Quickly reducing indirect marketing costs

For procurement, reducing indirect marketing costs can seem like an impossible task. How do you identify hidden costs? How do you demonstrably make savings when previous costs may not have even been recorded? Where do you even begin?

Print marketing is the perfect starting point. Did you know that 0.8% of revenue is spent on printing? (source: Printing Impressions)

For many, ‘price per print’ has been the only way of evaluating commercial print options. However, even if price per print takes into account the production cost of the printed material, such as the ink, toner and paper type to give a cost per product, it neglects the Total Cost of Printing (TCP), which includes admin, design, creation, print, excess print and delivering products to their final user/destination.

The indirect costs are remarkably clear. Printing itself accounts for just 15% of the total cost of the print process. Admin accounts for a staggering 60% for short-run printing (<1000 copies).

From sourcing printers, procurement processes, time spent emailing designs back and forth, discussing with various offices about who needs what, it’s easy to see how indirect costs add up.

It’s common for organizations to have no central record of print activity. This can be down to segmented departmental activity and costs being hidden in external agency invoices, event budgets and so on. For organizations that have offices around the world and produce materials in local languages, failure to keep track of spend and inventory can make getting a true idea of print costs incredibly hard.

For example, for global businesses with operations in multiple countries, failure to efficiently share and make use of materials can lead to the duplication of work. Gelato overcomes such issues by giving teams across the world access to company brand files in the cloud that can be modified within templates, enabling the tailoring of content for local markets, while global brand consistency is maintained.

As everything is carried out in one system, centralised control is ensured, with complete oversight of cost and process; right down to who is permitted to print and in what quantities, along with records and reports of everything that’s happening. Gelato’s Network of print partners means that businesses no longer have to spend time finding and setting-up with printers.

Using Gelato, global manufacturer Zehnder Group cut time spent on print administration by 50%. Printing centrally, it had previously managed 18 local print partners and shipped prints to different countries across the globe. The company knew it needed to streamline its print process and used Gelato’s print cloud to reduce stock, lower costs and half admin time.

“Foremost, we want to reduce the handling effort. With the large number of print jobs we run, it is extremely helpful to have a solution that allows the head of each country to order prints for himself/herself and his/her team, as needed. And, of course, this also saves costs.”
Nadja Funkner, Marketing Project Manager Clean Air Solutions, Zehnder Group International AG

Getting physical goods to locations around the world can be costly, both in time and money. For businesses printing centrally and shipping, this can mean prints traveling vast distances, adding 40-50% on top of print costs (even higher when shipping into BRIC markets) and requiring lead times of 3-4 weeks.

Hydro needed to get 800 posters to 133 addresses and by using Gelato and printing locally, they reduced shipping distances by 72%.

The materials also need to get through customs and can be subject to tariffs depending on the country in question (Russia is around an additional 10% - 15% for example) which not only adds additional costs but can also cause further delays.

Gelato intelligently allocates print jobs to high quality print houses within the Gelato Network in over 70 countries. This means prints are produced close to the delivery address and delivered quickly. Not only is there no need to coordinate print partners (reducing admin expense), the process leapfrogs customs altogether.

It is the print files that easily cross borders, rather than physical products. This of course cuts CO2 emissions, which have been the price to pay for shipping physical goods. As environmental consciousness comes to the forefront, cutting the cost to our planet has never been a more important consideration!

An example is Hydro Extruded Solutions, a provider of innovative aluminium solutions with 22,000 employees, that needed to get 800 posters to 133 addresses. By using Gelato and printing locally, it reduced shipping distances by 72%. Similarly, Zehnder Group used Gelato to cut print shipping distances by 87%, which in turn reduced its associated CO2 emissions by 81%.

"To be perfectly honest, when I started to look for a solution, I did not know that a solution like Gelato Globe existed. When I found it, it solved my challenges and at the same time provided me with the potential of significant efficiency benefits."
Hilde Kallevig, VP Communications, Norsk Hydro

When delivery times are long, there is a tendency to over-order print material ‘just in case’ it’s needed. Excess printing, defined as unused printed collateral, can amount to as much as 50% of total print volume, which also raises associated shipping and storage costs.

Over-order can see cupboards stacked full of outdated materials. In some places, we’ve even seen companies that have rules in place to ensure materials are used before updated versions can be ordered, meaning that old and outdated materials are actively being distributed. The cost of such activity to the company’s overall reputation and standing is impossible to calculate, but likely to be considerable!

What can be calculated is average wastage. If an organization is making its commercial print purchase decisions based on cost per print, it needs to factor in the cost of the creation, shipping and waste of the materials it never even uses. As Gelato prints close to the final delivery address, enabling prints to be ordered ‘on demand’, organisations simply no longer need to over-order!

Gelato has been working with a leading automotive brand to change the way it manages its printing process for marketing materials. Together, we’ve shifted from high volume production, in a central location, to a micro volume on-demand approach. Rather than printing and distributing to resellers (leading to excess print volumes), the company now allows its resellers to order on-demand and when items are needed. Through this fundamental change, Gelato has helped reduce both print volume and delivery distance, resulting in total cost of printing being reduced by 74%!

When assessing a new brand and print marketing material solution, it’s very easy to come to hasty conclusions by focusing only on print per item costs. However, to understand the total cost of printing and cut indirect costs, factors - such as administration, shipping & delivery and excess printing/waste - must be addressed.