The Death of Print Markups
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- Laurel McCormick
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1 The Death of Print Markups An Mtivity Workshop presentation for: March 2017
2 About Mtivity Founded in Years Providing Procurement technology to Print Buyers o Marketing Communications Companies o Print Management Companies o Corporate Buyers o Companies spending over 2m per year on print largest clients procuring over 100m per year Mtivity application now manages over 1 billion per year in print spend with users in over 120 countries Allows us to to aggregate and observe trends and best practices
3 Print Outsourcing: Early Days Mid 90s and the Print Industry looked ripe for Outsourcing $1 trillion in global spend Excess supplier capacity Dated procurement processes Overall lack of financing in supply chain VCs invested nearly $1 billion into software companies to automate this space soon they would be printing $$$ Several B2B print exchanges formed with the idea that corporate marketing would publish a requirement into a large print exchange and 100s if not 1,000s of printers would bid on it Reverse Auction Mentality Printers hated it, and buyers such as a CMO, would never trust unknown suppliers for corporate marketing materials. Print Networks like VistaPrint worked for the low end but failed for B2B
4 Enter Print Outsourcing And yet, Print industry inefficiencies persisted o Print Managers and Marcom Companies emerged to do what tech could not o Ownership and risk o Economies of scale o Powered by experienced people Typical contract paid for managed services with upside The primary role of technology was managing the workflow approvals, collaboration Contracts often lost or broke even at the low end but as they grew in size, more spend made them more profitable
5 Phase I Print Outsourcing Dominated by the UK several reasons including expertise in localizing marketing materials across European countries Large companies like Xerox, Williams Lea, and RR Donnelley were landing massive deals Exciting time for Mtivity: we were often landing 1 new major client per month through Intermediary resellers Agencies and Print Managers Service providers leveraged the initial contracts to upsell services such as creative, as well as: logistics, postage, handling and distribution Several years of increasing and good profits for service providers
6 Print Procurement - Phase II Mid 2000 s - competition became heated o Service providers began taking more and more risk on future margins o We re losing money on each sale, but we ll make it up in volume! Many began cutting prices below costs and becoming even more aggressive on additional work Some service providers walking away from deals for first time. Enter the Credit Crunch of 2008 Service providers and corporates undergo massive restructuring
7 Current State of Print Procurement Companies pushing back on Service Providers to reduce or eliminate black box costs Service Providers pushing back on Companies to ensure they can earn margin Both sides push towards complete savings TRANSPARENCY and AUDITABLE GAINSHARE Companies willing to pay service providers if they can demonstrate where and how they are saving money and driving efficiencies. Unfortunately The amount of data required to support success for these types of contracts Is enormous. Review dozens or 100s of suppliers Years of history, rate cards, client expectations and guided buying to Facebook/Amazon Generation interacting with Business Apps Costs increase as spend increases
8 Changing Marketplace There are two types of service providers in today s marketplace * Adaptable service providers that are open, transparent and link their revenue to the saving achieved for the client. VS. Traditional service providers that offer savings but are unable to demonstrate the savings in a transparent and auditable way. *Outsourcing Yearbook 2016 National Outsourcers Association
9 Phase III Tech Becomes Strategic Enter technology: Big Data techniques to analyse massive amounts of history: buying trends, seasonality, rate cards Technology can automatically identify Benchmarks, Calculate True Client Savings and Manage the Gainshare Calculation Analytics and reporting to keep track of trends, spend, SLAs, savings, gainshare Guided buying to leverage B2C type Amazon and Expedia approaches into the B2B procurement world With the right type of contracts combined with technology margins return o Complexity is offloaded to system and service providers can once again scale efficiently
10 Phase III: System Generated Reports All data entered into the system by the end user and calculated by the system. This includes, workflow, finance and customer KPI and survey information:
11 Current Market Customers now requiring technology Service providers begin highlighting technology in bid process Technology often the difference between winning and losing that 5m bid Mtivity transitions from selling to responding approach transitions from Push to Pull
12 End of 2016: Service Providers Survey Top 200 Marketing Agencies and Print Managers Technology Innovation is Driving Demand for Accelerated Marketing Services
13 2016 Market Research
14 2016 Market Research
15 Client Case Study 148% productivity increase 32% savings in spend 25 day rollout The adoption of these cutting edge features allows us to differentiate ourselves from other outsourced marketing communications providers. Head of Technology, Office Depot BENEFITS: Instant estimates: using benchmarks & historical pricing Increased retention: from more consistent service levels Increased margins: from increased efficiency in sourcing
16 Marketing Acceleration Platform Grow faster. Go global. Instill trust.
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