
    • [00:15:44] Pat McGrew: and there are a lot of different approaches to batching. What I've learned as walking through the halls, there are hardware approaches, there are software approaches.
    • The thing to know is that the most efficient print shops are the ones that can batch like jobs together instead of having to. Change roles or change palace out over and over again, going back and forth, keep like stuff together, like finishing batch together makes you much more efficient.
    • And at the end of the day, it does impact your bottom line. 
    • [00:16:10] Ryan McAbee: Yeah, absolutely. Before I got here, I was really thinking we would See AI everywhere that it would really be at the forefront of what every vendor was talking about. And it's not that it's not here. You just had to look very ask 
    • [00:16:25] Pat McGrew: questions.
    • [00:16:26] Ryan McAbee: You have to ask questions. It's not obvious. And to be in all fairness, there's multiple forms of artificial intelligence, right? The industry has definitely got baked into the machine learning aspect. Every hardware vendor, whether it's finishing or the printing side, they're collecting all that massive amount of data that their machines, I forget, I heard one vendor say a stat on how many sensors are there in a machine.
    • Oh, there can be tens of thousands, there can be tens of 
    • [00:16:48] Pat McGrew: thousands in some of the larger pieces of 
    • [00:16:51] Ryan McAbee: equipment. Yeah, absolutely. Every one of those is just feeding data back. And what they've now been able to do is not only present that through dashboards to the end user to know, what's my OE, what's my uptime, what's my maintenance replacement cycle supposed to be, is it coming up?
    • Is the part going to fail that sort of thing, but they're also using it internally to make the machines better themselves. So a lot of things are going on with vision technology. Look at the sheet and then automatically correct if there's like a nozzle problem, if it's inkjet. So I thought, we're using it.
    • It's just not in that generative AI aspect. There's some of that here. There is 
    • [00:17:25] Pat McGrew: some of it. There is some of it. But I think the thing to understand about artificial intelligence, machine learning, all of that, those aspects, is that this industry has used it for a long time. 
    • [00:17:36] Ryan McAbee: Yeah. 
    • [00:17:37] Pat McGrew: It's not new, but I 
    • [00:17:39] Ryan McAbee: didn't call it that.
    • Yeah. 
    • [00:17:40] Pat McGrew: We really didn't. And, things like rules based automation that, that are more led, those things have been around for a long time. What I have seen here is every once in a while you walk by a stand that has, AI enabled or AI, something and, they're putting that up there, not because They needed to say it, but because they think it'll get somebody to stop and talk to them.
    • Yeah. And there are ten other people around them that don't have AI on their sign, but probably have it in their programs and in their solutions. 
    • [00:18:10] Ryan McAbee: The one thing that maybe four years from now about the next drupa cycle, I'd really like to see the AI start to be applied to the business of, Problems of the printer themselves.
    • A lot more analysis around the data that's, typically bottled up in like a management system so that you can, think about how cool it would be that AI would let you know that, hey, your capacity is like 99 percent full for this next week. So when you have that request for the customer coming in saying, I need it tomorrow, let's do some value based pricing instead of just what your capacity is.
    • Covering your cost is so that I know that I can, I need to charge 50 percent more or whatever. But that's 
    • [00:18:47] Pat McGrew: got to be the next step because We've spent a few years now trying to gather all this data. We're gathering more data than we can really process. So we're going to start to need to be choosy about which pieces of data we're looking at and why and what kind of analysis we can get out of them to drive the business process.
    • So I absolutely agree with you. I haven't seen that as a top track yet, I haven't been in every hall. It might be out there somewhere. 
    • [00:19:15] Ryan McAbee: Yeah, it could be. It's a big venue. Final points here I think to wrap up with are, I'm still continue to be amazed at the application diversity and what we've been able to do as an industry with inkjet technology.
    • [00:19:30] Pat McGrew: Some really cool things that I've seen in inkjet technology. I was over in the Fuji stand yesterday, you were there as well. They have one whole table that is, Samples that have been printed with inkjet including 3D. So it's another thing we saw here. In 2016, we weren't quite sure how to feel about 3D.
    • Was it really printing? Was it, additive manufacturing? Additive manufacturing? But at the end of the day, the technology that drives it is the same head technology that drives intent printing. So we are seeing a lot of the vendors showing their 3D solutions here. So Fujifilm was certainly showing theirs.
    • And it's just so fascinating to look at. But they were also doing printed electronics. They were doing all sorts of interesting things where just the ink, the way they develop the inks is impacting how the ink lays on the substrate. It's the stuff that gives you, if you've ever had a can of beer that turns blue when it's the right temperature to drink they were showing how all of that works.
    • I think that we'll continue to see a lot of innovation in Inkjet. We spoke with Palmer Gavi from NXSCA a couple of mornings ago, and he's been a leader in Inkjet technology. And he, I asked him what the future was, and he said, It's just bigger, we're just gonna keep on getting bigger, getting better, getting faster, and getting more sustainable so that we can ensure the future.
