Transpromo for Must-Read Ads

Roll-feeds satisfy voracious appetites of high-speed inkjet and toner printers in long, ad-laden statement runs.

By Mark Vruno, Executive Editor -- Graphic Arts Online, January 1, 2009

Consumers are more mindful of their debt and debit cards during lean economic times like these. In corporate America, marketing usually is one of the first areas to suffer when the budget cuts commence. And those two factors combined are precisely what makes transpromotional printing so enticing. It combines transaction documents with promotional direct mail by printing non-solicited, highly targeted personal messages directly on the face of bills, statements and invoices.

Today, text and corresponding images for tailored service reminders, bonus cash offers, lower financing rates and new product deals can be printed prominently onto bills that arrive monthly in the mail. When done right, transpromo marketing captures more mindshare than mass-media alternatives such as billboards, television, radio and magazines, say its advocates. Transpromotional print may reasonably be included among the so-called “unavoidable media” expected to gain in popularity with marketers in 2009. As TV ads falter at the remote controls of ad-skipping TiVo and DVR systems, in-your-face media venues—such as signage and displays in elevators, at gas pumps and checkout lines, or sleeves and bags wrapped around publications—force themselves into audience attention.

Consider this: Nineteen of every 20 statements or notifications that get mailed actually are opened and read. “The power of transpromo is its reach,” writes industry consultant Adam Dewitz in his online blog. Indeed, a multi-client study by InfoTrends shows that, on average, consumers spend between 120 and 180 seconds reviewing monthly statements received in the mail; 20% spend five minutes or more.

“Transpromo marketing messages, by their very nature, command more attention than traditional communications,” says InfoTrends analyst Barb Pellow. “While the average customer may get as many as 3,000 advertising messages per day, they receive less than 12 transaction documents monthly.” These come “from known and trusted sources, so they are more likely to draw the customer's attention,” Pellow says. Transpromo's much higher response rates confirm this.

Art Plus, a subsidiary of printing firm NEPS, spearheaded a project for a financial services firm to increase 401k participation by including promotional messages on participant statements: The 10.5% response was shockingly high for such a campaign in that field. In another project, consulting firm Prinova created a health benefits promotion for Humana that resulted in a 42% switch from more expensive, brand-name prescription drugs to cheaper generics. (Ordinary mailers netted just 10%.)

As part of a live test currently running, Best Western is reporting substantial, double-digit lifts over control groups, especially for guests applying for its MasterCard. The hotel chain is in the midst of a three-phase pilot program developed by InfoPrint Solutions to demonstrate transpromo's value and effectiveness to a national peer network of marketing officers. Rewards statements are being printed on an InfoPrint 5000 at the manufacturer's Innovation Center in Boulder, CO.

In the past, Best Western didn't treat statements as response vehicles, so expectations were low when the pilot launched during the tanking of Wall Street last September. Ryun Lambson, the company's marketing programs manager, was surprised. “Frankly, we didn't expect much of an increase at all,” he says.

Some big printing firms are convinced, too, including RR Donnelley, Quad/Graphics and Transcontinental. “Our customers are attracted to testing transpromo as part of their communications mix,” says Lynne Andrews, variable color manager for Donnelley's Business Communication Services unit, part of its Moore Wallace acquisition five years ago.

Digital press technology is a key driver at in the transpromo race. Several new high-speed, continuous-feed color inkjet and electrophotographic printers were introduced at drupa last spring and seen at Graph Expo three months ago. As their price/performance ratio has improved, organizations can more affordably colorize critical transaction information as well as add promotional messages—including graphics and coupons—to capture customer attention. The reproduction quality of the latest generation of color print engines means more appealing images can be printed on statements, such as graphs, pie charts and photographs, even for offers of fine jewelry and luxury cars.

Turning on to onserts

While businesses have been using statement inserts for decades, the latest promotional component is called “onserts”—documents personalized with relevant graphics and offers digitally printed on the face of statements. Research shows these are preferred by 63% of respondents. (Direct marketers believe many insert recipients may literally open mail over their wastebaskets to dispose of the contents without even looking at them.) Plus, onserts save time by eliminating gathering and coordination of multi-step press runs.

“We were always delaying our statements because we were waiting on inserts from the mail house,” says Best Western's Lambson. “Onserts enable our products to move to market faster.”

The migration to full-color digital printing is accelerating, as customers and their print providers transition from personalizing preprinted offset rolls to full-color digital runs. The number of color shells and rolls preprinted on offset presses has declined by about 30 billion in North America over the past six years, reports market researcher PRIMIR, a unit of NPES. Meanwhile, the use of digital color to produce transaction documents is growing by more than 90% annually, due in part to new technology and new postal rules. Nearly 23% of total North American transaction document volume was printed in full digital color three years ago, up from less than 11% in 2002. By 2010, that number is expected to be 33%—or 21.7 billion impressions, estimates InfoTrends. Still, less than 50% of businesses incorporate color into their transactional digital printing, leaving a lot of room for growth and opportunities for commercial printers.

