U.S.-based Print Service Providers that have not invested in Cross Media but interested in buying in the next 12 months
Photo credit: Source: InfoTrends Annual Investment Outlook, 2012-2014
In a move to further capitalize on the fast-growing cross-media marketing opportunity, EFI announced it has acquired the Berlin (Germany)-based Variable Data and Cross Media Software provider DirectSmile. No financial details have been made available about the acquisition, but since DirectSmile is relatively small, the acquisition is not expected to have a material impact on EFI’s top line revenue.
Despite DirectSmile’s limited size, the acquisition is big from a strategic point of view. So far, with perhaps the exception of OPS, EFI’s software acquisition strategy has primarily focused on providing productivity improvements (predominantly through MIS) and not so much on business enablement. However, in the last couple of years we have seen a rising demand for cross media marketing technology among print businesses. In InfoTrends’ latest investment survey (2014), about 75% of respondents indicated they believe that print companies need to become marketing services providers, the highest number we have seen since we’ve started tracking the question a few years ago. The reason is pretty simple: in a time when print volumes and margins are under pressure, cross media marketing provides an opportunity for print companies to turn the tide, offer services that make their customers meet their communication goals more effectively, and come back for more. Print business that are successful with cross media see an average increase of 15% in print volume.
DirectSmile was founded in 1997 by Christoph Schacht and Christoph Clermont as a company to provide image personalization software. Image personalization typically works by overlaying graphical fonts on static background images. DirectSmile’s innovation is that it developed a stand-alone design interface, which reduces the need for prepress staff to possess advanced Photoshop and scripting skills. Additionally, the DirectSmile composition technology is optimized (and fast), which is a key requirement for high-speed production.
When tied in with a compelling creative narrative, personalized images can significantly improve response and conversation rates. Over the years, it became clear that image personalization would not become as mainstream as once thought; mainly because the application range for successful image personalization turned out to be pretty narrow. Whereas its direct competitors Pageflex, PTI (who bought image personalization provider DirecType in 2010) and XMPie could bundle their image personalization software in with its wider VDP and Cross-Media Marketing offerings, DirectSmile did not have that advantage. It partnered with Objectif Lune to provide an integrated version with variable data tool PrintShop Mail, but despite the effort, it did not become the sales success DirectSmile was hoping for.
Around 2010, DirectSmile decided to focus on the emerging cross-media marketing opportunity. It took the same approach as with its image personalization technology and developed a standalone cross-media designer that enabled prepress staff to design campaigns, develop landing pages, send out emails, and collect response analytics. It took a couple of years to refine the technology but since drupa 2012 sales for DirectSmile Cross Media has been on the rise. DirectSmile has recently started to port their technology to a SaaS model and announced last year that marketing automation (lead scoring and management software) is important for their future product direction.
EFI, headquartered out of Fremantle, CA, has been a leading producer of digital workflow software. EFI’s Productivity Software group includes MIS, Web-to-print and (now) cross media technology. Online Print Solutions has some cross media capabilities, but with DirectSmile the company will gain a much stronger technology base. EFI stated that they will incorporate DirectSmile into a new variable data product they will launch at Graph Expo. EFI will embed DirectSmile into their Digital StoreFront offering but will also keep selling it as a stand-alone solution.
The cross-media marketing software business is small from a revenue perspective but fast growing and important from an enablement point of view. Print service providers are under a lot of pressure to transform their businesses, by often adding marketing services, and are looking for a trusted partner to help them with this transition. InfoTrends’ research demonstrates the need for cross-media marketing solutions continues to rise. In that sense, the EFI acquisition makes a lot of sense and EFI has been able to secure world class software with much potential for future expansion.
The acquisition enables incremental revenue growth by expanding the available sales channels of DirectSmile, although some channels for EFI – e.g. Xerox (XMPie) and Ricoh (who took a strategic stake in PTI) have their own offerings. For channels where there is overlap (e.g. Canon, Konica Minolta Europe), the acquisition gives DirectSmile much more strength.
- InfoTrends interviewed DirectSmile distributor VBS last year about his success in selling DirectSmile in the Nordic region of Europe. Click here for more information.
- InfoTrends’ U.S. Investment Outlook 2014 in which we surveyed 200 U.S. based Print Service Providers and asked about their investment initiatives.