Trends in Outdoor Graphics: A Discussion with Industry Leaders
Veterans in the outdoor-graphics industry discuss how their companies have dealt with changes in the market and how other recent issues, such as the economic recession and the push for sustainability, have impacted their businesses.
The outdoor-graphics market certainly is a competitive one. With frequent launches of new, faster, better printing equipment and consumables, along with customer demands for high-quality work and the pressure to adopt sustainable processes, producers of outdoor graphics are continually searching for ways to run an efficient operation and stay one step ahead of the competition. Screen Printing magazine recently spoke to five principals of high-volume printing companies about how they’ve adapted to the changes in the outdoor-graphics market.
SP: What, in your opinion, are the most important changes or trends the outdoor-graphics industry has experienced in recent years?
Gabriel: It is critical to develop lightweight, environmentally friendly solutions, while maintaining quality. Digital billboards, while not necessarily a huge part of the past, are becoming a significant option moving forward. If you agree with the major posting companies, by 2010, 10% of all billboards will be digital. As far as technology, quality is becoming much more accessible at a competitive price. The versatility and speed of the new [printing] machines is amazing, much more than it was 10 years ago, even five years ago.
Norris: Probably the changes in the past half dozen years that have affected the outdoor-graphic market that we participate in would be the development of air-egress channels in premium vinyls by all the leading suppliers and the continued development of faster, bigger inkjet printers.
Renda: Digital printing is becoming more of a factor in our industry, which accommodates shorter runs and competitive pricing for lower quantity orders. This allows us to service some customers that might not have been big enough in the past for our larger screen-printing presses. This benefits them by being able to access our creative side of the business—our artists, graphic designers, and engineers. Companies are starting to ask for environmentally friendly or green materials, and some are starting to require them. One of our customers is requiring that we sign off on a questionnaire that asks a number of questions about how we operate our business. Some of the questions relate to how we treat our employees, do we pay them a fair wage, are our working conditions safe, and do we provide a good working environment. They are requiring not only us to answer these questions, but also have our suppliers do the same. After I thought about this I realized that this could be a good thing for America. Some foreign countries, especially in the far-east, do not have fair labor practices and still run sweatshops. These methods have allowed them to steal jobs from US workers and drive up our trade deficit. More companies should start to require these fair labor practice assurances and jobs may start coming back to the United States. I believe that our workers can compete with any workers in the world as long as the playing field is the same for all.
SP: What effect have those changes or trends had on your business?
GABRIEL: These trends are welcoming to us because they are in harmony with our business strategy to provide solutions in a more innovative way. Most people in this industry would answer that negatively, but we aren’t one of the old dogs, that has a history of preconceived notions and bad habits to break.
NORRIS: These changes all lend themselves to a proliferation of vehicle wraps. The improvements in vinyls make it easier to get a quality installation, and the improvement in speed and quality of printers have brought pricing down and made wraps more economically available to more and more customers. And it just feeds upon itself. The more attention getting the graphics become, the more attention getting graphics they beget. And you probably should throw in the computer revolution as an important change and trend as well. The more powerful the computers get, the bigger the files they can handle, and the designers use it as fast as they can get it. The result is really big graphics with really big punch, impact, or wow factor.
MCDANIEL: It has caused us to ask ourselves two questions. First off, “Do we want to get into digital printing?” That decision was made pretty easily as our customer demand continued to grow. Second question was, “How far into digital printing did we want to get?” Years later, our answer is “as far as customers need us to.”
GARCIA: It has allowed us to make recommendations for new products/applications to existing and potential new customers.
SP: Have new printing equipment or materials had an impact on the kinds of outdoor graphics jobs you produce or the amount? Please explain.
NORRIS: We have added an inline screen-printing press and an HP TurboJet printer to our production line. Both have increased our capacity and lowered our costs. They also give us the ability to compete for differing job sizes. The Turbo, in particular, gives us a much greater agility. A 53-in. trailer has up to 28 panels to completely wrap it. These are often each full color and individually unique. It takes a huge order to make that cost effective to screen print. The turbo can spit out a 4 x 12-ft panel every minute, and it doesn’t care if the next one is a different graphic or not. It becomes affordable to wrap a smaller fleet.
