This is a transcipt of a recent Web-to-print Webinar presented by Wilson Zehr.
Good morning. My name is Wilson Zehr. Im the CEO of Cendix. Cendix is the leading provider of Web-to-print solutions that automate on-demand marketing campaigns and increase sales both online and offline. We also pioneered the concept of hybrid (digital to postal) mail for short-run direct mail almost ten years ago working with the United States Post Office (www.usps.com). Since that time we have delivered numerous Internet applications designed to drive print traffic from the Web. This class of application is now known as Web-to-print. This topic was not a real barn burner back when we started in 1999; mainly because no one really knew what it meant or what the real potential was; but it certainly has received a lot of attention lately. Web-to-print is the focus of our discussion this morning. What it is; what it isnt; how it works; and how we can leverage this process (and related technology) to create lucrative new business opportunities.
So, what is Web-to-print, is it an opportunity or a threat? This is a question that we hear a lot from our new and prospective clients. It seems like everyone in the industry is trying to answer this question. Well, the answer is yes. Web-to-print is both an opportunity and a threat. PrintingForLess.com, Modern Postcards, Vista Print, Express Copy here locally (Portland, OR), and many others are now large firms. The business that helped build these online firms is not coming just from new first-time print customers. The vast majority of this business was/is taken away from commercial printers just like you.
Well, what can we do? Barbeque one last brontosaurus and wait for the ice age to arrive? Rest assured, all hope is not lost. We have one key advantage that none of these mostly online firms can hope to match. You have a local presence and a personal relationship with the customer (or you should!). If you can match the power and convenience of your online competitors, all other things equal, why wouldnt a potential client just go with a local vendor who can give them personal attention? But, that is only the beginning, because that is just maintaining your existing customers. Once you are on the Internet with a compelling offering you can expand your sights and market to an even larger audience then you can reach now. So, you can secure your existing customer base, and take it right back to these online vendors to grow your business further.
Well tell you more about what it takes to do this. However, lets start out by taking a step back and looking at the overall printing industry that we operate within. As you know, this business is extremely capital intensive. Becoming a commercial printer requires a substantial investment in plant, equipment, systems, and people. This creates a profile with a relatively high fixed cost component. In other words, if we arent selling stuff, in some cases a lot of stuff, then we are losing money. There is no such thing as surviving by standing still in this industry. In addition, a lot of competitors have made similar investments. The barriers to entry, beyond the initial capital required, are relatively low. Anyone with the capital or the gear can hang out a shingle and start calling on clients. Plus, recent growth in many segments has been slow. This creates a situation where there are more sellers than buyers, excess capacity, and intense price-based competition. This is not a positive scenario when we need to count on those thinning margins to cover our fixed costs!
We also operate in an industry where production technology is evolving rapidly. Two decades ago we could buy a large offset press and build a business around it. In this day and age production technology becomes obsolete much faster. If you dont keep up then you can find yourself at a competitive disadvantage based on new features, pricing, or some combination of both. This includes new offerings like Web sites and online portals based on Web-to-print. Unlike the traditional hardware-based world this new frontier requires knowledge of software, servers, and online technologies. These are new skills for most commercial printers.
Finally, people have been talking about the paperless office for my whole career; paper is on the way out; soon everything will be digital. These folks really just need to get over it; print is NOT going away anytime soon -- certainly I dont expect that to happen in my lifetime. Not mail. Not print. Not direct mail. In fact, the last time I looked, direct mail was still growing strong on an annualized basis. With that said, other mediums are growing more rapidly and we need to figure out how to capitalize on the opportunity.
In terms of the Internet, it has become a ubiquitous communication mechanism. Its a way for us to reach a lot of people with less effort than ever before. Global penetration for the Internet is just short of 600 million users. If you look on a local basis, depending on the community, penetration ranges between 50-70% of households and majority of business customers; so in terms of being able to reach customers through the Internet, the potential has never been greater.
