Business Trends

Our assignment for this month was to write about trends in the year ahead and one firm comes immediately to mind for this information: Trend-Watch. This market analysis company produces reports based on market research with business owners and executives. They specialize in the graphics, visual effects, and TV and broadcast fields. Here are some thoughts from Vincent Naselli, TrendWatch Director/ Graphic Arts Division (www.trendwatchgraphicarts.com).

Shutterbug: The clients of many of our readers are in the graphics field. What have your surveys revealed about the health and welfare of this community?

Vincent Naselli: The advantage that those in design and production fields have is that with only a modest capital expenditure it's pretty easy to set up a SOHO ("Small Office/Home Office") design studio, a business that is small in size physically as well as in employees.

In our 2000 Demographic Atlas, we estimated there are just fewer than 5000 establishments in the US design and production markets we cover. About 1/4 are commercial photographers, about 1/4 are corporate design departments, about 1/3 are graphic designers, and the rest are ad agencies.

As for publishers, there are in excess of 11,000 establishments in the US, and about 1/5 of them are book publishers, 2/5 are magazine publishers, about 15 percent are catalog publishers, and the rest are miscellaneous publishers.

SB: What industries have been identified as "growth" markets for 2003?

VN: Well, it's no secret that graphic arts markets are in a decided slump. There are very few of the markets we track that have reported anything like great business conditions in the past two years. But many have turned a corner--a good corner--in our Summer 2002 survey.

We have a calculation based on business conditions data called the Trend-Watch Graphic Arts Business Conditions Index (BCI). To get a sense of the scale, at the height of the Internet boom in Spring 1999, ad agencies reported a BCI of 165.91, the highest they've ever been in the history of our survey (which goes back to 1996). Ad agencies hit rock bottom in Winter 2001/2002, with a BCI of 1.14. No, that's not a decimal error or a typo: 1.14. They've turned a corner and the BCI for agencies in Summer 2002 is back up to 40.91. Actually, of the four markets we survey as part of our TrendWatch Graphic Arts Design & Production survey--graphic designers, ad agencies, corporate design firms, and commercial photographers--commercial photographers are doing the best.

SB: Magazines have traditionally been a market for photographers. What is their forecast?

VN: As for publishing markets--get out the Prozac. Magazine publishers took a hit in Winter 2001/2002, but the good news is that they're the only one of the publishing markets of the three we track (magazine, book, and catalog) that is on an upturn. In the magazine publishing market, we've seen a lot of consolidation over the past couple of years. First, larger publishers were on a buying spree, acquiring smaller independent publishers and titles, and especially new media publishers. Now, for primarily economic reasons, we're seeing a lot of shakeout. This is especially true in a lot of business-to-business and trade publishing markets, but even in successful consumer magazine categories. The market can't bear as many titles as it used to. But at the same time a lot of publishers see one solution as adding new titles to exploit hitherto unexplored markets. This seems to be especially the case among technology publications. We don't have data, but, anecdotally speaking, regular trips to the newsstand always turn up new titles on subjects like wireless devices and other new gadgets and technologies. So there's a lot of activity going on.

SB: What about graphic design firms and ad agencies as photo clients?

VN: In the graphic arts, no one lives in a vacuum and trouble in one part of the food chain trickles down to other parts. For example, when companies cut back on advertising and marketing (which they did), it means less work for ad agencies and the designers who create ads and marketing materials. This means less work for photographers, since less imagery is needed. Down-stream, this means fewer ad pages in magazines, which ultimately means less work for printers.

We find it amusing when manufacturers and developers that service the graphic arts markets cut back their marketing and advertising and then complain that creatives aren't buying more of their products. Gee, now why would that be?

So in some sense most of the creative markets are growth markets in that it's hard to get any lower than they've been. And Internet design and development firms--which we also track--took a hit, but they didn't fall as far as other markets and they're bouncing back modestly.

SB: What recommendations can you make to photographers planning for a brighter future?

VN: Well, print has traditionally been the bread-and-butter work for creatives and if there's less demand for it, it is not a bright future for those who design for it. So it will pay to become more conversant in new technologies. People think we're all doom-and-gloom when we forecast declines, but we think it pays to be prepared. Savvy, well-run companies can always thrive and we're more supportive of businesses that keep their eyes and ears open and can exploit new markets and new technologies. They always do better than firms that coast along on the wave of high times.

SB: How has the Internet changed the 2003 forecast for photography?

VN: The web has been a boon to photographers in that it provides an easy way to show potential clients their portfolio. This also means that they can attract clients pretty much anywhere in the world, so they're not tied to just clients in their local community or environs.

For example, "web page design" is one of the top 10 sales opportunities for commercial photographers. Some of this is offering web design as a service for clients, but a lot of it is using the web for their own marketing. We think this is a no-brainer. Some good executions we've seen involve organizing images by subject matter or type of image (for example, portraits vs. product photography). Some savvy photographers we know have even gotten into the "e-blasting" game and will put together a regular e-mail newsletter and mail it to current and potential clients.

It makes sense for photographers to market their own images and sell them themselves via their own web sites. This is probably why between Winter 2001/2002 and Summer 2002, the percentage of commercial photographers who see "e-commerce services" as a sales opportunity rose from 3 percent to 16 percent.
In fact, one additional advantage of the web is that there are so many other sites out there, that there is an increasing need for content and imagery--and there will always be a need for new imagery.

SB: From your TrendWatch perspective, what can you tell photography business owners to help them make better business and marketing decisions for 2003?

VN: This could apply to anyone, but we'd say don't let the economic slump force you into inactivity. There is a sense in some of the markets we cover that many firms are hunkering down and waiting for the tide to return--as idle as painted ships upon a painted ocean (to paraphrase Samuel Taylor Coleridge from "The Rime of the Ancient Mariner")--but it's dangerous to assume that a rising tide will lift all boats. It pays to be proactive rather than reactive, because you can bet your competition is going to be.

The other piece of advice I would offer is: don't be scared of technology. Photographers in general were sensible in that they didn't jump into digital photography immediately, but kept an eye on it until such time as the quality and cost made it practical to do so. As a result, digital photography--which many people believe is now finally "there"--has quickly become the top sales opportunity for photographers who respond to our surveys. There are of course some holdouts, and at the moment there are still applications for which digital photography is inappropriate, but that is changing fast and we forecast that photography will be increasingly digital. That's not a stunning prediction of course, but we're bullish on digital photography.

SB: What new profit-building centers or services do you see for photographers in digital technology?

VN: There are many aspects of the so-called "digital darkroom." For example, photographers have proven to be one of the biggest markets for wide-format printers. And one trend we've been seeing in the past few years, especially in the context of digital photography, is that photographers are taking over (either by design, or by expectation, or just by default) more and more of what used to be the purview of pre-press firms. Color correction, retouching, color management, proofing--it's not that they never did these things before, but now there is an increasing expectation that they will do them. It may be a pain to have to get involved in all these tasks, but when all's said and done, we think this will be more a source of empowerment for photographers than an imposition.

All these technologies may seem daunting at first, but when users of it get up to speed, digital imaging technologies give photographers and content creators more control over their images than they ever had. And that's a good thing.