MCDANIEL: Yes. Some of the new pieces of equipment in both screen and digital that PSP installed have allowed us to provide customers with outdoor graphics that we could not previously produce. The digital equipment has allowed us to be able to compete for small test-market signage, and this ability has opened the door in screen printing for large national campaigns.
RENDA: Again, I think it is the evolution of digital machines becoming faster and cheaper has had an impact. Of course, large-format inline screen printing is still important, and you need a combination of both to be able to satisfy customer requirements.
GARCIA: The technological advance in the digital-printing industry (print quality, speed, and price) enables printers like us to offer our customer quicker turnaround on products that require customization by region for national campaigns.
SP: Can you identify any specific outdoor applications that recently have seen growth or decline?
GABRIEL: We have seen an increase in our ability to bring our creative efforts into the outdoor world. Different applications and materials are on the rise, which play into creativity with different bump outs, clear, foil, reflective, LED, and how to incorporate all of them and make it very interactive. Standard applications using flatbeds to minimize the usage of materials also are on the rise. I haven’t personally experienced a large decline in billboards because we haven’t focused on billboards per se, so we’re actually starting to see growth in that area.
NORRIS: I am still going with the concept of a wrap. Not only are the number of vehicle wraps increasing, just about anything else is a candidate for a wrap if it will hold still long enough. Anything with wheels from 18 down to two, boats, planes, ATMs, bus-stop kiosks, park benches, buildings—everything seems to be fair game.
RENDA: Some municipalities now limit the size of outdoor banners. In the past, there were no limits, and the banner size could be quite large. Outdoor banners using four-color-process art are real eye catchers and bring in additional business for our customers that use them.
SP: What types of clients are the major buyers of outdoor graphics from your company? Has this customer mix or their buying habits changed during the last five years, and, if so, what factors do think have driven the changes?
GABRIEL: Our clients are a combination of entertainment and retail. We haven’t seen much of a decline, and quite honestly, we have seen an increase in business. Our clients are looking for options, and someone who can manage their entire campaign and offer solutions will always have the best chance.
NORRIS: The clients that buy the majority of outdoor graphics from our company include a major retailer, several transportation companies, and several oil companies. The only pattern seems to be that there is no pattern. They all want to be seen, or they wouldn’t be in the market for graphics. They all seem to want to update and refresh their image, but tend not to make any drastic changes because they already have well-known images and do not want to risk any loss of recognition. But they seem to go from one year of adding graphics and buying a lot to another year of buying little to a different year of average buying. They economy does have an effect on overall purchasing, but it isn’t a reliable way to forecast what any given client will do.
MCDANIEL: The end user of the outdoor graphics range from companies in a number of industries like home improvement, convenience store, grocery, and retail-store chains. The buying mix has changed in a positive direction, mostly due to the new equipment that we can offer. As digital production has become more cost effective, and with the ability to print direct to substrates, clients often run regional promotions and small test markets before rolling out a national campaign. Five years ago, we rarely produced test market and regional signage. Today, it goes hand in hand with almost every campaign. We believe this change is primarily driven by the speed and cost effectiveness of digital printing.
SP: How have recent technological trends affected outdoor-graphics production in your business?
GABRIEL: The quality and speed of today’s equipment is allowing companies like LAgraphico to compete with screen printing, where in the past that wasn’t an option. We carry materials in house that meet both our sustainable objectives and the quality expectations of our clients. One material biodegrades in landfills. Lighter-weight materials (7 oz) that are able to hold the quality are extremely important to us.
MCDANIEL: We are able to digitally produce outdoor graphics extremely quickly, many times, with same-day service. Digital production offers options that previously were not available to us. We can provide partials, we can cut into others jobs being produced to help a client out, and it is not extremely costly to do so. In screen printing, once a press is set up, you need to run the job until it is finished. So, digital production offers a more flexible production environment. We were considering a drive-through window on the side of our building, but the county turned us down!
RENDA: The newer machines are faster and offer better quality, but they are also expensive. You must continue to invest in capital goods to remain competitive and produce the quality that is demanded by our customers. It is capital-intense to be in this type of business. We make sure we are on the cutting edge and keep our costs competitive in the industry, while providing a quality product.
GARCIA: The technological advances and drop in price of digital printing equipment allows new companies to enter the outdoor-graphics industry, making it a more competitive market.
SP: What impact has the recession had on your outdoor-graphics business? Does it remain a profitable area for you?
