Production: Creating Revenue Streams Through Innovative Thinking and Management of Operational Resources

By: Jerry Simpkins

As print revenues continue to be challenged, it is up to us to uncover new sources of revenue opportunity. There are distinct advantages presented in operations versus other “service departments,” such as the business office or editorial.

Production often has the highest labor expense of all areas, needing those resources to facilitate daily operations in layout, composing, page output, press, mailroom and distribution. Paper costs alone can be one of, if not, the largest expense for any newspaper. Plate expense, press repairs, blankets, rollers and a multitude of other consumables make production the most expensive department in our industry.

It’s no wonder printing operations have been consolidated, moved to outside printers or in many cases discontinued all together in favor of digital publications.

I remember years ago being one of the “geniuses” who was fairly confident this “internet fad” would quickly fizzle out and we’d be back to those 50 percent margins in no time. I don’t need to tell you that most newspapers were kidding themselves, mistakenly overconfident and in for the surprise of their life.

So here we are now and while there’s still time (and I believe there is), let’s fight to minimize the backslide and manage resources to improve current operations by exploring new opportunities for commercial revenue and enhancement of in-company products.

Growing Outside Customer Revenues

I’ve written before about commercial printing revenues, but from a much more conventional approach. I believe there are many unfound revenue opportunities still to be explored by every publisher, with or without a press. I’m tired of hearing there are no new opportunities in newspapers; I believe it’s a case of no new thinking in newspapers.

If you have a press do you provide full-service commercial operations to your outside print customers? If you’re simply printing their papers, you’re missing out on a lot of other revenue opportunities. If you don’t have a press, there are still tremendous opportunities by partnering with outside publications to gain revenue.

Mailroom Services

Many outside print customers continue to operate their own mailroom operations to spite not having a press. When I sell a commercial print job, many customers are surprised with the additional services we can provide, and if you don’t ask (i.e. sell them on it) they simply will continue with their own post-press operations.

Recently, I was able to move a customer away from their current printer. I found they had weekly inserts and were employing a small army of employees to hand-stuff at their facility. I put together options to move that function to our facility on our SLS and justified significant cost savings to the customer, capturing additional revenue for my operation.

While this may seem like and is simple common sense, if you don’t ask, the customer may feel comfortable with what they’re doing now and not go out of their way to change anything in their operation. It’s about selling services and uncovering every opportunity. The more effort you show and the more you can do to help enhance the customer’s business, the better your chances of not only securing that job but keeping it.

You can charge for simple things like quarter-folding. Often customers want their products quarter-folded and their printer doesn’t have that ability on-press, so they settle. If this is the case in your shop, consider picking up an inexpensive used quarter-folder. There are Cheshire and Kirk-Rudy units on the market from many operations that have shut down in the past few years. Units can often be picked up for very reasonable prices and pay for themselves in a short period of time.

Another marketable service can be providing mailing services to your outside accounts. I once had an account that labeled and mailed several thousand copies of their publications monthly. We printed their product and delivered it back to them. They brought in several of their employees to place sticky labels on, sort them and take them to the post office. When I explained how we could inkjet and sort their product and provided them with the numbers, they quickly signed up and moved the operation to us, increasing my revenue. Expanding on this, as they grew it became difficult to produce their mailing in the time allotted, so we contracted with a local mail house and ended up making a tidy profit simply subcontracting work out and providing one-stop-shopping to the customer. My point is if you’re not aggressive about new revenues they won’t come to you.

You can also expand outside of the manual operation of applying labels by ink-jetting your customer’s product and managing their mail list, utilizing your list management software. This may be more work for you, but providing a one-stop-shopping experience can be well worth the effort.

Newsprint is one of, if not, the largest expense for most operations. Web reductions and controlling draws that newspapers employed over the years can also be beneficial to the financial health of your commercial clients. Assist clients with new and innovative ideas that maintain their solvency and keep revenue flowing into your operation.

Booklet Printing and Binding Services

Gaining the ability to stitch and trim publications into bound products can provide revenue from outside customers while adding opportunity within your core operation.

Small print shops have taken it on the chin much the same as newspapers and as a result there is quite a bit of used equipment available through companies who deal in used equipment or by contacting the owners of these shops directly. Currently you can pick-up a used stitcher / trimmer (aka saddle stitcher) at a fair price.

Once you’ve located and purchased a used unit, there are several options for getting the equipment up and running.

Option one is to work with a company that not only sells the equipment but installs it as well. This is probably the cleanest approach since any issues that may come up during the installation the company who sold you is responsible for (be smart writing up the purchase contract).

Option two is having the equipment vendor (i.e. Muller-Martini, McCain, etc.) orchestrate disassembly, reassembly and startup. While this usually provides the best service and can get you up and running very efficiently, it is usually most expensive and can be prohibitive.

Option three is the least expensive but can also be problematic—using your own installation team. If your mechanical/tech team hasn’t dealt with a saddle stitcher before, things can be challenging. We recently acquired a unit from another site and while our techs have had few minor challenges with installation, we’re now down to fine-tuning and will be off and running shortly.

To accomplish fine-tuning and operator training we contacted a non-competing local print shop who graciously allowed us to subcontract one of their experienced employees to help us along. It’s always impressed me how far printers will go to help others in the trade.

When your customers find out that you can stitch and trim their special sections and produce booklets, they will in turn be able to market their new product line to their advertisers and open up a new niche product to market, increasing your revenues. It’s a win/win.

