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Profiting From Wraps

Taking on the Big Jobs Can Mean Big Profits.

by Thomas Franklin

2 of a 4 Part Series

Building wraps don’t just provide advertisers with a big bang for their outdoor buck, they can enrich print providers as well. Producing building wraps can be a lucrative addition to a grand format printers’ portfolio of services, print providers say, but it’s not without its challenges.

"It’s a nice, niche market," is how Tom Wilhelm, president, GP Color & Imaging of North Hollywood, CA succinctly puts it. While coy about specifics, print providers acknowledge that properly executed building wrap projects can offer significant margins versus other graphics products.

"They’re very profitable," seconds Gary Lucke. Lucke owns a Fast Signs franchise in St. Petersburg, FL and has produced wraps for two professional sports stadiums—The Devil Ray’s Tropicana Field in FL and LP Field, home of the Titans NFL franchise in TN.

Building wraps have benefited from the overall strong growth in outdoor advertising expenditures. According to the Outdoor Advertising Association of America, Inc.—an industry trade group—advertisers dropped $6.8 billion on outdoor ads in 2006. That’s an eight percent increase from 2005’s $6.3 billion. Through the second quarter of 2007, total revenue for the outdoor advertising industry jumped 7.9 percent versus the same period last year.

The outdoor market has seen consistent growth and shows no sign of abating, states Tim Greene, director, Wide Format, InfoTrends.

Demand for wraps is not uniform, however. Given that they are regulated by local government, they will thrive in locales with a looser or more permissive regulatory framework, Greene says.

The local-nature of the business extends to specifics of the local economy, especially commercial construction. "In places like Orlando where there’s a lot of construction and rehabbing of older buildings, you see a lot of building graphics," he says. This speaks to wraps increasing use not just to promote products but to disguise construction sites.

There is a greater appreciation among advertisers and property owners about the impact of building advertising, providers say. Especially in construction, wraps are seen as a way to disguise the unseemly jumble of workers and scaffolding and to remind the neighborhood of what the ultimate aim of all that chaos is. They’re also thriving in promotional cities like Las Vegas or Hollywood, Greene observes. "These are the Super Bowl cities that see the launch of big media campaigns," he adds.

Wraps have also benefited from an overall growth in digital printing, Wilhelm asserts. "I think the whole market is just expanding and the media companies—Viacom, CBS, etc. —have finally latched onto wraps."

Pricing wraps is a subtle game, according to Lynn Krinsky, owner of Seattle, WA-based Stella Color. "You need to be a high volume business, because no one will want to pay for a wrap by the square foot." Her recent purchase of a Leggett & Platt Virtu wide format UV flatbed has made this dye sublimation powerhouse take a close look at the wrap market, even though it’s typically the domain of the 16-foot solvent machines, she adds. "We haven’t done one yet, but we’re studying it very closely," she says.

Pricing by the square foot is a non-starter, Greene seconds, but leveraging the service aspect of the wrap—its installation, permitting, and overall job coordination—can help boost returns.

Given the volumes of ink and media involved, the production time, and the installation logistics, profiting from wraps requires very careful budgeting, Lucke says. Building wraps are frequently elements in a larger media campaign and that means a lot of money is on the table. "And you have to consider what your customers are re-selling the graphics for," Lucke says.

"Building wraps can be a very good business, provided you walk away from the bad jobs," Wilhelm offers. Bad jobs are typically the result of inexperienced clients or problematic proposals and job sites where the time spent putting out fires would likely eat into overall productivity. "Sometimes people just don’t understand what will work. You need to have everyone—creative, the facilities, the printer—on the same page, otherwise you won’t have a profitable experience."

Wraps also confer benefits beyond the bottom-line, Greene observes. "It’s such a big project that it generates a lot of buzz in the community, it gets your business" out in front of the public’s eye, he says.

The potential for the market is perhaps its most attractive feature. "Really, we see unlimited growth if it’s marketed right and if we educate our customers," Lucke states.

Click here to read Part 1 of this exculsive online series, Invest for Success

Oct2007, Digital Output

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