GABRIEL: I’d say we haven’t had any impact quite yet. In terms of profitability, because we’re new in the business (being in it the past two years), we’ve only seen it rise. We plan on developing a survey for our clients and measure the results with the goal to see if our business model is the key factor—one source, one solution. Clients have the option of several value-added services in one facility that most graphic-solutions providers simply can’t offer.
NORRIS: The majority of our products end up outside, and it does remain a profitable area for us. Business levels have followed the economy in a general sort of way, but it is difficult to point to any trend exhibited by any specific client and say a recession kept them from placing an order this month. We count several oil companies as clients, and they seem to be fairly recession-proof these days. If we survived on jobs from mostly small business clients, a recession may have a more noticeable impact.
MCDANIEL: We don’t actually feel that there is a recession in the outdoor-graphics market. We understand that more attention is being paid to budgets, and customers are looking for the best pricing they can get. So, the pricing has been more competitive this year. We are shifting more focus to internal efficiencies to make up the difference.
RENDA: We actually haven’t seen any downward impact. Our customers are still buying advertising. It’s helping them sell their products, so we haven’t seen anything negative.
GARCIA: There is no question that a certain portion of our customer base has cut down spending, which has a negative impact on our top line but, in general, it is still a profitable segment of our business.
SP: What is your company doing to contend with the rise in energy and raw-material costs? Have these conditions affected the way you do business?
GABRIEL: We try to pass that along to our clients, where possible. I think they understand and are open to that. We’re always conscientious of those factors (rising costs) and we try to communicate that to our account executives with as much notice as possible, and then to our clients so they can be prepared for the increase. For example, in the next three months if there is an up charge, our clients can get secure budgets beforehand, approve projects, and we’ll honor all of our quotes. Also, internally one of our goals has been to be as sustainable as possible, which has benefited us in reducing long-term operating cost. Recently, we installed a lighting system through our 80,000-sq-ft facility, which saves us tens of thousands of dollars a year by cutting the voltage usage in half. We also recently installed low-flush toilets throughout the facility, and we replaced over 80 monitors to energy-efficient LCDs. Internally, we have developed a Web-based system called Huddle, which incorporates soft proofing, asset management, and job tracking via the web. Benefits seen with this software are that we’re not printing as much paper for job tracking, produce less proofs, and have increased efficiencies and consolidated information.
MCDANIEL: Well, there is not much we can do about the raw-material costs. Most of our materials are petroleum based, and we all know how that has been going. We get the increases, as does everyone else, and we must pass them along to the customer. We are helping our clients find alternative materials that are more cost effective for them. We are also looking at ways to cut energy costs internally.
RENDA: Unfortunately, we are starting to see material prices increase on items that are petroleum based. This places added pressure on us to look for ways to be more efficient so that we can keep our prices as fair as possible. We have a continuous-improvement program in place that helps facilitate this initiative.
GARCIA: We are very diligent in finding alternative methods and/or materials to lessen the negative cost impact of the rise in price of raw materials and energy cost. Since we are in a very competitive market, we are unable to pass along these cost increases; therefore, we are absorbing the drop in product margin.
SP: How has the push toward green, sustainable manufacturing affected your company and the way it produces outdoor graphics? Please explain any material or procedural changes or specific green initiatives you’ve started or plan to start soon.
NORRIS: Green is definitely the buzz word of the moment, and it certainly is being sustained in the media. It has not made a huge practical impact on our market yet. It has been a source of subject matter for graphics we produce, as it affects some of our clients. We have sold markings for flex fuel and hydrogen stations to oil companies. One of our largest clients is visible in its efforts to go green, and we have done show trailer wraps touting their progress.
We are in the early stages of exploring the purchase of one of the new greener printers being developed and using it as a marketing tool to produce graphics greenly so the client may proudly point out to the public how environmentally conscious they are by using green graphics. That sounds somewhat cynical, and it probably shouldn’t because protecting our environment is something everyone should participate in and take responsibility for. On the other hand, green technology is typically more expensive, and you can bet there will be some marketing mileage taken from it.
MCDANIEL: The push towards green initiatives cannot be avoided. It has increasingly been requested by customers over the last 12 months to know what we as a company are doing. We are currently pulling information together on what we currently are doing and also are getting ready to gear up on some more initiatives. We are going to make this information accessible to our clients via our Website.
