InfoTrends’ latest wide-format digital market research indicates that the market for wide-format digital graphics largely recovered in 2010. But that doesn’t mean that everyone in the market will recover at the same rates, and many of the companies in the wide-format market now become prime targets for acquisition as companies in other segments of the printing industry look at wide-format digital as a growth area.
We’ve written before about how convergence among printing segments—commercial printers, screen printers, reprographics printers, copy shops, sign shops—is one of the biggest and most important trends affecting the wide-format signage and graphics business. Now, as the economy recovers and the wide-format business in particular recovers, printing companies that are not in the wide-format signage and graphics business may be considering entering the market.
There are three ways to enter the market—they can sell wide-format and outsource production, they can invest in the equipment and people to produce the graphics themselves, or they can acquire another company that is already in the market. Also, some companies already in the wide-format digital printing business could be seeking geographic expansion or entry into new market segments by buying up a company with a specific set of skills.
3 Strategies to Enter the Wide-Format Signage & Graphics Market
- Instant market entry
- Have skills
- Have equipment
- Have book of business
- Increase sales with small commitment
- Lack of control
- Customer perception
Acquire Equipment & People
- Total control over equipment decisions
- Time to market
- Lack of expertise
- Lack of all required skills
The basic pros and cons of each strategy are identified above. The boxes on the far right illustrate another one of the very basic considerations about the wide-format signage and graphics market and that is that the barriers to enter the market are quite low. Any person or company can enter this market with a very low initial investment, but the companies that do this generally end up competing on a price basis. A new market entry has total control over equipment purchasing decisions, but has to be able to sell and professionally produce and fulfill wide format digital graphics, so the big risk is that they buy the equipment but then they can’t sell enough to make the venture profitable.
The outsource strategy is a low-risk alternative from a financial standpoint, but it is also likely low reward because you have to pay your production partners and it is a lot of work to find and manage reliable production partners, and there is a risk in selling something that you don’t produce and cannot control.
The third strategy is to acquire a company that is already in the signage and graphics business. This strategy obviously is likely to require the largest expenditure, but may also be the most rewarding in terms of building your business.
Rock LaManna is an expert in the field of mergers & acquisitions with a special focus on the signage and graphics market. LaManna is an independent consultant and good friend who offers the following advice for companies that are interested in either selling their wideformat signage business or acquiring a wide-format signage business.