A key advantage of the Internet is that it is content rich its immediate its rich media. But on the negative side its also passive. People have to find you, you cant find them. Its disconnected from a lot of the things we do and thats one of the issues we will try and address here. Ive been working on different kinds of convergence opportunities since 1996 - over 10 years now. One of the things we realized early on about the Internet is that it has some of the advantages that I talked about; about being immediate, content rich, interactive and things like that; but one distinct disadvantage is that its not very connected to the legacy systems we all have come to depend on.
You see that we address convergence across a lot of different industries. One of the earliest companies, I worked on was a company called eFusion, where we worked on voice over IP (Internet Protocol) gateways and applications to provide convergence between the Internet and the public telephone network (PSTN). We see the same things happening now on a larger scale voice over IP is really standard fare. Other kinds of things are also happening with convergence like music downloads, iPods, broadcast TV and of course one of the largest communications mediums on the planet -- print communication and direct mail. Web-to-print has the potential to converge those as well.
We need to make sure that we get this one right, as everything else that follows hinges on it. There is a lot of misinformation about what Web-to-print is, and what it is not, that circulates around the industry, and I want to make sure that we clarify this before moving on:
Web-to-print is a process that bridges the gap between digital content online and commercial print production. This process is supported by software and tools that allow print buyers (consumers or businesses) to present documents or other printed materials digitally for production by commercial print providers.
Online tools for web-to-print can assist with digital asset management, customization, list management, scheduling, work flow, and end-to-end communication. There are a wide variety of web-to-print solutions available to solve an endless variety of customer, commercial printer and communication challenges.
So in the same vein, I helped rewrite the Wikipedia definition so that it would reflect this idea as well. The one key thing I would like everyone to take away from this definition is that web-to-print is not software; web-to-print is not a piece of equipment; web-to-print is a process. Its a process that connects the online to the offline and helps automate the flow of production.
There are lots of tools that can help in this regard not just one. Web-to-print is really the process. Lets explore that in more detail by looking at a couple of applications we have created in the past.
In terms of web-to-print applications we tend to look at a couple of different categories. One is consumer versus business applications. You can see these categories on the vertical axis of this matrix. Secondly, we can categorize the resulting communication as one-to-one or one-to-many. You can find these categories on the horizontal axis of this matrix.
The earliest application for us was called my Zairmail. This service was first rolled out in December 1999. It was an Internet application that allowed consumers to send free, advertising funded, personal letters. Lots of interest in this application - it took off rapidly. Over 10,000 subscribers in short order. But, of course, the dot.com bubble made capital a little harder to come by. So we did transition to Zairmail Express Direct in June 2000 and it was the first service to really automate short-run direct mail for small to medium business customers from the web. We jointly developed that capability with the United States Postal Service (USPS). The USPS calls this class of applications hybrid mail. This is a service that was extremely successful and remains so today. We have seen many millions of pieces of mail flow through the system at this point.
Some of these other applications - Im trying to pick out the earliest:
Speed Greetings was an application that would allow business customers to send out greetings cards to their clients to and send Greeting cards for large stock brokerages.
Green Dog eco friendly printing opportunity that is up and running.
Print to Zairmail was a desktop application which allowed business people to compose a letter, drop it in a folder and shoot it right into the mail and so letters were delivered automatically. Instant Letter was an application that we could put into a click stream so that somebody could For example is you were on a music site you could put a page up like send Britanny a letter and tell her how much you care.
Side: Laughter. Of course she was a little more popular then.
You get the idea: Theres a lot of different types of applications here - let me cover the last 2 here: Cendix is my company today where we do Web-to-print application and sales and marketing consulting basically our flagship product is something called a channel marketing portal where we actually allow orgs to post all their corporate approved logos templates for logo, trade shows, etc. then distributors, dealers and come to the site select those applications and route them for automated production and delivery. You see lots of different ways - When you talk about Web-to-print there is no one answer. Lots of ways to approach the topic. It depends on what problem you are trying to solve.
The next three slides I wanted to touch briefly on what Web-to-print is not. One thing that happens with a lot of technology and Web-to-print is no different if vendors see the topic heating up and everybody wants to latch on to it with their favorite product or cause or whatever it is their selling, and position it so that it solves that problem. I can think of lots of examples from technology over the years. But in this case we will touch on how we will concentrate on three I run into often.