Transactional print service operations traditionally are split into two camps: in-house data centers and print-for-pay service bureaus, some operations of which are quite large. Regulus, for instance, is America's largest independent remittance provider and a leading bill processor. The $148-million firm receives and stores nearly 1 billion images and processes more than 2 billion transactions annually through 10 centers across the U.S. Its blue-chip clients includes one-third of the Fortune 50, leading it to be acquired for $80 million last spring by 3i Infotech of India.

But even traditional printers seem receptive to the changes. Last June, Quad/Graphics announced a $25-million investment to strengthen and expand direct mail services through its Sussex, WI-based QuadDirect division. Enhancements include new equipment such as digital and variable-cutoff offset presses, high-speed envelope inserters and commingling machinery as well as upgrades to its existing 300,000-sq.ft. operation in Pewaukee, WI. The transformed facility began operations late last year, complementing Quad-Direct's other location in Fredericksburg, VA.

Rivals Donnelley and Transcontinental also have made moves into the transpromo field. Transcontinental Direct USA was created through the acquisition of two major U.S. direct marketing companies—CC3 in 2003 and JDM (Jetson) in 2005. Today, Transcontinental Direct produces transpromo and direct mail via a network of 10 production facilities. It owns a range of output equipment, including 13 continuous lasers from Océ (eight VarioStreams), 19 Xerox DocuPrint cut-sheet devices and Kodak Versamark inkjet installations, including the first VX5000 unit five years ago.

Meanwhile, the Donnelley BCS division's services include roll-to-roll and roll-to-sheet digital printing. The firm says it has helped to save one customer, a private bank, more than $1 million. The bank uses three BCS production facilities daily to produce five types of statements averaging 13 duplex pages each and totalling 30 million pages annually.

“Transpromo complements insert programs exceptionally well, broadening the choice of offers that can be made and helping to keep envelope weights under the next postal increment,” notes Lynne Andrews of Donnelley BCS.

DST Output adds that, despite increases in 2007, “the rate to send an additional ounce of First-Class Mail actually decreased from 24¢ to 17¢ on an individual piece. With letter-automation discounts, the rate declined even further to 12.5¢. Factor in the 1¢ rate increase to 21¢ for Standard-Class Mail, and companies now find it less expensive to send promotional offers and messages with their transactional statements than separately, even if mail pieces exceed the 1-oz. mark.”

In addition to postage hikes, marketers dread inbound telephone complaints to call centers about as much as catalogers shudder at merchandise returns. They cost time and money—an average of more than $16 per call—and eat away at profits. Humana says transpromo helped drop call center calls for member questions and concerns from between 7% and 10%, and average call duration was reduced by 15%. Xeikon cites its own statistics, which show that redesigning a 15-page, letter-size monochrome insurance statement into a full-color, 11×17´´ trifold format, with only relevant data included, resulted in 30% fewer call-center calls. Best Western reports similar response rates.

Another large-scale print example is marketing provider Direct Group, whose Swedesboro, NJ facility boasts 47 Océ printing engines, including 32 VarioStream 8750 digital web toner systems added last year and used for direct mail and transpromo applications. The firm also installed two JetStream 2200 inkjet printers in 2008: the first in May and the latest last month.

“By enabling our clients to add color and personalization to their mailings, these technologies help increase readership and response—and enhance campaign effectiveness during challenging economic times,” says COO Chris Ryan. Direct Group serves clientele in the financial, educational, telecommunications, retail, insurance and nonprofit sectors with fulfillment and direct mail.

Its latest Océ 2200 system features magnetic ink character recognition (MICR) capabilities, the same printing tool used on check numbers that more and more direct marketers and lettershops are offering. Direct Group also recently installed five intelligent inserting systems for statement processing and transpromo marketing opportunities.

Also last month, O'Neil Data Systems began beta-testing transpromo projects on its recently installed HP Inkjet Web Press featuring a scalable print head. The Los Angeles firm is producing full-color health insurance explanation-of-benefits documents. It anticipates developing a new level of financial statement and direct mail communications based on the features and benefits of the press, which prints up to 30´´ wide using 4-color process. To be commercially available this year, the device can print up to 2,600 letter-size color pages per minute.

