Why the Paper Crisis will Lead to More Digital Retailer Advertising

The paper crisis, pushed by the COVID19 pandemic and the global shipping crisis, is making local advertising more and more expensive. How will that impact ads?

Firstly, congratulations! You are reading this text online, in digital format, perhaps on a computer monitor, mobile phone, or other display.

If this article were to be printed on paper, it could prove very expensive in the future. You see, paper is the new gold, and this is throwing manufacturers and printers into a state of alarm. Publishing in print is threatening to be more costly than ever before, with the price of an offset role rising to 200 euro and more, according to trade specialists, Euwid. There is even industry talk of prices increasing up to 40 percent.

The cause is an increased demand coming from China and, of course, the Corona crisis. The pandemic has broken supply chains. Recovered paper, a coveted raw material, is also increasingly used as packaging for booming, online retailers.

But what has the global market rate of paper to do with local advertising in Germany? The answer is - an awful lot.

Local marketing primarily consists of retail advertising, for which, at least in Germany, tons of paper are still being printed. Retailers invest around a third of their annual marketing budget in brochures, leaflets, flyers, and advertisements. Many still using brochures as the medium around which all other advertising activities are planned. Although the near future will see more budget spent on digital marketing, some retailers, especially in the food retail sector, are still fans of the good-old pullout advertising supplement. According to the EHI institute, the percentage of printed marketing in the food retail industry will have sunk just 15,7 percent by 2024.

The unrelenting popularity of print is rather difficult to explain considering the tight margin calculations used by the retail industry. Even before Corona, leaflets and direct mail drops were dearer than their digital alternatives, and now, this paper crisis will make printing significantly more expensive.

However, even without the current paper shortage, a lot could be said for the use of digital advertising, alongside  a clear and considered cross-media mix of brochure and online marketing. No other area of marketing has such huge, unrealised digital potential as local advertising.

  • Today, large, national advertising campaigns can be “localised” with very little effort. What previously cost media agencies many sleepless nights labouring over complicated Excel lists can now, thanks to smart technology, be done with a few mouse clicks and a well-arranged dashboard. Even the most extensive campaigns can be rolled out swiftly, in thousands of variants, at a local level.
  • It has been a long time since the younger generations could be reached via classic print channels. Media behaviour has fundamentally altered - but the media mix of retail advertising hasn’t. Why is that?
  • Printed direct mail advertising is being pushed to its limits by the many mailboxes which now sport stickers requesting “no advertising” or “no free newspapers”. The owners of these mailboxes are therefore no longer being reached. On the other hand, modern geo-targeting tools allow retailers to aim their campaign programs precisely and efficiently at local audiences.
  • The food trade is increasingly focusing on the subject of sustainability. All the big retail chains are promoting ecological and regional products. But how can this new positioning sit alongside the printing of high volumes of paper, plus the effort and expense of distribution, for advertising that will often land in the recycle bin unread?

This is not an argument against printed advertising in retail, which certainly fulfils a need, especially in the case of sales campaigns. This is a plea for more digital advertising at a local level. All the printed catalogues, brochures, advertisements, and direct mail drops would have a bigger impact if they were more closely and better linked to accompanying digital measures.

Perhaps the current price increase in printing costs will lead to a digitalisation of retailer advertising more quickly than expected. After all, more programmatic planning and less paper in marketing must, eventually, be the way forward.

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