Those key chains and pens that get tossed about at events and trade shows are worth more than you might think.
For one thing, they tend to stick in the mind. Of the consumers surveyed by the Promotional Products Association International (PPAI), 76% remembered an advertiser’s name emblazoned on a product they received in the past 12 months.
That’s partly why sales in this field are up 4.25% to $18.8 billion, a new record, the association says.
However, not all distributors have benefited from the boost.
The largest users experienced “spectacular growth.” Others reported only a marginal lift in business. Some even saw a decline.
But the overall increase has kept pace with growth seen by other major mass media and has far surpassed both newspaper and radio advertising.
Promotional product sales last year outpaced Internet advertising ($16.8 billion), cable television ($16.9 billion), Yellow Pages advertising ($14.4 billion) and outdoor advertising ($6.8 billion), according to the PPAI.
The largest product category continues to be wearables — t-shirts, golf shirts, caps, jackets and footwear. It took up 30.1% of expenditures, a slight increase from 29.2% in 2005.
The top buyers? Education, financial, health care, not-for-profit, construction and automotive marketers.
And what do they use these items for? To build brand awareness and generate accounts, and to get attention at events and trade shows. Premiums are also useful when introducing new products.
But the media mix is changing.
The Internet is now a huge factor in distributor sales, which last year reached $2.7 billion, a 25.4% jump over 2005, the PPAI says.
And direct mail? Unexpectedly high postal rates could reduce its effectiveness. That’s especially true for nonprofit groups that entice donors with promotional products.
“Folks with very tight budgets may have to cut mailings,” says Stephanie Hendricks, a spokesperson for the Direct Marketing Association.
National Pen Co. had to do just that. It previously mailed millions of samples each year to prospective buyers.
But under the rate hike that took effect in May, its mailings fell into the new non-flat machinable category.
Subsequently, the firm’s costs jumped from about 35 cents per piece to well over $1. National Pen spent months redesigning packaging to avoid the high rates and was able to qualify at an automated rate, or about 40 cents per piece.
“It was quite an effort for us to get into an automated category,” says Kellie Jonas, director of promotions for North America for National Pen. “But it’s not without additional costs. I just have to be a lot more selective on who I’m going to mail.”
Employee incentives are another hot area. Companies spend $46 billion a year on merchandise, gift cards, travel and promotional products for employees, says Incentive Federation Inc.
The goal? To reward (and retain) personnel in a tight job market.
GIFT CARDS
Gift cards are also big business on the consumer front.
Shoppers are expected to spend $90 billion this year on gift cards, up from $76 billion in 2006, according to Dan Horne, associate professor of marketing at Providence (RI) College.
This is due, in part, to the use of gift card malls that can display dozens of choices from different retailers in one carousel. Another factor is the ability of shoppers to customize and add messages to cards.
Home Depot created a gift card that doubles as a tape measure for Father’s Day.
And Target launched a limited-edition card tied to the movie “Transformers.” The card has moving parts and can be assembled into one of the robots featured in the film.
More than half of recipients redeem the cards within three weeks, while 85% do so within three months, according to InComm, a marketer of prepaid cards. Still about 5% go unused in a 12-month period.
Need more proof that premiums and incentives are growing? The Incentive Marketing Association launched a European chapter in May and plans to open another in Sydney, Australia later this year. It already has one in Canada.
SNAPSHOT
Promotional product sales now top $18 billion.
The largest category is wearables.
More than three-fourths of all consumers recall an advertiser’s name on a premium.
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