    • I think that, I'm very excited about where inkjet technology is going. Which is not to say that toner technology isn't changing too, because it is as well. There have been so many innovations with neon colors, and now even doing the white toners to enhance the color toners. Four years, I think it's going to be a lot of fun.
    • [00:21:13] Ryan McAbee: Yeah, I think that's a great place to end this quarterly update from the halls of drupa. Thanks for joining us. From the DNA 
    • [00:21:19] Pat McGrew: stage. From the DNA stage. 
    • [00:21:21] Ryan McAbee: What's next here? Yeah. And we're going to sign out and hope to see you on the next episode here at the Print University.

79- 2024 Q3 MARKET UPDATE

In this market update we discuss recent announcements from industry vendors related to equipment, embellishments, and AI-driven software.

  • VIDEO TRANSCRIPTION

    • [00:00:00] Ryan McAbee: Hello, and welcome to the latest episode of The Print Univeristy. You might notice we're actually physically together. Yeah, we are. Yeah, this happens about every trade show event, right? Yeah, that's what brings us together. The same point. So we're here in lovely Las Vegas where it's 104. At least when we first got here.
    • So the heat is on, the heat is on in the event space here is everybody's bringing their newest technologies from the equipment side from the software side. And that's what we're going to basically unpack today. So I have, of course, my good friend and colleague, Pat McGrew. Pat, lead us off with a little bit of the insights from the equipment side and the vendors and what they were doing here.
    • [00:00:49] Pat McGrew: So this show is not a big equipment show because it comes so close after Drupa. For a lot of the short and it's a short show. It's a two and a half day show, but we did see equipment here. And so one thing that we saw more of this time than I think we've seen in previous editions of the show is inserters.
    • And if you start to think about mail finishing equipment, it's not sexy. It is absolutely needed. And the innovations that companies like Bluecrest and Kern and Bowe are bringing to the table around inserting equipment. are really interesting because they're becoming more automated, they're becoming smarter, and they're able to share data.
    • And that is becoming the essential element of every workflow. So it's really nice to see inserting equipment actually being given some respect here. 
    • [00:01:38] Ryan McAbee: Yeah, a little bit into the limelight, the Vegas, the globe, the Vegas, the air, right? Yeah. Something like that. And of course, outside of the milling aspect with the inserters the other equipment that we saw here, because it is the convergence story still in terms of we have a whole hall dedicated to wide format, what was going on there and DTG and textiles and all that fun stuff.
    • And so it's 
    • [00:01:58] Pat McGrew: becoming so, and that's all becoming so automated too. Right now if you've been scared of that area, maybe you thought it was just too complex to get into, there are solutions on the floor to make it at every price point 
    • [00:02:11] Ryan McAbee: at every capability level for every size of shopper entity that's looking for it, right?
    • Yeah. 
    • [00:02:15] Pat McGrew: And Mimaki is one that always impresses me. They're here. They brought some brand new equipment that is really targeted to the folks who are trying to get into that space, but don't really have a lot of expertise in it. They need to crawl, walk, run their way into it.
    • They've got some great crawl entries that are reasonably priced options. And will pretty much teach you to be a good printer just by how they operate. 
    • [00:02:43] Ryan McAbee: And I love the past couple of shows that I've passed by them. They, they really show the great example sets that you probably have used on print sample TV.
    • I have. 
    • [00:02:52] Pat McGrew: And we noticed cause at Drupa, they had hired a bunch of artists. to actually create net new artwork for them to print and show. And they did a lot of that for this show as well. And so when I think of if I was going to try and get into the business and start up something in my garage, that's certainly equipment I would take a look at because it is got that user ease of use thing going to it.
    • [00:03:14] Ryan McAbee: Now, correct me if I'm wrong. I don't think we had inkjet fully on display in the wide format kind of area. I don't. I don't remember seeing any on the more commercial graphic arts because again, it's a bigger equipment. It takes a lot to get it here and set up and so forth, but there was some still interesting things in the toner arena, right?
    • [00:03:31] Pat McGrew: And there is actually like an inkjet device in one of the stands that's just not running and there is some inkjet equipment in the screen. Stan. And they're doing some, I'm doing a lot of virtual reality. A lot of the vendors have bought into virtual reality as a way to show you what they can do.
    • Some of them are doing it for demos where they've got demos going live back in their customer demo center. And they've got the headsets so that you can take part in them there. So I think of this show, again, because it's so short, is so hard to bring a lot of inkjet equipment, but RISO brought some equipment and, if you're looking for additional equipment to be your reprint kind of environment, RISO's great.
    • They also do some great things. production, right? So there are a lot of companies as 
    • [00:04:18] Ryan McAbee: well as another one 
    • [00:04:20] Pat McGrew: where they like if you're as your business grows because of the price point of the machines, it's easy to add another one to your network and another one to your network. So it changes the way you approach your workflow, changes the way you approach just your production in general.
    • But that's all really great stuff. stuff. And the Kyocera, the Taskalfa we saw, at Drupa as well. And there are some amazingly good case studies around that equipment for all sorts of things. My favorite one is still the Slovenian education testing booklet, which is highly personalized.
