A New Path to Client Success

In New York, Graphic Systems Group is aggressively pursuing the “de-coupling” trend.

As a co-founder and now president of Graphic Systems Group LLC (GSG, gsgnyc.com) in New York City, Ken Madsen has watched his company evolve from high-end photo re-toucher catering to the big advertising agencies to a full-service production house specializing in everything from Web design, product packaging, and outdoor displays, to graphics for retail spaces, and sets and props for national television shows. In the process, he’s watched innovation and technology not only change the way his company does business, but also redefine just who the company does business for.

And, Madsen is quick to add, he doesn’t want to be pigeon-holed as a print provider: “Sometimes when I talk to folks and I say, ‘We do print,’ they immediately think we have a 4-color and a 7-color press at our location here in New York and that we print magazines or brochures – but we don’t,” he explains. “We have the HP 10000 and the HP 9000, and we have a few Canons and Encads. We even have the facilities to do welding and building murals and mounting, and the people who do the support work before that phase. But that’s just where we go with print. Today we are a 360 production house.”

Perhaps it’s semantics, or maybe it is Madsen’s broader vision for the company that expands far beyond the scope of your typical print shop. But whatever you call his firm, GSG is a full-service provider – of print work and much, much more. He points to the company’s organic evolution to underscore his point.

“In 1994, we were a Paintbox and high-end retouching company catering to the advertising agencies here on Madison Avenue, servicing those folks,” Madsen says. “From there, we grew into large-format proofing and CMYK and display graphics, and from there, we dove into HTML, the dot-com world. Then we went into studio work, where we had mechanical artists who would take a lead design for an ad and modify it to fit different formats so we would have a complete workflow system that would help manage the assets.”

That gradual progression was marked by steady growth – from about 60 employees in Manhattan in 1994 to more than 150 today – plus an office in London.

“From workflow systems, for whether it’s packaging, advertising, today, 75 percent of the work we do is direct with our global clients, as opposed to with agencies,” says Madsen, who admits this has marked a substantial change to the company’s early business model. “Not only that, but we diversified the portfolio so now we’re doing not just print for advertising, but we’re doing packaging as well.”

This marks a decisive change from the early days of GSG, when agency work – specifically re-touching and print proofing – was the company’s bread and butter. When those firms were fat and happy, so was Madsen’s company. But the economy has a way of sneaking up on you, he says, and the successful businesses are the ones that manage to change and grow in the face of financial hardship. That’s what happened for his firm, at least.

Adaptability and ingenuity have both helped GSG survive, thrive, and redefine itself while many of its fellow production houses have struggled under the burden of clients’ shrinking marketing budgets and a long and brutal economic downturn.

“The recession has forced this idea of doing things more efficiently in a faster timeline, and clients want to understand what they’re spending in the marketing channel,” he says. “Because we have reporting and transparency, we’re providing a lot of those things that are too compelling to ignore. So the result is, they don’t want to use the agency anymore. Now, we call ourselves “de-couplers” because we de-couple the production away from the advertising agencies.”

Taking advantage of the decoupling trend
De-coupling – or unbundling – in advertising is the process through which advertisers buy services directly from suppliers who previously were sub-contractors to the clients’ advertising agencies. In GSG’s case, these services could include the printing, prepress, installation, and other production-related services the company brings to the table. While he certainly didn’t invent the term, Madsen admits he is clearly aware of the negative connotation it might have, particularly among his former clients at the advertising agencies on Madison Avenue.

“The advertising agencies do not like who we are,” he admits. But that hasn’t stopped him from selling the un-bundled services approach directly to clients.

“Essentially, now we’ll go into Heinz, or Novartis, or Elizabeth Arden, L’Oreal, Estée Lauder, and so on, and say, ‘You don’t need your advertising agency to do your production. We’ll do it. We are the logistics behind it, and we are the people they’ll use anyway,’” he says. “When we can speak directly with the client about the production aspect of their job and say, ‘We’re not going to mark it up – we’re going to show you the exact costs on this – and we’re going to be transparent, they see the advantage right away.”

Technology is the driver behind this promise of transparency and it’s this very same technology, Madsen says, that is most substantial and compelling to clients. He points to GSG’s client-facing “dashboard” as the best example of how the company has centralized and automated production- and campaign-related data that might previously have been buried deep within a client/agency marketing contract.

“We’ve built an interactive dashboard for clients that aggregates all the activities we do for a client, putting them into a graphical interface so they can get a feel for the metrics and spend and so forth,” he says.

The dashboard tool, according to the GSG website, “Allows clients, in real time, to track the status of work they have underway with us, to better control costs and more crisply execute their marketing activities.” Among the searchable data categories are: revenue impact across all channels, campaign respondents, percentage converted to buyers, marketing efficiency, and so forth. Madsen credits the dashboard with building trust and credibility in his company, while assuring clients in a tangible and measurable way that they can sidestep ad agencies and the subsequent hefty price tag for production services without losing out on anything in the process.

“The client can now tell their agency, ‘Listen, you focus on the creative and the concept and then you’re going to hand that off to my production agency to see it through,’” Madsen explains. “If I can save a client typically from 20 to 60 percent, from de-coupling from an agency, they can’t go back to the old way of doing things.”

It’s been an “interesting ride” for GSG, and Madsen says he is thrilled to see more and more big brands embracing the idea.

“We’ve been doing this for four or five years, and now Diageo [parent company of Captain Morgan, Ketel One, Crown Royal, and myriad other top liquor brands] is de-coupled, P&G is going it now, Pfizer has already done it in Europe and they’re bringing it to the States,” he says, noting that the whole concept of de-coupling was born overseas six or seven years ago.

“They started it first in Europe because of the complexity of the languages in the markets, and the need for more efficiency. When we release a campaign in London, for example, it’s always a master in English, but if it needs to go into the regions or other countries, it’s got to be translated. So part of our world is that we also do adaptations, where we adapt the English version into, say, the German market. It’s not just the language issue – it’s the cultural insight as well.”

Rediscovering P-O-P and out of home
Language and cultural barriers may not be key factors in driving the de-coupling trend in the US, but cost-savings are still a great motivator. And, by circumventing the ad agencies, Madsen’s company has seen a diversification in its production workload. Direct access to the client has opened the dialogue about GSG’s capabilities and, in turn, clients are bringing them work they might have missed out on when the agency acted as gate keeper and delegator of projects.

“Say I’m a brand manager for Colgate toothpaste and I’m in packaging – that’s a different group that’s going to deal with us for building the mechanicals and doing the prepress on the packaging than, say the marketing person who is handling the above-the-line campaign and doing the ads and using us for the TV,” Madsen explains.

“But, because we have a data-management system, all of those assets are now residing in one place like they never have before. So now the client or brand manager can do a quick sweep and look at the print, TV, radio, out-of-home, and large-format work we’ve done – or could do – for them, and see all the other ways we can work together they may not have realized before.”

One area in which GSG has seen substantial growth of late are the realms of out-of-home and point-of-purchase. His clients, both brand owners and agencies alike, seem to be re-discovering the marketing tactic after years of having shifted their focus to the Web.

“I’d say about 30 to 40 percent of our business today is P-O-P/out-of-home, and it’s definitely growing,” says Madsen. “What happened with marketers is they pushed a ton of money to digital – when I say digital, I mean Web – and they were pushing it there because they needed to get into that space. A lot of those dollars at that time went away from out-of-home, and P-O-P, and P-O-S, and even packaging.”

But it’s a trend that seems to have reversed itself in the last two or three years, by Madsen’s measure.

“I’d say today that out-of-home is definitely coming back,” he says, particularly among the companies that shifted the bulk of their resources and marketing dollars to the Internet. “The metrics came back and those companies said, ‘Wait a minute! Where is the impact?’ Especially when they saw that some of their competitors – people that were smart – who worked on refreshing the packaging on the shelf instead of worrying about digital. It was a big differentiator, they got huge results and sales went up.”

Those companies that had shifted their focus to online campaigns are playing catch-up now and the result, says Madsen, is a renewed focus on reaching customers at the store level. This spells money – and lots of work – for GSG.

“These same companies realized, ‘Wait a minute, we’ve got to refresh our P-O-P and P-O-S because that’s where all our competitors went when we were going digital,” explains Madsen. “What they lost sight of, and what they’ve got to remember is this: people still touch the package, and they’re still going to look at a P-O-P and a P-O-S.”

Hitting One Out of the Park
As noted in the main text, wide-format printing is just a slice of GSG’s service offerings, but that doesn’t stop the company from making a giant splash with every project it produces. A perfect example of the team’s creativity and versatility – including wall and window graphics and other printed and die-cut vinyl – can be seen in its recent work for Major League Baseball’s Fan Cave in New York City.

Situated in the heart of the Big Apple at Fourth and Broadway, in a retail space formerly occupied by Tower Records, and replete with a multitude of GSG-produced full-color, larger-than-life, digitally printed graphics, the MLB Fan Cave is designed to engage baseball enthusiasts with a fully interactive experience. The “pop-up” store, which was set in place for the length of the 2011 baseball season, serves as the setting for myriad fan activities, including visits from major-league ballplayers and celebrities, big name musical performances, and a variety of baseball-related events and parties.

The concept for the cave is the brainchild of Paul DiMeo of “Extreme Makeover: Home Edition” fame, and includes a pool table, bar, 1950s-era diner, memorabilia museum, fantasy baseball counter, and pitch-speed tester, among other things. What’s more, thanks to a MLB-sanctioned contest, two lucky fans won the opportunity to literally eat, drink, and breathe baseball – living in the cave from the beginning of the season through the World Series.

For its part, GSG coordinated with the MLB design team as well as industry partner 3M to bring the magic of baseball to life.

“We worked together with 3M, which provided us with the vinyl for the project ,” explains Rodger Sheehan, vice president and senior accounts manager for GSG. “We put up a lot of window graphics, we did some CAD-cut vinyl on glass, and also created a plexi-map of the United States with images of all the different ballparks that they gathered from Google maps. Basically, it’s a lightbox, with separate switches for each of the ballparks. So, when there’s a game going on, they light up those different stadiums.”

For each of the different graphical elements, GSG worked with Illustrator, Photoshop, and InDesign files provided by the designers, then output onto more than 2000 square feet of 3M-provided media, including its IJ3650-114 and IJ180-10 vinyl, as well as 3635-22b adhesive on white side for windows and 3535-22b blockout film for the lightbox display.

Printing took more than two days using GSG’s stable of wide-format printers – an HP 10000, HP 9000, and Roland Camm1 – each with Onyx RIP and HP inks; and another three days for finishing with 3M matte and glossy lamination on the company’s Orca I and Orca 64 laminators. Then three of the company’s two-person crews were ready to tackle installation, which took about four days in early March, just before the first-pitch of the 2011 baseball season.

“Removal of previous window films, difficult access to the site, and working around multiple other work crews all at the same time were all part of the challenge,” says Sheehan. “And, prior to install, we had to work out numerous changes to content and schedules to meet various deadlines over nights and weekend, and we had to create design solutions when client expectations were modified.”

All in all, though, Sheehan calls the project a success: “This job was a perfect fit for our versatile and flexible approach and to our strength in project management.”

A major lever
For GSG, then, the “interesting ride” Madsen referred to is continuing, and his company is keeping an eye on where trends are going at present and in the future. For now, pursuing those clients who utilize ad agencies by rote is a primary goal. For instance, if what Madsen heard from many global brand managers representing Fortune 500 firms during a recent meeting of the Association of National Advertisers is true, the de-coupling of production from the traditional ad agency is making waves throughout the industry.

“If you’re using a de-coupler like GSG, you already have a competitive advantage over your competitor,” he says. “That’s why procurement is such a big deal now within all these major global brands. They’re bringing de-coupling to the forefront as a major lever for cost-savings.”

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