RENDA: Some of our customers are starting to ask for green products. Our reply has been to seek out suppliers that carry green materials. We have found that more and more substrates are becoming available in an environmentally friendly form. These materials usually cost more, but some customers are willing to pay the higher cost. As progress continues and demand grows for green materials and products, I believe that costs will not be as big of a factor.
GARCIA: We are being asked by most of our major clients to make recommendation on making their product more green friendly. We have initiated a recycling program with our biggest client where we will be collecting outdoor banners once the promotion ends and using the material to fabricate other products.
SP: Looking forward, what do you see as the greatest challenges facing outdoor graphics providers?
GABRIEL: There are several options, in terms of materials and equipment that meet or exceed the goals of our clients. We will see more consolidation, mergers, and acquisitions. Fighting off the commoditization of the industry—companies that are just cranking it out, who don’t care what it looks like, dropping the value/price of what they are giving. We are holding our pricing because we believe the service and quality warrants, and eventually those companies will go out of business. Shipping and installation is becoming more cost prohibitive. Creativity and advertising is another challenge. You want to reach your clients two different ways: through the internet and outdoors. If you can do both through creativity, you’ll be golden.
NORRIS: I think the greatest challenges going forward will remain the classic ones: how to provide the best product for the best price for your customers, and then to stand behind your product and give your customers the best service available, certainly better than the guy down the street.
MCDANIEL: I believe there are a few challenges for outdoor-graphics providers in the near future. One of them is the ability to stay up on the newest digital printing technology. As soon as you purchase the latest and greatest digital press, there is as new one out right behind it that is faster and offers higher quality. This means that your digital-equipment decisions must be well researched and thought out. Another challenge I feel will be coming on with more strength is the green effect on outdoor graphics. With more corporate push towards green initiatives, this may tighten the amount of signage in this area, since most of the substrates are not exactly green friendly. We need to be able to offer more eco-friendly materials if we want the print spending on outdoor graphics to remain strong.
RENDA: Investing in new equipment as it is developed and learning how to process green materials will continue to be a challenge that faces our industry. We at Art Etc. have decided to expand the scope of our business from strictly a printing business to a display company that also provides screen and digital printing. As I stated, everything we do is with our customer in mind.
Brandon Gabriel, Principal, LAgraphico, Burbank, CA
LAgraphico has been in the graphic-solutions business for nearly 35 years. From prepress roots, it has grown into a complete graphics-service provider. Today, the company’s services include structural engineering, semi-permanent and permanent displays, sheet-fed printing, large-format graphics (outdoor advertising, in-store environments, vehicle wraps, and other promotional materials), and installation. Its sister company, Midnight Oil Creative, focuses on interactive media, media placement, and concept creative.
Randy Norris, CEO, Mountain Commercial Graphics, Houston, TX
Since 1984, Mountain Commercial Graphics has been providing screen-printed and digitally imaged graphics in a range of markets and applications, including fleet wraps, gas-pump graphics, banners, architectural signage, custom OEM graphics, retail, aviation, and canopy graphics.
Robbie McDaniel, President, PSP & Digital, Decatur, GA
PSP and Digital was founded in 2002 by father and son team Rob and Robbie McDaniel. The 60-employee company offers a range of services, including UV screen-printing, UV digital imaging, and solvent digital printing, as well as fulfillment and distribution services. PSP & Digital specializes in providing national retailers with sign kits that include banners, yard signs, window clings, pump toppers, pole signs, and decals.
Ben A. Renda, President, Art Etc. Inc., Louisville, KY
Founded in 1976, Art Etc. considers itself to be one of the most experienced and versatile producers of point-of-sales graphics and 3-D displays. This centrally located company is equipped with screen printing and digital printing technologies, as well as a variety of finishing and display-making capability. Art Etc. provides warehousing, fulfillment, and e-commerce services to its national customer base. The company prints banners, posters, window signs, and other P-O-S applications onto materials such as paper, foam-board, corrugates, plastics, and textiles.
Philip Garcia, Vice President of Operations, S2K Graphics, Chatsworth, CA
Founded in 1989 as Signs 2000, S2K Graphics provides promotional and visual merchandising solutions to retail and product marketers across the US. The 45-employee operation offers a range of services in addition to printing graphics, including assisting clients with promotional planning, creative design, shipping, fulfillment, and more.