    • It's really great. But here, this, because again, it's a short show, like we don't see an RMGT here. We don't see, 
    • [00:04:58] Ryan McAbee: not in terms of bringing, they 
    • [00:05:00] Pat McGrew: didn't actually. Physically GRAFCO didn't physically bring one, but they had two big sales they announced today, so they're happy too. 
    • [00:05:08] Ryan McAbee: I think the trend line is that toner is still expanding into and getting better.
    • So it's a little bit more speed, a little more substrate versatility, a little more unique applications that you can do on it. And it's also definitely in that CMYK+ or embellishment kind of, 
    • [00:05:22] Pat McGrew: You see that. You Xerox with the Iridesse, you see it at Fujifilm with the Revoria, Canon and Ricoh both have solutions as well that are definitely worth looking at. I think that one of the things you have to think about as you're looking at equipment, certainly at a show there's a lot of shiny objects. And it's easy to get wowed by a really cool talk track and some really great print samples. You always have to take a couple of steps back and think about what do I need?
    • Yeah, because we've seen too many pieces of heavy equipment returned because it turned out it wasn't a fit for business. 
    • [00:05:55] Ryan McAbee: Yeah. And also in regards to the one of the things that we found interesting was there's a focus of embellishment again at this event and the vendors that we already mentioned. But we were doing an educational panel and there were probably 50 plus people in the room and we said, okay who was looking at embellishments and not a single hand went up. So there's still a gap there in terms of marketing education. Yeah. Vendors doing the education, us, people like us doing the education and also how you can use it to get higher probability on the work that you do and where those use cases really fit with your kind of customers. 
    • [00:06:26] Pat McGrew: There was a data point I picked up today from our friend Eric Vessels from Taktiful right now use the CXO there and he said that they have the data that shows that when pieces are embellished Because they're tactical because you feel them, people engage with the piece for 30 percent longer and they are even a higher percentage more likely to actually buy from it.
    • So if it's a catalog, if it's a direct mail piece, when you get their attention and they hold onto it for a long time, that is one of the things that absolutely can change the nature of the relationship between the brand and the buyer. 
    • [00:07:09] Ryan McAbee: I'm smiling because this sample set of one does that. 
    • [00:07:12] Pat McGrew: Absolutely, I do too.
    • [00:07:14] Ryan McAbee: So moving on into more of the software workflow arena I was really super happy yesterday because I stumbled upon, after you had mentioned it the Fiery booth. Fiery is pretty prolific because they make the digital front ends to the printing equipment that you may have in your shop.
    • And what I was happy about is that the story I thought we would have seen started at Drupa that I didn't find there, I found it here. And that's really they're looking at how to use the generative AI technology, not to create stuff, but to actually apply it to a usefulness, for your production workflow.
    • And so one example is that they are working on something that won't release until next year, but working on something where it will interrogate the file and a little bit of the data around the file that submitted, and it can automatically with a high degree of certainty, match it up with a preset workflow that's already been created at the Fiery. So your operators are freed up from having to make that decision. And it will also simplify the language that's presented back to the operator when it has an error in the file. Or when it says there's a mismatch between what the file actual size is versus what we thought we were making.
    • So those are really encouraging. 
    • [00:08:25] Pat McGrew: Some of my 
    • favorite error messages. 
    • Error 00032, code 57. 
    • [00:08:31] Ryan McAbee: Yeah. 
    • [00:08:31] Pat McGrew: Thank you. 
    • [00:08:32] Ryan McAbee: Yeah, so it's making more, it's ironic. We're using super advanced technology to make it more human. 
    • [00:08:37] Pat McGrew: We are. We are. But that's what you do. And we've seen more AI. then that's really been exposed out, then I think we even to some extent solid Drupal.
    • Yes. Our friends at Markzware who are the FlightCheck people, you probably know their product. So they've been back at the shop, the elves have been working. They've done a very similar thing where they are applying GPT technology to the, to a couple of different areas of the Markzware universe.
    • So one, they're coming out with a whole series of APIs that'll allow you to pick and choose how you use the different Markzware pieces in your workflow, especially if like you're a Switch workflow, which is one of the ones that they're showing. And then also they've got a piece that's AI for publishers to help you detect AI generated content.
    • And so while a printer that might not be high on your list, If you're a publisher, a content publisher, it's good if something's coming at you from a writer, you, maybe you don't know them, you're reading it, this tool can detect whether it came through AI channels, and I think that's just one of those things, that it's a risk mitigation piece, that for me, I could see being required in every automated workflow, not only, getting it optimized for print or for eDelivery, but How much of this content is actually legal for me to print and use?
    • [00:10:02] Ryan McAbee: That's the key point, because we've already encouraged everybody at The Printing University to look at their policies around how they're handling the generative AI content, right? Because they're the reproducer of it, so you should have something in your policy that your customer signs off to say, this is what's going on.
    • But there's a tool now to be able to check for that and validate to see if it was. So that's a great thing. The other thing though, is that, that Markzware did, and it's a fact of life for anybody that's working in print, there's so many different tools. Platforms and tools that are generating PDFs these days of all quality types, right?