PRIMIR estimates the global transaction and financial document market at more than $4 billion and says we soon may reach the point where only 20% of the sites are producing nearly 80% of the volume. But most transpromo printers don't play in that super high-volume space. In fact, less than 2% of firms generate more than 20 million statements per month, reports InfoTrends, with another 1.7% producing between 18 million and 19 million statements. About 6.5% generate between 500,000 and 1 million, while slightly more than 8% do 100,000 to 250,000 statements monthly.

The mid-market, however, is huge: 54.4% of firms providing transpromo print services generate less than 100,000 monthly statements. This is where OEMs such as Xeikon hope to capitalize. Its 8000 duplex model features a monthly duty cycle of 8.5 million pages and prints at speeds up to 230 letter-size pages per minute.

Kodak, Océ, Xeikon, Xerox and others contend that this opportunity extends beyond the transactional to informational and educational markets. “There are a wealth of 'TransInfo' and 'TransEd' opportunities,” says Pat McGrew, Data Center & Transaction Segment Leader in Kodak's Graphic Communications Group. Indeed, firms are producing insurance policy books, for example, so recipients can obtain next-day details in print.

Advanced Business Graphics of Mira Loma, CA, for example, does about 400,000 records per run or about 3.8 million impressions on Xerox equipment. The firm produces transinfo and trans-ed documents such as explanation of benefits, health passports with personalized information and deposit slips for banks.

But effective transpromo, transinfo and trans-ed documents can be complex to develop and launch, as Océ point out. In addition to a robust, production-class infrastructure, variable data application development involving thousands or even millions of unique pages requires proper planning and access to clean, up-to-date data.

Pumping up color ... and volume

The electrophotographic (EP) and inkjet printing systems—either cut-sheet or continuous-feed devices from HP, InfoPrint, Kodak, Oce, Xeikon and Xerox—produce transpromo runs at high speeds averaging 80,000 color pages per month. The Xerox printers are based on dry-toner laser technology, while Xeikon and most Océ EP devices are LED, along with Fuji-Xerox. Generally speaking, continuous-feed dry toner printers use LED-writing head technology, while cut-sheet dry toner and liquid ink (HP Indigo) printers mainly use laser writing heads. All told, I.T. Strategies projects an installed base of about 23,000 production printers by 2012.

PRIMIR uses average monthly page volume instead of rated page-per-minute speeds because financial and transaction printing often occurs in bursts: 2 million pages may need to be printed during a five-day period, for example, followed by 25 days of downtime. In Texas, for example, Broadridge Financial Services prints and mails more than 2 billion images within the first five days of each month. Spun off by ADP (Automated Data Processing) in 2007, the NY-based firm is the de facto provider of proxy voting services to U.S. corporations. Its facility in Coppell, TX, is one of three processing centers that prints brokerage statements. To keep up with such a large volume in such a short time frame, Broadridge deploys some 100 printers (duplex, simplex and color) between its four locations, printing on various paper sizes including 11×17´´, 8.5×11´´ and 6×9´´. Data is digitally printed, then rewound, cut and stacked, or folded inline. Finished output is transported to one of over 100 inserters of various types. To handle such a wide range of applications, Broadridge utilizes a variety of Lasermax Roll Systems feeding and finishing solutions.

Continuous-feed is the most cost-effective design for super high volumes: millions of documents needed in a relatively short period of time. Their linear speeds range from 200 fpm to 1,000 fpm, as compared to an upper limit of about 165 fpm for feeding cut-sheet paper through a printer. The Xerox 490/980, its first full-color continuous-feed printer, was introduced 14 months ago and became available in North America in the second half of 2008. It runs at 226 fpm in simplex mode and employs the firm's flash-fusing technology, which doesn't use heat or pressure or make contact with the paper—allowing for a wider range of substrates.

In addition, roll-fed printers have a minimum print width of 17´´ and the ability to print two-up. With a second engine to print the backside of the page, productivity essentially doubles to 2,000 fpm. Once printed, the paper is then converted (often inline) into cut-sheet sizes.

Despite price tags of between $1 million to $2 million on most of these print engines, early adopters have realized process savings by eliminating most of their offset presses and monochrome digital printers, replacing them with a single-step digital printing system requiring some 40% less labor. Other printers, in need of updated equipment, opt for devices that can help them enter the transpromo arena, too.

Whose generation? 

Disclosure documents such as stock prospectuses and health insurance benefits that do not require a recipient to respond are often required by law to be printed and mailed. Some financial firms are experimenting with electronic so-called “opt-in” e-prospectuses, but changing the paper-based regulatory requirements could take years, experts believe. Still, purely transactional printing may be headed for rough waters due to electronic bill presentment, postal rates and legal regulatory changes. Businesses shift to e-statements “usually for automation efficencies rather than paper and postage cost savings,” I.T. Strategies reports. Credit card providers that encourage electronic payments, for example, save far more in remittance processing costs than the combined paper, printing and postage costs. 