Web-to-print is not print-on-demand: print-on-demand is an important idea and philosophy - the idea being rather than having a bunch of inventory or producing to some economic order quantity, we print what we exactly what we need when we need it - makes sense from a manufacturing standpoint not just in print but across the manufacturing industry. So that makes print-on-demand an important concept. But we can do Web-to-print whether we are doing traditional offset printing, digital printing, or print-on-demand.
Topic of Web-to-print does not require pod although print-on-demand is an interesting enabling technology. Another interesting corollary I am going to throw out here is that when I think of print upon demand is just not digital print either. The idea is printing whats needed when needed and we can do on any kind of equipment but some how weve managed to tie this term print-on-demand to digital print. I think for everyone out there with traditional equipment they can do print-on-demand the same at the same time.
Second one we hear a lot about is the term of PURL's: personal universal resource locators. The basic idea of a purl is it is a web address somebody can use to go a website or micro site so the idea is to put that purl on a piece of printed material whether it is a brochure or direct mail piece and somebody can come back to the website and give them an offer or capture their information or what have you.
A purl in itself is again an interesting technique but in fact it is not Web-to-print but opposite of Web-to-print it's more like Print-to-web. But we do use purl's in combination to create some other interesting applications. For example, Cendix has an application called closed loop direct mail - post a piece online and automatically assign a url or and pin # that info is put direct mail post a piece online and auto URL and pin number that information is put on direct mail piece back to website put in their pin and confirm their information and any additional information you may have like email address or phone number or something. And we can confirm and actually do fulfillment from there whether its a print fulfillment or can email a link to white paper. So it is interesting you can combine these different things but a purl on its own will not satisfy your need on its own for Web-to-print.
The third thing Web-to-print is not is the whole idea of job definition format. This is basically an electronic work order. It is a predefined or standard format that allows incoming jobs to collect information and take that information with it as it gets produced. To the extent that equipment and software within your production facility that understands JDF then things can caulk together and you can use that to help to automate the work flow. Unfortunately many people only have old equip does not have JDF we deal with a lot of customers who want to get there and we are Supportive of that but have yet to find a Customer who uses it to print with.
Good news while JDF is enabling tech you can do automation with or without JDF. and you can do Web-to-print with the automation today tools you have available today even without JDF.
Moving along: One of my favorite ads from an online service provider, Stamps.com - I wouldnt exactly call them a competitor, but I love this image. At any rate, one of the advantages of Web-to-print for your clients is the idea that you can provide this additional interactivity, place orders at their convenience, see the status of order, whole idea of saving item added convenience and adds extra Value to customers and something they really appreciate and in fact this day and age this day and age not only appreciate it they expect it and if you arent providing it you are behind the curve.
The second is Integrating into your client operations we talked earlier on about this is a commodity industry: lots of pricing competition and things like that but to the extent you can provide the solution to Integrate into your client fulfillment tracking eCommerce thing you make yourself more indispensable to their operation. Makes it harder for them to switch. We don't see people switching. We donts Lots of application we dont see people saving Save 10 cents individual price on a piece never comes up.
As time goes on I have 2 more slides where we talk more about that. We will come back to that. As we talked out before its an effective competitive response. We cant sit there printing for lesses in the world dominate this space. Especially our best clients are people we have relationships with it is important to response competitively. Again once we can embrace this make automated change we have reduced operating expenses. More loyal customers cultural relationship and good return on investment.
Next slide is one of those things they wont tell you if you talk to most of the vendors in the industry they wont tell you everyone wants to sell you something. Im going to tell you there is not without some pain first Web-to-print not free. It costs money: investment in software, systems, training, support, and operations. Now the way you look at the world will change that will require money investment in people and time and training.
Secondly, things are going to break. You are going to install new technology, you will find out processes you have today, arent fast enough. And systems that you have are not automated enough.
Systems should be integrated. Youve got staff that will resist change and in fact may even sabotage things because they dont want change. At the end of the day the pay off will be big but not without effort. The printing industry is not alone in that regards. We try to minimize change because that is how we make predictable, stable operations but of course to get to the next level need to introduce some instability and spend time fine tuning that to make it work.
