“There is no question that in a recession marketing and advertising spends are reduced and in turn this directly affects the wide-format production companies,” said Barry Polan, vice president, national sales, Crush Creative. “This is not to say that there are not rays of hope. Knowing that the general client spend was trending downward, Crush Creative took a proactive approach to win new business and capture a larger share of the printing needs of existing clients. This has helped us to offset some of the expected attrition.”
“Recent trends seem to point to a market that is slowly moving back toward more ‘normal’ conditions. It seems that many consumers—from small shops to large ones—are still a bit “gun shy”…waiting for a sustained period of recovery before jumping back into the market with both feet,” said David Grant, vice president of marketing, Oracal USA.
“The wide-format industry saw a contraction from 2008 to 2009 of approximately 30 percent in the outdoor graphics markets. With tightening credit markets, limited capital availability, cuts in marketing and advertising spending and economic uncertainty, there’s been a pull-back in spending. 2009 was a ‘reset economy’ where a new normal was reestablished,” said Rick Scrimger, vice president/general manager, Roland DGA.
“Despite these conditions, however, recent reports indicate this downward trend might have reached the bottom,” said Bill Dundas, director of technical affairs, ISA. “Because commercial advertising historically is the vanguard of economic recovery, a turn-about in the market for digital signs and graphics might already have begun. By all indications, however, this won’t represent a return to the pre-2008 boom days but, instead, to a more moderate and steady growth pattern.”
One of the interesting things is that some of last year’s high-growth areas—retail and POP signage, as well as vehicle and exhibit/trade show graphics—have been some of the hardest hit during the recession. In many—if not most—instances large projects have been delayed or reduced, some cancelled entirely. According to InfoTrends’ Greene, “As I see it there have been few if any segments of the market that have NOT been impacted by this economic downturn.”
“Print and sign buyers have cut back in relation to the economic decline,” said Catherine Monson, CEO, FASTSIGNS International Inc. “Specifically, we have also seen larger customers tighten their print and sign buying budget. Any purchase that can be delayed is being delayed.”
Durst’s Howard elaborated a little more on some of the difficulties facing print service providers during this time. “The one item that seemed to have the most impact to customers was the constantly changing landscape of projects that their customers were going to implement and then pulling back from. It made the business and production planning abnormally difficult and the lead time for projects was cut down dramatically as when a customer did decide to do a campaign it was needed immediately,” said Howard. “This was particularly the case in the retail segment early in the year. It looks like this is beginning to stabilize and the end users are moving back towards a more planned project approach which means that budgets are set and being followed.”
Retail and Trade Shows
It’s no surprise that the retail and trade show segments have been hit the hardest—especially in light of the ties both have to the larger advertising industry. According to Adam Florek, research analyst with Lyra Research Inc., spending on advertising has dropped worldwide, but particularly in the United States and Europe. “Advertising companies reported year-over-year revenue declines of 15-20 percent,” said Florek, “revealing less spending on everything from billboards to banners. Sluggish consumer spending and the difficult environment for retailers are hampering demand for POP applications.”
“The demand for graphics in these segments is down from last year as marketing and advertising budgets have been cut at most manufacturers and national brand corporations across the country,” said Ed McCarron, director of marketing, Digital Imaging, InteliCoat Technologies.
“Retail advertising has been hit hard, but I’m not sure if we can define it as the hardest,” said Crush Creative’s Polan. “However, there is no question that budgets have been reduced. We are already seeing things turning around. ‘Back to School’ was a big push and ‘Holiday’ is trending well, also. The Entertainment clients are going strong as are cosmetic companies. We see that our clients that have lower ticket items are generally fairing well.”