Forecasting Print Applications during a Pandemic

COVID-19 changed many aspects of our personal and professional lives almost overnight, and the printing industry has certainly been no exception. Keypoint Intelligence publishes a revenue and print volume forecast for the digital printing and publishing market every year, and it should come as no surprise that the ongoing pandemic is impacting these values. Due to the unpredictable nature of our current market situation, Keypoint Intelligence has just released a preliminary forecast based on the rigorous research that we’ve been conducting since the crisis hit. As we continue through the second half of 2020, we will conduct further research and publish an updated forecast (if required) during Q4 2020. At this time, however, the preliminary forecast offers Keypoint Intelligence’s best predictions on the current state of the market and the implications of COVID-19.

COVID-19 Has Impacted Growth…but Some Bright Spots Remain!

When the pandemic hit at the beginning of this year, the effects were almost instantaneous and are expected to linger on for quite some time. The economy plunged into a recession, and the digital printing market has not been immune to the downturn. At the same time, however, it is important to note that certain segments were hit harder than others, and some pockets of growth remain. In some cases, the effects of COVID-19 have actually proven beneficial to specific market segments.

Even before COVID-19 became part of our everyday vernacular, many consumers were experiencing “digital fatigue.” Most people are inundated by e-mails and text messages, so the digital channel is a cluttered one. Some people receive so many e-mails that they will perform mass-deletions without ever opening the messages themselves. Armed with this knowledge, businesses are expected to place a greater focus on direct mail communications—and these efforts will likely intensify as we continue to navigate through the pandemic.

The effects of COVID-19 drove certain transactions to a digital format, and online shopping remains very popular. According to a statement from Google CFO Ruth Porat, users’ search activities increased at the beginning of the pandemic, but their interests shifted to less commercial topics. Marketers need a way to drive consumers to their online shops since fewer are visiting retail locations and consumers are conducting fewer searches on commercial topics. As a result, KPI believes that mailed brochures and catalogs are experiencing a resurgence.

Although stay-at-home orders have been lifted in many locations, the reality is that consumers are spending more time than ever at home. Because of this, businesses suddenly have a more captive audience for their physical messaging! It is also important to note that physical mailboxes are a less cluttered (possibly the least cluttered) communication channel for marketers. Direct mail volumes are, therefore, expected to keep rising as the pandemic continues. According to KPI’s most recent marketing communications research, consumers read/review a greater share of their direct mail messages and spend more time reviewing them.

Figure 1: Direct Mail Gets Noticed!

Although the effects of the pandemic did cause commercial print applications (e.g., brochures, catalogs, direct mail) to decline sharply in Q2 2020, these applications are expected to rebound somewhat during the third and fourth quarters. By Q4 2020, KPI’s On Demand Printing & Publishing Consulting Service projects that catalog volumes in the US will be about 30% below what they were in 2019, while brochures are about 25% below their values last year. Buoyed by the effects of digital fatigue and the continued effectiveness of physical communications, US direct mail volumes at the end of 2020 are only expected to be about 18% lower than they had been in 2019. It should also be noted that a lower cost per mail piece is also contributing to some of the revenue decline.

Some other highlights from the preliminary forecast are as follows:

• Transactional: During 2020, volumes of transactional communications (e.g., bills and statements) are expected to remain on par with what was seen in 2019. Businesses still need to send these documents to customers at the same volume even during a pandemic, so the year-over-year numbers are not expected to change.
• Publishing: Within the publishing sector, book volumes are expected to decline only about 10% year-over-year in the US. Once again, this slower rate of decline can be tied to digital fatigue, and some consumers who feel stuck at home will likely choose to unplug by reading a physical book or paper magazine. With so much uncertainty about what education will look like during the 2020/2021 school year, it remains to be seen how the educational book market will fare. That said, traditional books are not expected to see a sharp decline, and the push for temporary remote learning may prompt some parents to go back to the basics and stock up on physical books to help minimize screen time.
• Consumer: Encompassing photo products and greeting cards, consumer print application volumes in the US are expected to remain flat year-over-year. Although many consumers are quite price-sensitive during a recession (and a pandemic), photo products are rather inexpensive. Furthermore, additional time spent at home with immediate family will likely fuel the creation of photo books as consumers seek familiarity and normalcy during these uncertain times. Greeting cards are also inexpensive, and they are a great way to reach out to others and show that we care when close physical proximity may not be an option. As a result, volumes for photo products and greeting cards are believed to have increased since the pandemic hit, but they are estimated to return to normal levels by the end of the year. The volume change for consumer products is therefore expected to be flat between 2019 and 2020.

The Bottom Line

There is no denying that we are living in strange times—times that make forecasting more complicated than ever. Only time will tell what the rest of 2020 will bring, but KPI’s research indicates that the digital printing industry will begin to rebound soon. In any case, marketers need to be more strategic and focused in the way that they contact their customers.

COVID-19 had an immediate impact on print volumes, but businesses have since had time to adjust and are now working to recapture some lost revenues and volumes. KPI will release an updated forecast when more time has passed and expectations have solidified. In the meantime, our preliminary forecast numbers offer KPI’s best insight about the future of the digital printing industry in these uncertain times.

To obtain more information about our full digital print forecast (covering equipment, service, supplies, and retail revenues as well as market installed base and print volumes in various segments (e.g., color, black & white, inkjet, toner), please contact your Keypoint Intelligence account representative or email deanna.flanick@keypointintelligence.com. We will continue to release more information, data, and insight as it becomes available.