    • Oh, yeah, and one of our favorite that we use every day is Canva, but Canva is really it wasn't designed for print originally, so they've got some pretty creative thing that they've done with that. 
    • [00:10:43] Pat McGrew: They do. So they've got a Canva plug in that is Markzware into Canva and it is designed to help you produce printable Canva output.
    • And I just love their approach to it. So they're Canva users, we're Canva users, so they were basically solving a problem for themselves. And now they've got something that they're bringing to the industry to help everyone solve that problem, which I really thought was a very cool way of going forward.
    • [00:11:11] Ryan McAbee: Yeah, and the PDF optimization, as we call it, kind of story that's becoming more a tool or something that you need in your workflow to be able to automate it because it will automatically, fix up these various PDF files that are of lower print quality so that you can actually run them without hitting and hitting an issue when it's actually at the printer and you're noticing.
    • Oh, this is darn. Yeah, 
    • [00:11:32] Pat McGrew: And our friends from Solimar here as well. And they are in a couple of the stands here. RISO and Screen. And of course, they're ReadypDF product is designed to do that same kind of optimization. And for anybody who prints like secure work. The other thing that I love about ReadyPDF is that audit report that it produces.
    • And I think that brings a lot of value to the story. So here we're seeing a lot of Switch workflow being used in a collaborative way. So it was fun walking around and knowing that this stand here, they're all working together to create samples that you can take home.
    • I am the personal recipient of baseball cards with my face on them. I'm probably the only one who wants that. But it is a Switch Workflow using XMPie Personalia, and then it goes into a Switch Workflow. They're using Trello for the dashboard, and then printing on one of the Canon devices and then being cut with an Eclipse cutter.
    • And you can walk away in three minutes from their stand with this. And it's, it's a workflow story and you get to see it work, which should then give you some ideas of how it can actually maybe work in your shop. But then we saw Xerox doing the same thing with Duplo. It's been really interesting to watch some of the collaborations here.
    • And I think we'll see more and more of that as we see more shows over the next few years. 
    • [00:12:52] Ryan McAbee: Yeah. When we were back in Germany at the last quarterly update that was one of the things that you hit on is like the partnerships and collaborations were just all over the place. And we've continued to see that here.
    • And Enfocus probably was the poster child, because I think they were putting out a press release every single day saying a new partner 
    • [00:13:06] Pat McGrew: To the, Enfocus Switch app store. And then the other one, we talked to our friend Tom Peire from FourPees who was also here. He's an integrator. He's got a product called Atomyx, which is Sort of a superseding workflow architecture, is a way to put it. They were part of a collaboration with HP doing printing which was actually done off site, but then rolls from their Advantage 2200 were brought here to the show and finished in the Standard finishing system. stand on their Hunkeler. And it turned out a magazine, which is the FourPees React Magazine, which is a very similar to a solution that was shown at drupa, but it's all updated with new covers and new stuff.
    • So it's nice to see companies working together because if you're a printer and you're trying to figure out what to do, an individual piece of equipment is probably not the thing that's going to help you the most. You're going to need an environment and you're going to need the workflow to drive it.
    • And that's one of the things I think finally this year, we've actually seen the workflows in action. 
    • [00:14:06] Ryan McAbee: To everyone watching this, the real benefit for you is not just the two companies are partnering together. It's the fact that they've taken the hard work upfront to make sure their solutions can work together and not have to do that with some kind of bespoke programming or very costly type of integration.
    • They've already made it more turnkey for you. If you have both of their solutions. So that's the upside. 
    • [00:14:26] Pat McGrew: Yeah. So I think we've, it's been an exciting show. 
    • [00:14:28] Ryan McAbee: It's been a good two, two and a half days as we're sitting, 
    • [00:14:31] Pat McGrew: or three days, whatever. It's been good. And I think everybody, the thing about a trade show is it's not always, if you're a vendor, it's not always about the lead generation.
    • It's about maintaining customer relationships. So we've seen a lot of that going on here. 
    • [00:14:44] Ryan McAbee: Yeah. 
    • [00:14:44] Pat McGrew: A lot of hugging. 
    • [00:14:45] Ryan McAbee: That's right. That's right. A lot of walking. A lot of walking. 
    • [00:14:47] Pat McGrew: And a lot of walking. 
    • [00:14:48] Ryan McAbee: I think that's a good place to end. As always, if you ever have any questions, just drop us a note.
    • Until next time, thank you for joining us on this episode of The Pratt University Review.

82- Year End Review and Predictions for 2025

We recap notable moments from the past year and point to AI and sustainability as issues to pay attention to in 2025.

  • VIDEO TRANSCRIPTION

    • 82 End of Year Review
    • [00:00:00] Ryan McAbee: Hello, and welcome to another episode of the print university. So Pat, guess what? It has been 12 months already and we're staring at the end of 2024. Can you believe it's gone by this fast? 
    • [00:00:14] Pat McGrew: It's hard to believe that we are sitting here recording at the end of the year. Cause I remember the beginning of the year really clearly.
    • The middle is a little bit of a blur. 