There is a definite learning curve and lots of new stuff to embrace best to take a crawl, walk, run, kind of philosophy. Rather than ditch the old and start with the new. Better to pick a pilot project low impact have a chance to get experience, get confident and build from there of course how much we analyze this stuff we cannot anticipate every feature, issue or client thing that might come up. Because we want to avoid making mistakes it is easy to fall into a trap of analysis paralysis. No matter how thorough your analysis and you get a new application and real people are using it they will gonna try to do stuff you dont expect and they are going to want features they dont have and you have to get ready to respond to that. Not freak out, but respond in a calm fashion and make it work. This is part of status quo - part of the game.
So, in this example we look at direct mail. Direct mail is one level more complex than standard collateral or print order. Wanted to compare a print type scenario. Substitute local trucking, UPS, or FedEx where the US Postal Service is in this picture -- the idea is still the same.
Many of us are already moving past his process slightly because we using email to pass files, and websites to upload documents, but traditionally the idea of pushing a product out to the printer; having it marked u; blue line, going back, proofing; a few iterations of that. Going to a bonded Letter shop, document has to go there, a lot of iteration. Actually, statistics from the Direct Marketing Association state that on average it takes three weeks to get out door with a program like this. I can tell you have worked on stuff recently that was not automated and it took a lot longer than that.
However, if we go over to a more automated example and this is a revised work flow for a print-on-demand website where the customer will compose a document on their personal computer; upload the document and approve an online proof; upload their list or buy one directly online; the job is then routed to an automated printing and mailing facility for production and presentation to the United States Postal Service (USPS) for delivery.
This is the service Zairmail provides every day. Customers are given an in the mail commitment of 72 hours. Often it takes less time. When the service is really percolating it can average .9 days in the mail. You can see that to get from 3 weeks to .9 days is a tremendous savings for customer in terms of time and effort. But you can see it has implications internally for being able to automate our processes and make the entire flow really smoothly so we can meet customer expectations. Once a customer has operated in this environment you arent going to get them back into a traditional workflow. Customer expectations will be far to high. This is going to be sad news for any of your would-be competitors!
Going on to next example really meant to talk about diagram talk about idea of integrating in customer operations multiple industries, not just printing. Traditionally we have a vendor vendor would order print materials source, store inventory, give out when needed. More in tune with idea of ? Manufacturing more vendors pushing that inventory function back to the manufacturer. So in the printing industry, hey you know Ill take 50,000 pcs. But you have to save it for me and ship it out in batches because I dont want to deal with floor space good news for manufacturers is that you get Predictability and Plan for it but require floor space and logistics. A more enlightened model in a direction seeing it going, especially with Web-to-print we have a producer i.e. commercial printer through the with the web interacting directly with the client, and the vendor on back end handling and providing templates, billing customers, doing customer interaction stuff but we are actually interacting with customer and producing whats required - print-on-demand. And because we can do that the amount of inventory is fading and amount space required is fading. And this is a trend we expect to continue. You are in the middle of it you are in between the vendor and the client - in the middle which makes you indispensable.
Next slide is a schematic of kind of internal software within an organization. This is not meant to be exhaustive -- really to provide different classes of software. You guys see things I missed please let me know.
On to next slide, which as you can see from the numbers looking at the evolution of systems within a commercial print organization. So if an organization starts print production, shipping, mailing all those basic functions. Buy equipment today everyone has their own software. Basic stuff to get if you are just starting business, especially as an organization gets more mature, you get more tools, matrix layout, postal presort and adding on those layers of software. So the second step is the backup, the accounting system. As organization grows accounting has to grow. Track costs, billing, reporting, payroll all that kind of stuff. Somewhere in the evolution can pick up an erp system or a Manu system which tries to pull together the accounting details with actual applications that actual process and cost accounting. We have had a number of clients who have large sophisticated client packages which are more or less useful. Sometimes it is a challenge between if you are running the software or is the software running you?
Be that as it may, the next step is really online systems and a lot of that comes from the fact that over the past 10 years just started to see this. Two levels: Website and Ecommerce and actual portals themselves.