A saddle stitcher also gives your advertising department new in-house opportunities to market. Stitched and trimmed tabs look much better than a standard tab and the additional cost for labor can be minimal. You can also enhance the look of the final product by adding glossy covers to booklets. If you don’t have the capability in-house for enamel/gloss printing, you can purchase covers from a local sheet-fed printer or a printer with heat-set or UV web presses. Marking up this printing, marrying it to a printed product from your press and providing a final booklet to your customer can really add to your revenues.

In-house, you may suddenly be your advertising department’s new best friend. I guarantee a final stitched and trimmed product will allow sales to be more fruitful than selling a conventional standard tab. Even those special section tabs that are more editorial driven will look better and add to the overall reader experience.

Up Selling Your Current Product Line

Many of the customers I’ve moved from their previous printers have made that move because of additional color availability. Publishers tend to grow accustomed to the color restrictions of their printers. I’ve secured many print customers by being fortunate enough to have better equipment and present how I’m going to help them fix the lack of color availability they’ve been accepting in their publication.

When you meet with a potential customer, listen, and they’ll reveal all opportunities for you to grow revenue and secure their account. Many publishers have outgrown the capacity of their printer and are paying for multiple press runs to gain the necessary color to satisfy their clients. Publishers can grow complacent with printers and unless you show them how to improve their product with additional color most of them won’t come to you looking; they’ll just make things work with their current printer.

Focus on your saleable strengths and sell solutions instead of simply selling services.

Another enhancement you can add to your product line and offer to outside customers is a spadia. In a previous article, I touted this for in-house products, but it’s also something that can be aggressively marketed to commercial accounts and one more thing they can offer to their advertiser. Many newspapers doing commercial printing settle for printing what their customers send along; I’m a firm believer in partnering with them to help grow their business, which trickles down and grows my business.

Web Reductions for Commercial Accounts

We’ve all been at newspapers that reduced web size or basis weight to reduce expenses. There is no reason whatsoever why we shouldn’t help our commercial customers understand and relate to those savings as well.

I want my commercial accounts to be around for a long time and the best way to do that is to help ensure their financial health. I’d rather have a smaller profit margin than no profit at all. Referring back to my statement of partnering with commercial accounts, I attempt to educate commercial customers on the benefits of lower paper costs through web reductions. Sure it takes a bit of reformatting, but it’s well worth the savings.

There tend to be two objections to reducing the size of the printed page from commercial customers: We’re going to get complaints from advertisers, and we’re going to get complaints from readers.

My answer is sincere but a bit direct: you’d be surprised how little difference it will make to anyone.

From the advertiser’s standpoint, they may feel they are getting a smaller ad. My response is it’s about real estate—a half page is still a half page and a three-by-five is still a three-by-five. You are getting the same portion of real estate on the page. I’ve not had that explanation fail yet, mostly because it’s true.

As far as reaction from readers, it’s much the same. I’ve worked at newspapers where we’ve reduced the web, had meeting after meeting on how we’re going to address the fallout, only to have three or four readers call to ask “Why the change?”  The complaints are overshadowed by readers calling to compliment us on the new format.  In the end, it’s truly a non-event.

Stitch and trim booklets can mean additional revenue opportunities for the publisher, regardless of if that means enhancing in-house products or creating new revenue streams for your commercial clients. Here, an operator sets up the equipment before binding a stitched booklet for a marketing display piece.

Delivery Services

We can produce a commercial product and have it picked-up, or we can deliver the product to their doorstep for an additional fee, or we can look at smarter delivery as another revenue stream.

Consider exploring out-of-the-box partnering options like inserting copies of commercial publications into the zones of your core product, piggybacking home delivery with your core publications using your carrier force, sending their product out with your TMC, handling bulk drops to similar store locations, etc. All at a nominal fee which managed well can return an excellent margin with minimal expense on your part.

Page and Ad Composition Services

We’re a business and should sell like one. If you have something someone else needs and you’re good at it, market it and fill the need. Many newspapers send ad production overseas because it’s simply more economical. If that model works so well, why can’t we be the producer and market the concept to our commercial accounts?

The same can be said for pagination. We have some very talented people in our page layout areas. We should be marketing that as a service to outside customers as well. We can be the prepress departments for commercial accounts that we print and profit from that service.

Digital Options for Commercial Customers

Last but not least, don’t fall asleep at the wheel again like we did when no one acknowledged the threat of the internet to our printed product or we scoffed at Craigslist challenging our classified. Digital is here to stay and it’s a force to reckon with. I truly believe there is enough room for both print and digital and we can profit from both when marketed correctly.

The majority of our smaller commercial accounts don’t have websites. They don’t know the first thing about starting one up and if they did they wouldn’t know how to market and sell to their advertisers.

Become your commercial customer’s web designer and provider. We have employed some of the most talented web designers to develop and maintain our core publication websites; let’s market that service to our commercial accounts and develop yet another revenue stream.

Before you react to my suggestion, don’t look at this as a way to lose revenue through reduced print quantities, but instead a way to grow overall revenue by marketing one-stop-shopping services to commercial accounts. Sooner or later, they’re going to want to satisfy the digital needs of their advertisers, and it’s better to jump on with them at the front-end than to lose their revenue completely.

Jerry Simpkins is vice president of the West Texas Printing Center, LLC in Lubbock, Texas. Contact him on LinkedIn.com or at simpkins@tds.net.

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Published: November 20, 2017

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