    • [00:00:25] Ryan McAbee: Yeah, yeah, it can happen that way. So we're going to, in this episode, we're going to take a look in the rear view mirror of, of some things that we noticed going on in 2024, and then we're going to look in our, to our crystal ball and see what, to talk about two trends that we think will continue to rise in importance and, and kind of change as we go into 2025, so let's start with the rear view, what, uh, was significant for you.
    • That you found as we went through 2024. 
    • [00:00:55] Pat McGrew: It felt like everyone woke up and I don't know if that was the, the Drupa aura that, that sort of surrounded the year as we had Drupa in the middle of the year, or if it was just that we finally shook off the COVID pandemic doldrums, I think that the last several years.
    • You know, it has been very hard to get anyone to put a stake in the ground to say we've recovered that everything was full steam ahead. As we started 2024, it really started to feel like the, the hardware vendors, the software vendors, the services providers had. Finally, woken up and said, you know, we've got really cool technology.
    • Let's get this stuff to market. And the other thing is that printers who had been holding back a little bit trying to decide whether to invest in technology similar to what they already had, or whether it was time to You know, take some detours or some left or right turns into maybe new segment areas, new styles of finishing, new styles of, of delivery, they all started to get out their shopping lists and look at their budgets to figure out what to spend.
    • So over the course of a year, we saw a lot of announcements, both hardware on the hardware side, feature function updates, as well as new hardware introduced a lot of software, a lot of mergers and acquisitions, and a lot of I think Vicki Stroll said it at, at Drupa, the printing industry knows how to pivot.
    • It has done it over and over and over again since the 1400s. Right. I mean, it's not a new thing. So this definitely, I feel like 2024 was the year that the pivot was starting to really take effect. And we saw everybody putting their, you know, their best suit on and coming to market and just shining up all the best new offerings.
    • [00:02:57] Ryan McAbee: From my perspective, a couple of things on the M& A side, one that happened a few months ago that I thought was very interesting was the acquisition of Fiery by Epson. And we think that it'll kind of be business as usual for quite some time with anybody that that's associated with Fiery. But it'll be interesting to see how that progresses and how they kind of help.
    • I think that it'll help spur even more innovation. Innovation and maybe a faster pace of development on that side, particularly for, for markets that aren't necessarily their core already. So that'd be very interesting to watch. One thing also from the FHIR group that I was very impressed with, uh, cause I know artificial intelligence is a topic that we're going to talk about for 2025.
    • But at Printing United this year, they were showing off some of the things that they're going to release in January, I believe, five, that Which have to deal with using artificial intelligence in a couple of ways. One was to, to kind of streamline the onboarding process of a job. So when the customer makes a request, it kind of goes in, interprets the language and figures out how to create a ticket from that perspective.
    • And then the other way they were using it was around variable data to, to kind of help structure the data a little bit better coming in, but also using the engines to create the creative content side of that based on the variables that it was given. So that thought that was kind of neat. 
    • [00:04:18] Pat McGrew: Fiery is an interesting case where, you know, it was technology that was embedded for so long and just assumed to be part of it, of the EFI of environment originally.
    • And then, as EFI was sort of segregated out, you know, EPS, E Productivity Software took all the software. EFI is, is now, you know, the home of Nozomi and the 16 H's. Uh, Fiery was one of those places where, uh, I kept feeling there wasn't a lot of investment being made. So they were sort of rolled out as their own independent entity.
    • And I think in that, in that structure, it was harder for them to find the investment capital to do the things they knew they wanted to do. So Epson brings that to them. And it, it appears that. Epson isn't looking to capture all that technology and bring it inside and use it only for themselves. They do expect Fiery to continue to grow and bring its technology to the various markets it serves.
    • So I'm excited for the Fiery team. I think they're looking forward to having some investment capital. And in addition to those things that you mentioned, Ryan, the other thing they did is packaged up a lot of their OEM tools. So they've created something called Impress. So if you're in that space where you create bespoke printing solutions, you're in industrial printing, you're in one of those areas where microservices and tools are a way that you build your offering, they've created some really nice packages under the Impress.
    • label for Fiery that I, I really was quite taken with. 
    • [00:05:55] Ryan McAbee: Was there any other kind of hardware equipment kind of side of announcements that really caught your eye this year? I mean, I know we were both at, with Canon a little bit ahead of Drupa. That was pretty impressive when, from their inkjet technology kind of roadmap and perspective.
    • We've seen a lot of gains across vendors in that, in that particular segment as everybody's figuring out inkjet and inkjet for cut sheet. Anything that stood out past year? 
    • [00:06:19] Pat McGrew: You know, the, the Canon iV7, which is their new sort of super B2 press that should come out next year. It's interesting. It's going to be interesting.
    • They're going to co market that with Heidelberg, along with other inkjet solutions that Heidelberg's also going to market from the Canon family. That's certainly interesting. You know, the Ricoh VC80000 is now touted as really a commercial press this time. And, and I think that's It's interesting because of the substrate range and the ink stickiness that, that they're working with.