This slide here, the idea here is if you look at a diagram of those systems a lot of the systems they have to be able talk. So if web to print applications and stuff to add to environment important to have things which have interfaces we dont want to create Islands of automation. We want to make it to all Work together. When looking at these Packages look for these interfaces and how it works with your system and how well they will tie together. Important to get leverage out of the system.
Moving on we go back to this idea of looking at levels of maturity within the online part of that solution what we call: Web-to-print. Today many people start with a basic website, unfortunately, in the minds of customers today, if a company does not have website it doesnt exist. A little company can seem more credible than a big company if it has a good website. A lot of people start with a corporate website like an online brochure, with hours, contact information, basic information. Next step is to add rudimentary operation information - what we do as a business - add ability to upload files, request quotes, see pricing, see design specs, more involved but still not creating electronic transactions. Then interactive ecommerce: the idea that clients can submit orders, charge orders, sales orders, maintain accounts online and allow customers to check the status of their order, as its going through production and delivery - like tracking a Federal Express order. All of sudden we are starting to integrate what's happening with our company with whats happening on the client side via electronic interface. The last step is what we call really online applications or portals. In general they are applications specific to solving customer problems. The Cendix channel marketing portal would be one of these solutions. Clients have a specific problem; we create solutions specific to solving their problems; we create actual revenue opportunities. But we have to move through these stages and get our organization to the right level of sophistication. And get buy in from everyone. There are a lot of factors to consider because Web-to-print is not a piece of software, it is a process and the type of solution depends on what you want for your organization is mature enough to deal with.
Think thoroughly in advance about what problem are you trying to solve? Competitive response? Reduce costs? Entering a new marketplace? What issue are you trying to address? What market are you going after? Are you going after a consumer application?
One customer wanted a retail portal that would operate just like Zairmail. Do you really want several dozen 400 piece orders daily? This has implications for the type of internal organization you have. It really hinges on what kind of business you want to be in. Do you deal with government, community colleges, other public organizations and automate their print orders? You can still use web-to-print but it is a different kind of solution. Its Important to know what problem we are solving. What is feasible based on stage of maturity, how much do you have to invest; we need to be realistic about what it costs and what we have to spend, how much time to get there, and how much expertise we need, and the various other automation issues.
In terms of solutions -- I have run into three kinds of solutions we see out there today: (1) enterprise software, (2) on-demand software, and (3) hosted solutions.
Traditional trade enterprise, buy package hosted buy system and have expertise. The upside to that is if you have technical expertise and build out. Once you have it. You can implement as many portals as you want. Enterprise software can be very good if you know what you are doing. Again puts you into a different business. Puts you into the software business and you have to decide if you want to be in that business. Another dirty secret from enterprise software bus is that some projects actually 30% large enterprise take on actually fail whether its from requirements, cost overruns, it never gets implicated, can be a good thing but be careful, and know what you want to accomplish. Buy it, pay to customize, pay annual maintenance Ongoing expense and the other thing important here not creating relationship with vendor but the enterprise sales guy -- goes off into sunset. Left for you to deal with - what youve got left. For right kind of organization it can make makes sense but weigh alternatives.
The second kind of solution, on-demand software, was first made popular by the guys at salesforce.com. Different packaging hosted version or on demand version as well. Limitation to that, Good news is you do have a partnership with a vendor but in most cases the customization is limited because support a lot customers and dont want to Change a bunch of stuff they are looking for a One to one relationship with you. So you have a one to one relationship with your customer. What are you trying to accomplish. Least expensive but least rich in terms of functionality. If you are trying to do Custom solutions for your customers that is not flexible enough.
Hosted solution is in between the two the organization providing the software becomes an extension of your IT organization for this class of application. The hosted application provider supplies systems, software and expertise. You manage the customer relationship and specifications. You also provide feedback from the customer so that together you can design a solution fits your customer well. This gives you the ability to offer customized solutions, but you dont have to be in software business. The big question here is are you comfortable with a partner? You are going to establish a long-term relationship with this organization. You need to be able to work closely with them and trust their ability to deliver.