But paper is not going away. While the volume of statement printing has peaked, it will decline only slightly on an annual basis despite inroads from online banking and other e-services. An Interquest study forecasts that full-color promotional transactional printing in North America will grow at an annual rate of 45% over the next three years. 

People like paper. It’s their record keeper, providing hard-copy proof that a transaction took place. Paper is tangible and trusted – sort of the opposite of the Internet, which is intangible and not completely trusted, PRIMIR’s research bores out. Once again, printers are finding that the relationship between their medium and its electronic counterpart need not be adversarial. Many consumers like the convenience of electronic documents and prefer a choice of receiving both them and more permanent paper versions. 

Even in the financial arena, where some major players have a 40% online banking rate, they’re finding that 70% or more of their customers still request paper statements. Meanwhile, many small- and mid-sized banks contend that paper statements are an extension of customer service—and a competitive advantage. They view paper as a monthly customer communication vehicle. 

When it comes to remitting invoices, Baby Boomers over age 50 still like getting mail; research shows that most actually prefer (by a 61% to 21% margin)—and trust—direct mail over alternative (read electronic) forms of communication, such as email. Why? Because paper-based communications are minimally intrusive and easily managed, says InfoTrends. 

But what about the younger generation of bill payers? Paperless direct marketing extends to the Internet, PDAs and mobile phones, and nearly 30% of firms surveyed already offer these direct-mail alternatives. Futuristic technologies driving transpromo include high-density barcodes that enable recipients to interact via Quick Response codes readable by cameras on mobile phones and PCs. The more savvy customers are realizing that data and content are the kings when it comes to printing effective transpromo statements. 

See the TransPromo Track at the PODi AppForum Jan. 19-21: podiforum.org

SOFTWARE: What You’ll Need
Software is becoming simpler and less intimidating to those wishing to enter the transpromo market. Skills have migrated away from intimate knowledge gained though directly coding an application in legacy mainframe computer languages such as Advanced Function Presentation (AFP), to commercially available composition software, says Harald Grumser, CEO of Compart. Speaking at last month’s Gartner Print & Imaging Summit, he predicted that more and varied types of output from an even greater number of sources will be generated now that it is easier to create. Still he said, this tequires print files to be normalized for mailing and finishing operations, or for web presentment and archiving. 
Many print owners have been calling for an industry standard software/format method to protect their investments. (See

WorkFlow

.) Xeikon’s modular X800 digital front end on the 8000 press is an example of an open-architecture system with software that can run on any PC. The firm says its focus is on industry standards—PPML, AFP/IPDS, JDF, ICC SQL, Pantone, etc.—with fully automated workflows and seamless integration the goals. The engine even handles graphical datastreams. (Intelligent Printer Data Stream is IBM’s Systems Application Architecture host-to-printer datastream for Advanced Function Presentation subsystems, which is popular in data centers.) See also the

October 2008 issue of GAM, p.24.

 
Software developers play a major role in the transpromo digital print cycle. HP raised eyebrows last year when it made a significant investment in variable data print software, paying $371 million to acquire Exstream Software, which had 2007 revenues of $18.1 million. Oce’s Prisma and Xerox’s Freeflow are two other examples of transaction-enabling software from printer manufacturers. But there are myriad independent software vendors offering applications, including Compart, Doc1, Document Sciences, Elixer, Emtex, Printable, PrintSoft and a host of other vendors. 
Research shows that, on average, a consumer spends 42.5 seconds reviewing a bill. However, two-thirds of consumers rarely or never read the inserts and brochures enclosed with their bills, says Hal Morrow, marketing VP of GMC Software Technology, which provides the infrastructure to build personalized transpromo campaigns. Here’s GMC’s list of what transpromo printers need:
> The statement source data should be available in a format that is compatible with information mined from CRM systems, ERP systems, and other external databases. The more integrated this data is, the more effective transpromo applications can be.
> A platform capable of handling a mix of different applications—transaction, promotional, hybrid transpromo and one-to-one interactive applications.
> A vendor that provides a strong technology offering for direct marketing and marketing applications, as well as for transaction materials.
> Technology that is easy to implement and use—and that has platform and protocol support capabilities for easy integration with enterprise architectures.
> The ability to quickly develop and easily maintain marketing/transpromo applications.
> Technology that is compatible with your data input sources; integrates with your CRM, content management, document production and archiving systems.
> A system with data handling and processing capabilities required for robust, high-volume trans-promo applications.
> Multi-channel distribution capabilities.
> Message management and version control capabilities. 
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