    • I think, you know, HP's done a lot of work to upgrade the A 2200 that they announced last year, so it's been interesting to watch those icons brought some interesting solutions to market Fujifilm with the, the new Revorias. I think there's been a lot of of interesting stuff there. We're watching them now come into the US with their production inkjet, but what caught my heart?
    • Is all the work in industrial inkjet. So I I'm, I'm sort of an inkjet nerd and I, I watch all the different ways that jetting stuff gets used. And when I worked at Kodak, I was always probably more impressed by jetting ink on diapers and Pringles than I was jetting it on to paper for credit card statements.
    • You know, I just, because that just looked, it was cool to watch jetting go up. One of the things we've watched is all the major inkjet manufacturers put money into their industrial solution sets. So, HG Film with their Samba presses, or Samba inkjet heads, Ricoh with their new heads. And in fact, their VC80, 000 is all Ricoh heads.
    • That's a sea change for them. Um, Watching, you know, an Epson with his key is Sarah with some of their new solutions there. There is an awful lot of work on the industrial side of inkjet. And I think that's important for any commercial printer to keep an eye on because. There will be times as our markets get more and more competitive that you might be able to build a competitive solution that allows you to do things that your competitors can't by adding an industrial head to the end of your press, to your finishing line, to your binding line, to allow you to do things no one else can, and all of these manufacturers are building kits To make it really, really easy for you to adopt that technology and put it in play in an existing print production line.
    • So, to me, 2025, 2026, heading into 27, into the next group in 28, I'm going to be watching those industrial printheads real carefully. 
    • [00:09:09] Ryan McAbee: That makes a lot of sense because whatever happens in the industrial printhead space eventually flows throughout the ecosystem of the printing equipment, and, and those gains are really what allow us to advance and expand our application set and what a print provider can actually produce and sell in the end.
    • [00:09:26] Pat McGrew: And I think the inkjet production presses are going to have to start thinking beyond CYMK. It's been comfortable for them. It's technology everybody understands, but on the label side, inkjet label side, we're already seeing six and eight color presses and more. So eventually, if you really want to be competitive with production inkjet in the commercial space, How could you not be looking at adding 5th, 6th, 7th, 8th colors and, and doing those extended gamut range things that commercial printers have always been able to do on their offset and flexo sides.
    • [00:10:08] Ryan McAbee: Yeah. Something to keep an eye on, definitely going into 2025. And so let's go into our crystal ball now of what we think is going to really, uh, impact the coming year. We've already seen the public's, uh, attention really captured by everything, artificial intelligence, because it's, it's really one of those things that was being driven on the consumer end almost before it was driven, found itself into the business realm, which happens a lot actually with technology.
    • But I think what. I saw was that every single printer that we came across this year was trying to figure out how to best use, use it in their environment. And, and, and what were the use cases that really moved the needle for them? So what was some interesting kind of scenarios that you've saw and heard about this year?
    • [00:10:57] Pat McGrew: You know, AI, when we were going to Drupa, you and I were talking and I was saying, I really expected to see AI everywhere. I expected to see a lot of signs, and we didn't. No, we didn't. It was there. It was sort of tucked under things, right? There were a lot of AMRs. There were a lot of robots and co bots being shown that definitely were part of automated workflows, uh, you know, automated, uh, moving, you know, changing dies out of, of die cutters, moving plates around, moving paper around, uh, filling mail bins.
    • I mean, we, we saw it everywhere. We didn't see it on the signage quite the way we expected or that it really being lifted as as being under the covers. And I think that some of that is that engineering companies, right? So hardware companies are typically engineering companies by culture and for them, it's old hat.
    • Right. I mean, they've been leveraging machine learning and, and that style of AI for, for well over a decade, if not two decades, three decades. So to them, it's like, oh, you finally caught up with us. Yeah, we've been doing this for a while. It wasn't really new to them. But in terms of, of how a printer can see it manifested, um, it's definitely making the machines easier to use.
    • It's adding efficiencies to the pre press space. It's adding a lot of ease of, you know, interactions are easier. I think it's, uh, being leveraged for things like doing better predictive maintenance, smarter predictive maintenance. So instead of just a. Clock that's going off. Oh, every 30 days. We have to change this every 45 days.
    • We have to do this. The preventive maintenance routines are now leveraging the data from the machine to say, oh, actually, you don't need to do that. Every 30 days. You are actually fine to go 60 or 90 days. And the net benefit to a printer is that they're not paying for replacement parts that they maybe didn't even need to replace.
    • But the other thing is that it'll warn them ahead of time if something's about to go out that might not have been expected. And so, that's one of the places we're seeing AI really be leveraged, and I think that's smart. On the other side of AI, where you start to look at it in terms of workflow automation and, and design automation and variable data automation, um, you know, file cleanup, all of those things.
    • Um, I think we saw a lot of that on display at Drupa and certainly at Printing United as well. Again, without signage that said, Hey, come see us. We've got AI. It could be fair. A lot of it was kind of. 
    • [00:13:41] Ryan McAbee: And to be fair, a lot of it was kind of pitched as a technology demonstrations, which happens a lot at Drupal, right?
    • They're basically saying, look, we're working on this. It will come out at a, at a future point in time. 