Pricing model the way they charge for this all over the board. Enterprise software can cost $30,000, to $50,000, to $100,000, or more. We looked at a package last week that was $125,000 without any customization at all. We also talked about the ongoing expenses that come with that solution too. The cost of the actual software is only one element and we may actually pay as much or more to maintain the software. On the other hand, on-demand software, is usually licensed on a per seat basis; template based; or transaction based. You can expect a monthly fee based on whatever they are using as a driver for that fee. Hosted solutions lie somewhere in between. You will pay an initial license fee, a monthly hosting fee, and for any customization or features that are unique to that application.
One question to answer when building your model is how you are going to cover the costs. Are you going to pay for the solution to win or retain the customer and then earn it back in margin? Are you going to pass the entire cost, portal and fees, along to the client? Is there some other model that works for you and the client? The bottom line is that if this is structured correctly, then the client, or the additional business coming from clients, will more than pay for the solution. You just reap the rewards.
We need to briefly consider the launch model itself. Find the solution, find the requirement, and sketch it out. Implement the solution, pilot it, define small test pilot and shake out issues, launch it and promote it.
That brings to next slide - we need to promote the solution whether it is an outward-facing application or an inward-facing application. So, if the target is internal employees we need to roll it out internally: announce it and reward employees that work with it. With retail offerings we may have to use press releases, promotions, and other online and offline marketing techniques. The actual tools we choose revolves around the audience, timing, and budget.
There are two slides here on Zairmail marketing models that illustrate what has been done for marketing online. The Zairmail site has driven orders for millions of pieces of direct mail for small to medium business customers. This is what has been done to market this solution. Viral marketing to different points of contact; online marketing; and demand generation.
The schematic shows how all the pieces fits together. Of course, this is not the only approach; there are lots of different ways to do this. This can be a big area of mystery especially working with a new customer base for the first time. But I wanted to give you one blueprint or example of what works. Looking at your organization, or your specific application, you may take elements of this or all of it and make it work for you.
In summary, there is no need to fear evolution. We all know there is a huge opportunity. We just need to understand it, embrace it, and figure out exactly how it fits in our own organizations. On that basis we will all thrive. There is plenty of opportunity for all of us using Web-to-print.
With respect to the web-to-print solution that averages .9 days to the mail, what is average run length? Small to medium business average job size 500-1000pcs per job. Under 800.
Can you please give some examples of enterprise software Do you mean Oracle?
Classic examples of enterprise software include: SAP, Peoplesoft, Oracle. Large packaged applications. They help avoid building your own software solution from scratch. However, historically much of this software was not implemented. If you are talking specifically about web-to-print then we have to look at applications like Printable, Pageflex, XMpie, and others. The Digital Print Council of the PIA/GATF maintains a pretty complete list that they share with members.
Proportionally how many hosted solutions are available at this point?
There are a number of alternatives out there. Applications that are ready to go. Cendix offers a Zairmail-like solution for commercial printers. This has been in production since early 2004 and dealing with a ton of volume. The software is already debugged and ready to go - it saves clients a ton of time. But, this is only one example, there are others. The PIA/GATF list covers these alternatives as well.
Well, that's all the time that we have for today. If you have any unanswered quetions I would be happy to respond to email or phone calls. You can send email to firstname.lastname@example.org; however, all my contact information can be found in the about section of the Cendix web site. Thank your for joining us and giving me this opportunity to share. I know you are all going to embrace evolution and take your business to the next level.
Wilson is the CEO of Cendix (www.cendix.com) the leading provider of Web-to-print solutions that increase sales both online and offline. Cendix also provides strategic and tactical marketing consulting services for emerging growth companies in the Pacific Northwest. In addition, Wilson serves on the faculty for the School of Management at Concordia University, Portland, Oregon (www.cu-portland.edu).
Wilson Zehr has 25 years experience in high technology and telecom over a decade of experience working with Internet-related products and services. He has created numerous new products/brands and successfully brought them to market. In addition, he has crafted and managed strategic alliances with many (20+) of the largest technology and communications firms in the world. Mr. Zehr is a serial entrepreneur who has raised over $60 million from investors; returned over $160 million; and bought/sold a number of enterprises.
More detailed background information on Wilson can be found at Wilson Zehr profile.