SOI Promotional Products: Running the Good Race
If we were running a foot race in a stadium, we could at any point look behind us and then ahead to determine exactly where we were in the race. Since all runners are visible at the same time, we could even get a good fix on the competition. But when the race is cross-country, the only thing we know is the ground we have already covered and how the few other runners nearby are faring. The rest of the race is a mystery. Will we have a lot of uphill ground to cover? Will we have soft, smooth paths to run or many obstacles to navigate around? Even if we think we are ahead, will we have the stamina to win or will someone pass us along the way?
In politics, guessing at the future is called prognostication. In financial circles, they ask for forecasts. Soothsayers and fortune tellers predict, with dubious results, our personal futures. And, religion has relied on prophecy throughout recorded history. Today, I have the task to give some account of where the promotional advertising specialty industry is in this race.
So for the record—the race isn't over. In business, we have the great benefit and burden of never finishing the race. We get to restart every day. We can decide to take a different path than the other runners. We can hire others to help us. We can even change the direction the race takes if we get out in the lead.
The past three years have been challenging. Promotional products distributors saw fewer orders and less profit in the orders that did sell. But, overall, the downturn was modest for the promotional advertising specialty industry. In fact, it was even a significant bright spot for a lot of distributors who saw other product areas decline more dramatically.
For many, 2010 saw growth when measured against 2009. For others, 2010 saw some forward movement when measured against the average of the past three years. A recent survey by an online business newsletter found that 50 percent of businesses in general experienced a decrease in sales in the last 12 months and 97 percent of the same group expects to see sales increase in the next 12 months. The survey also revealed that nearly 70 percent of sales are still made in person—the perfect environment for adding a promotion component to the process.
With promotional advertising specialties sales declining less than business sales in general and regaining strength at a faster pace, 2011 appears to have some building momentum. It seems order value is increasing faster than the number of orders. This may be that customers who cut back on quantity or ordered lower priced goods are going back to what they did before the downturn. But customers who eliminated using promotional advertising have not yet reached an economic comfort level that allows them to start using promotional goods again.
Many who read this have considered promotional advertising specialties as a secondary profit center to printing, forms or other goods or services being the primary focus. In 2010, Print Professional Magazine noted that promotional advertising specialties accounted for approximately 8 percent of overall sales volume within the printing, forms and label distributing industry. Several indications suggest this will increase in 2011. The higher margins normally maintained for promotional advertising specialty products proved to be important to many distributors during the past three years. As a result, some print brokers are investing more time in building the promotional advertising specialty part of their business.
A reality of the economic downturn is that many businesses that existed three years ago are now gone. This includes not only customers but some competitors, too. So the impact of lost customers is somewhat offset by fewer competitors. Aggressive action this year will result in new customers and potentially more promotional advertising specialty business than in the past. I have noticed a significant increase in the number of businesses that were exclusively printing and related goods prior to 2008 that we have helped add promotional advertising specialties to their current sales offerings. We expect this trend to continue throughout this year.
While there was much in the economic downturn that did not follow historical economic cycles, the fact that strong businesses continued to market and gain better position and market share while weaker businesses cut back on advertising and marketing to preserve capital, ran true to form. As this slow and sometimes weak recovery continues, thousands of businesses will need to "catch up" on the marketing they abandoned when things were at the worst. This also will contribute to a strong sales year for promotional advertising specialties.
Keep in mind that the promotional advertising specialties industry, at times, runs contrary to the general economy. Promotional advertising is more affordable and targeted than other forms of advertising, so a slow recovery is not necessarily a bad thing for us. Small and medium-sized businesses—which make up the majority of businesses using promotional marketing items—are able to use promotional products to ease their way back into their marketing programs.
With many economic forecasts including both good and bad news, the promotional advertising specialty industry can benefit from the "good" and not be affected by the "bad." For example, in January, Kiplinger projected about a 10 percent increase in overall business spending and The CMO Survey (www.cmosurvey.org) found nearly 69 percent of CMOs (chief marketing officers) are optimistic about the domestic economy for 2011.
At the same time, just about every forecast mentioned that new jobs are not being produced—keeping unemployment above 9 percent.
The positive impact on the promotional advertising specialty industry of a 10 percent spending increase and 69 percent of marketing executives having positive attitudes has a much greater impact than 4 percent or 5 percent fewer employees at companies (than five years ago).
EconomyWatch.com, using all the economic indicators worldwide and its own calculations, predicts the U.S. economy will grow 2.31 percent this year and 3.039 percent in 2012. I feel the promotional advertising specialty industry is positioned to realize three to five times that growth. Individual business performance always depends on individual decisions, investments, work ethics and motivation.
So as you restart your cross country race tomorrow with a clear memory of the ground already traveled, a quick look around at your nearest competitors and a good map to the finish line—remember that every day brings a fresh start. Repeat your successes and learn from your mistakes. If you don't currently have promotional advertising specialty as a profit center, 2011 will be a great year to add it.￼
About the Author:
Gregg Emmer is chief marketing officer and vice president of Kaeser & Blair (K&B), the number-one-ranked promotional products distributor in Print Professional's current Top 10 listing. K&B offers printers and print brokers a fast and easy way to add promotional products as a new profit center or to increase existing revenues in that area. K&B began as Acme Print Co. in 1853 with the current business spinning off in 1894. Emmer has been involved in the advertising and graphic communications industry since 1971. Contact him at firstname.lastname@example.org.
Gregg Emmer is chief marketing officer and vice president for Kaeser & Blair Inc. (K&B). He has more than 40 years of experience in marketing and the promotional specialty advertising industry. His outside consultancy provides marketing, public relations and business planning consulting to a wide range of other businesses and has been a useful knowledge base for K&B dealers. Contact Emmer at email@example.com.