    • [00:13:52] Pat McGrew: There was, and I think that one of the things that as printers we should all expect is that the vendors that we work with should have a story to tell us. At this moment in time, if you have not had a quarterly business review with your primary vendors in your shop, Your hardware vendors, your software vendors, your services, vendors, your cybersecurity vendors, everybody that you do business with.
    • A question you should be asking in those quarterly business reviews is, does this stuff, does my last update have AI embedded it into, I have access to AI tools you haven't told me about, or do you have AI tool AI based tools coming? If you do, how can I leverage them? How can I work with them? What's the benefit they are going to bring to me.
    • And if you're not working with AI in your infrastructure, can you explain why not? And how am I going to get efficiencies that maybe my competitors are getting because they have access to those tools? 
    • [00:14:58] Ryan McAbee: And I think with artificial intelligence, the piece that's the newer piece that everybody's still figuring out largely is that how to leverage these large language models, like a chat GPT type engine.
    • And there's many others out there, obviously, to, to, to be able to automate the things that we were hoping to see, um, happen even more this year. But I think that will ramp going into 2025. I did come across something, uh, so on a, on a more end user level, like You using ChatGPT or one of those engines inside of a printing environment or just for your own purposes.
    • I've followed for years and years now, a gentleman named Christopher Penn. He kind of sits at the intersection of technology and marketing, and he, he created a kind of useful acronym, I think, for how to deal with the, uh, engines and interact with them. And it's called, it's, uh, the acronym is REPEL. And so I'll just run through real quickly what each, each letter stands for.
    • So roll, um, basically tell the engine who, who you are, you know, and be specific. So tell them that, you know, you are a designer in a print shop and got to audit whoever you are, what you're doing. The next one is action. What is the task that you're actually asking the engine or the model to do for you?
    • And then the next one is prime. You want to ask the model, and this is one that I often miss or don't do, but it's asked the model what it knows about that topic. Which I thought was an interesting twist and then, and then wait for it to respond. And then you're going to actually start then with the prompt.
    • So the next P and repel is prompt, right? The prompt for the task. And we're going to talk about prompt engines and resources for that in just a little bit. And then the E and repel is evaluate, evaluate what the model then looks like. Responded with what the results were and then talk to it and request any changes that you'd still need.
    • And then the last piece that I often forget to, or haven't done much is learn. And that's asked the model to actually encode the process. So it's repeatable down the road for you. So I thought that was a very useful kind of structure. 
    • [00:17:05] Pat McGrew: That is excellent that I always start with the role. That's when I got that off of one of the LinkedIn classes I took on prompts and I start every one of my prompts within your role as.
    • And because, I mean, we do a lot of different things, right? We're, we're, sometimes we're analysts, sometimes we're researchers, sometimes we're writers, sometimes we're all sorts of things. So I, if I'm looking for something specific, I, I give it my role. I like that approach though. That's really useful.
    • That's practical advice for everybody. 
    • [00:17:38] Ryan McAbee: Yeah, I thought, I thought it was pretty handy. So I wanted to share it on here. So let's switch from artificial intelligence more to sustainability because we're seeing, you know, kind of legislation, best practices continue to evolve. It's not a new topic. I mean, we've been talking about this in the industry for decades as well, but I think it's creating a little bit more importance as we go forward and certainly there's.
    • There's glimpses of things that happen in Europe that usually proceed what eventually makes their way over to the U S market. So what, what are a couple of sustainability things that every print shop probably has heard of in the past with, in terms of certifications and things like that? 
    • [00:18:15] Pat McGrew: So I think most print shops, no matter where you are in the spectrum, whether you're, you know, principally working in transaction or direct mail, or if you're commercial wide format, label banner, whatever you're doing, um, you probably know about the, the forestry stewardship council, FSC, and you're aware of how they rate, uh, the, uh, certifications.
    • Hey, ensure that products are, uh, grown, you know, come from responsibly managed. Uh, they, they come with a lot of bonafides that, that help you prove to your clients that, that you're buying sustainably. And, and that's something that it's always worth keeping an eye on. Um, it provides you a chain of custody.
    • And if you're only working with small local brands, they might not be asking you, but eventually they might have to, depending on how legislation goes. If you're working with any. Excuse me. It's the program for the endorsement of forest certification. It's another one of the certifications that promote sustainable forest management.
    • It's primarily found in Europe. But again, if you're if you're following FSc and you are working with a European customer, you might need to click over to their guidelines, which you will find are very, very similar to FSCs and be able to provide that certification as well. Remember that your substrate vendors can typically provide all this information to you, but you just need to ask and, and it's on you to ask.
    • They might not immediately offer, but that that's where you go. In addition to PEFC, you might want to know about the sustainable forestry initiative. Again, it's another one. This one is primarily in, in North America. Again, if you're doing FFC, then SFI is not going to be a hard one for you to figure out.
    • It is again, promoting sustainable forest management. What you may find is depending on which part of the market you serve, Your clients are asking for either FSC or SFI because they, they kind of, they have their constituencies. And they'll, it's not hard if you're doing one, you'll get the other here again, your substrate providers can help you out with that.
