From the whimsical to the practical, there is a profitable promotion for every marketing need.
Recovering from a 12 percent drop in revenues from 2000 to 2002, the promotional products industry posted a gain of 4.5 percent in 2003 with sales of $16.34 billion, according to the PPAI. The high-water mark in 2000 saw sales of $17.85 billion, which dwindled to $16.55 billion in 2001 and shrank further to $15.63 billion in 2002.
Figures from the ASI show more modest swings, but essentially tell the same story. ASI pegged the height of industry sales at $16.5 billion in 2001, dropping 5.5 percent to $15.6 billion the next year, before swinging up 3.2 percent in 2003 to end at $16.1 billion.
Sales for 2002 and 2003 "were definitely down; and in 2004, it started to turn around," said Josh Arkin of Funco Promotions, Lynbrook, N.Y. The depressed market was mainly the result of decreased order size rather than a drop-off in total orders, he added.
"Customers who had previously ordered 5,000 of a product now only ordered 1,000," Arkin explained.
Despite the seesaw, custom-imprinted promotional products have shown tremendous growth over the past 10 years. PPAI figures pegged 1995 sales at $8.04 billion, meaning that the 2003 numbers record a doubling of sales volume in nine years.
Although 2004 sales figures aren't yet in, PPAI Board Chair Carol Aastad said, "All indications for 2004 show that it was another great year. I wouldn't be surprised if sales were over $17 billion."
Compare that to the BFL&S Top 100 Distributors' sales of $2.78 billion in 2004, an 18 percent jump from 2003's $2.35 billion. Just under one-third of that total represented forms, with another 21.5 percent coming from commercial printing sales.
Distributors are jumping on the promotional products bandwagon, though. In 2001, promotional products accounted for just 10 percent of distributors' sales, or $221 million. In 2004, the category comprised 15.2 percent of sales, or $391 million. "We've seen increased distributor interest in promotional products in the past three years," said Karen Gregg, vice president, sales and marketing, for FSI Products, Aurora, Ind. "Many distributor organizations bring on new salespeople with ad specialty backgrounds to tap into this profitable area, thus increasing promotional products sales more rapidly," she said.
What's Hot
FSI Products, which produces promotional packaging and presentation folders, is seeing a big increase in requests for gift card holders, Gregg said. "They come in different configurations and are very versatile for use in any type of retail or consumer promotion," she said. Other popular products include photo frames and DVD holders.
Arkin noted that three years ago, bobblehead figures were all the rage, and thundersticks the year after that. "We stocked up on fun office items this year, such as a backscratcher with a massager or shoehorn, and a correction tape roller, which is huge because it's a re-order item," he said. Funco Promotions—which supplies official lava lamps, mini gumball machines, beach balls, pin art, fun dough, stress balls and putty eggs—offers more than 40 new items this year, including executive games, dodgeballs and cowbells.
Scot Fuhr, spokesman for ASI, said that the trade show in Orlando this past January featured a plethora of new offerings. "The hot products this year seem to be golf accessories, such as golfing watches and customized golf towels, imprintable USB drives and flashing ice cubes," he said. Such items span several categories of promotional products marketing, such as business gifts, desk/office accessories and novelties.
The annual PPAI show, held in Las Vegas this past January, showcased a new product pavilion, which Aastad said featured 500 products.
The show itself featured 3,600 booths. Aastad agreed with Arkin that people love to have fun. "There are some very silly, funky products out there, and it's one of the things that creates a memorable impression," she said.
For instance, a few years back, bouncing balls that lit up on impact were very popular; the next year, manufacturers added music. Silly hats are always popular, Aastad added. At last year's show, an electric toaster that toasted a logo onto the bread caught her eye. "Talk about branding," she said.
Industry insiders agree that flash-in-the-pan promotional products may come and go, but if distributors can identify a unique product with a long, useful life, they have a winner.
Aastad related one example in which the gift item was a turkey or ham. "Food is a very popular gift, especially in an imprinted container," she said. It came packaged with a wooden cutting board branded with the company name. "One of my customers told me that she was still using it seven years later—what a way to remember your name!" she said.
Stake Out the Desk
Desk accessories are the third most popular category for that reason, comprising 7.7 percent of 2003 industry sales. "The desk is the most expensive piece of real estate because the recipient sees the advertising message over and over again—on a clock, pencil holder, coffee cup, Post-it Note, etc.," Aastad said. Mousepads, screen savers, items that adhere to the desktop computer, and even cell phones, PDAs and their covers are a growing category, she said.
Arkin noted that desk accessories provide an enticing return on investment (ROI). "You need to supply a solution that maximizes ROI," he said. "If a customer is only looking for a quick hit, you don't need a $20 T-shirt. But, if the goal is to have the brand in front of the audience for a longer amount of time, you may pay a little more."
A T-shirt, for instance, may only be worn occasionally, spending most of the time out of sight in a drawer, whereas a $2 mini bubblegum machine stays on the desk and is seen on a daily basis. "The one question from every distributor is, 'What do you have that's new?'" Arkin said. "But, year in and year out, beach balls are our biggest-selling item. It's a huge business for us, for giveaways, concerts, picnics, etc."
Arkin attributes that to quality; Funco's beach balls have a self-sealing valve and a moderate price. Although occasionally undercut by other vendors, Arkin said, Funco wins back customers who are disappointed with lower-quality goods. "There's a big trust factor involved. We're honest with distributors and will tell them if it's a lower-end item that they shouldn't expect to last," he said.
Successful Selling
Clear communication between distributors, manufacturers and end-users is paramount for success, industry insiders say. "I believe that customers want the best value and ROI, not always the lowest price," Gregg said. In order to provide that, distributors need to ask what the end-use of the product will be, and what kind of quality and delivery will give them an advantage. The bottom line? "How many ideas are distributors providing to their customers that will increase sales?" Gregg asked.
Arkin counseled, "Don't be a product pusher; provide new ideas and solutions. Be proactive, not reactive, and build a relationship with the customer. You want your client to be a success."
Understanding a manufacturer's offerings is crucial, Aastad said. Distributors should ask suppliers how the products are effectively used, obtaining case histories and noting which market segments and types of businesses were successful with that product. "The ultimate key to being successful," Aastad said, "is building relationships with customers and offering business solutions that the client is looking for."
By Janet R. Gross
- Companies:
- FSI Products
- People:
- Aastad
- Josh Arkin
- Karen Gregg