According to gap intelligence advertising data, circular advertising for ink supplies has increased by almost 60 percent for the first eight months of 2011 compared to the same time in 2010. Manufacturers are dedicating more of their ad dollars toward ink supplies in an effort to push the razor blade part of the equation and increase their profits. Furthering this point is the very slight, and arguably negligible, 8 percent increase seen in All-in-One printer ads for 2011 thus far compared to the same period last year. While manufacturers are not lowering their investment on pushing hardware through advertisements, there is certainly a renewed sense that awareness around consumables may also help generate higher sales.
Some of the most notable increases in ad volume are at OfficeMax and Staples with 186 and 64 percent hikes, respectively. The third major office supplier, Office Depot, also showed increased ink supplies circular advertisements with 28 percent more placements in 2011 over 2010. The increase of ink cartridge ads in the office supply channel is particularly noteworthy considering this is one of the primary channels that consumers shop for this product category. The increased circular activity for ink supplies potentially indicates a renewed sense of confidence by manufacturers in the channel, which is demonstrated by increased investments.
Another store type that saw significantly more circular advertising for ink is the mass merchant channel, particularly Kmart and Walmart with growth of 388 and 106 percent, respectively. Target did not experience the same surge of ink advertisements with a mere 28 percent increase during the time period. However, increased advertising investment into the mass merchant channel indicates that these types of stores are growing in popularity as places that consumers are frequenting to pick up their ink supplies. Comparatively, it should be noted that Best Buy’s advertising levels remained even with 59 ads during the nearly 8 month period of 2010 and 2011.
Weekly circular advertising for the ink industry has undoubtedly seen growth during 2011 compared to 2010 but it is also important to note which brands these ads are coming from. The largest growth was seen in advertisements for the OfficeMax brand (refills), Multi-brand ads (featuring a variety of consumable brands), and Kodak in that order with growth of 350, 272, and 144 percent, respectively. However, it should be noted that the absolute number of ads featuring the OfficeMax brand went from 8 to 36, which is not nearly as impressive. Absolute numbers for Multi-brand ads, however, do present an impressive increase from 43 to 160 placements in Sunday circulars. The increase demonstrates that retailers are heavily pushing ink supplies in their circulars and promoting programs such as ink recycling and merchant rewards.
Even more interesting is when we look at specific ink manufacturers’ advertising numbers. Kodak bolstered its advertising placements by an impressive 144 percent year over year, which makes perfect sense considering the company’s heavy investment in its inkjet technology. Kodak is depending on its inkjet products and has made it perfectly clear that cameras are not the company’s key to success. Kodak announced its second ink set in January of this year with the No. 30 family, which supports the company’s lowest total ink replacement cost claims. With so much invested in its inkjet business, Kodak knows that advertising dollars have the potential to take the company far. HP and Lexmark also showed increases in ad volume with growth of 16 and 59 percent, respectively.
The other major printer companies including Epson, Canon, and Dell showed respective declines of 14, 22, and 50 percent in the number of ads for their ink supplies. It should be noted that Dell only advertised two times in 2010 and a single instance in 2011 so far in Sunday circulars. Brother’s ad volume has remained consistent with 15 ads during the first seven and a half months of both 2010 and 2011. The drop in ad volume by these manufacturers may indicate a slight change in their sales strategy or more realistically reflect the continued challenges posed by the weakened US economy.
Overall, the increase in Sunday circular advertisements featuring ink supplies is positive for the industry. While resellers are likely contributing a large part of this growth with advertisements for their recycling programs and merchant rewards, the industry remains one of the key money makers for many companies. Promoting cost savings through ink advertisements may be a key ingredient to consumers’ decision making process on what hardware to purchase. If Kodak keeps telling consumers that it has the lowest total ink replacement cost in the industry and HP continues to showcase the savings from buying multipacks over single cartridges, consumers are eventually going to listen and that means more printer sales and a higher installation base for those invaluable drops of ink.