    • The thing that you should be watching for, though, is that the, the different, um, the differences in the programs. And 1 of the things that that. We know is that they're all just slightly different. So having that conversation with your vendors and your customers to find out what's most important to them helps you figure out what little certification sticker you might need to put on an RFP that you're responding to or what might be nice to have on your website if you're dealing with certain kinds of clientele.
    • So that's always good. Another one to kind of keep an eye on is ISO 14, 001. A lot of you know it. A lot of you are already participating it. It's got enough focus on on environmental management. If you're doing any of the ISO certifications, it kind of gets bundled in. But again, you may have clients for whom that's very important.
    • Typically enterprise clients. Care about the ISO certifications and the commercial brand clients care about the other ones. So that's just something to be aware of the last one that I would suggest you kind of get smart about quickly if you can is something that hasn't hit the U. S. Yet. But again, depending on what segments you serve, it may become very important to you.
    • It's called extended producer responsibility. An extended producer responsibility is, it's not really arrived here yet, but what it is, is that carbon footprint calculation. It is, it basically says that you as the manufacturer of the print product, Right, so not the substrate sense, but you as the one making a printed product are responsible for the entire life cycle of that product.
    • So it has elements of FSI, uh, PEFC, SFI in it. But it actually requires in Europe for printers to calculate the carbon footprint of the entire piece, including building, environment, press, solvent, waste, everything. And it's big. It is daunting to do. The good news is there are some vendors out there who have developed some specialization in that one that we saw at Drupal carbon carbon quota now becoming everybody's best friend.
    • I was laughing because I've met them now at every show I've been at since Drupal because once. The hardware and software vendors became aware that they have already done this work and have it in their back pocket. It's very easy to bolt into existing automated workflows and make it part of an estimation and quote that are provided.
    • So they, they're somebody that I keep an eye on, but this is going to become an interesting conversation because right now it's part of what they call the circular economy action plan in Europe. And that's going to be a big thing over there. If you do business with Europe, you're going to get sucked into it.
    • If you could do business with Canada, you're going to get sucked into it. Cause they'll get sucked into it faster than, than we will in the U S. But eventually we'll get sucked into it as well, because to participate in the global printing economy, you're going to need to be able to prove your carbon footprint of the work that you do.
    • So maybe not in 2025 or 26, but as we're approaching the next group in 2028, I expect it to still be part of the conversation and something that while it may not have made the legislation requirement yet in the U. S., it might become de facto because of how we all do business and how things move across national boundaries.
    • [00:24:35] Ryan McAbee: And, and with that, uh, extended producer responsibility that they've, uh, already gone down the path with in Europe, it, it, it, it really wants to shift kind of more of the responsibility to the producer side for that cradle to grave aspect and figuring out how to minimize and, and they also probably incentivize the producers with a carrot instead of the stick at this point to, to basically minimize the environmental impacts of, of whatever's being produced.
    • I guess, but there will be 
    • [00:25:04] Pat McGrew: fines. As, as we look out there, part of this circular economy action plan does include fines to producers who do not have the ability or just don't provide accurate. information in their reporting. 
    • [00:25:21] Ryan McAbee: Yeah. And do you think that we will notice that impact more in the packaging segments before we have filters through the rest of kind of the printing segments?
    • Or do you think it'll be equal? 
    • [00:25:32] Pat McGrew: I think that we'll see it in packaging first because they see that as low hanging fruit. If you think about, um, just the volume of substrate consumed in packaging, um, Annually. It's, you know, commercial print is a shadow, you know, of it. It's not even close. So it's where they're practicing.
    • If you want to think it that way, um, they're learning how to audit in that space. They're learning how to identify all the, the hidden costs and hidden environmental issues, not just, you know, solvent, wash up waste and pack in, you know, production waste from the fibers, printing waste, cutting waste. All of those things play into it.
    • And if you think about it in Europe, if you're a printer, you probably already have a venting system because it's a requirement in the U S if you're in packaging, you may not yet. So we'll, we'll start to see those things take hold and definitely become part of the landscape and impact prices. I mean, make no mistake that all of this impacts prices.
    • It then, as it, if you look at the EPR rules, It, it wanders into every form of print, L and P, you know, packaging, then label, folding carton, commercial print, transactional print, direct mail printing, you know, get nearly as much of volume of direct mail in Europe, um, traditionally as you get, um, print.
    • Certainly here in the U. S. and in Canada, but, um, it'll wander into all of those areas. And, uh, you just have to watch the timelines. Um, my go to for keeping an eye on these things is a website called Europa and Europa is the guide to. Every regulation in all of the EU and it's a massive site and it is maintained by the big consulting houses like PwC and Ernst Young and those guys.
    • Um, and it's where I go to keep an eye on everything from the Universal Postal Union to things like EPR and and all the coming sustainability initiatives. 
    • [00:27:56] Ryan McAbee: Yeah. Very, very good source. So that brings us to the end of this episode. We hope that you've all had a wonderful 2024 and looking forward to an even better 2025.
    • We will catch you next year.

Share by: