Slipping and Sliding

The stormy economy has put a hurtin’ on promotional products sales. The third quarter of 2009 saw promotional products sales drop 10.9%, or about $551 million, versus the same period last year, according to the Advertising Specialty Institute.

The drop carried some good news, however, signaling that the steep declines over the last five quarters may finally be slowing.

Sales declined 13.9% in the second quarter and 18% in the first quarter. The decline began in the third quarter of 2008 when sales dipped by 1.6%. In 2008, overall promotional products sales were $19.8 billion, up 1.2% over 2007.

Close to 30% of respondents reported sales were up 11% in the third quarter compared to 19% in the second quarter. Larger distributors ($1 million or greater in revenue annually) showed the smallest decline in sales, off 8.1% versus 12.8% in the second quarter.

“This indicates that perhaps the economic climate is improving for the advertising specialty industry,” Timothy Andrews, chief executive officer of ASI, said at the time.

In 2010, about two-thirds, or 65%, of distributor firms are anticipating an average increase in sales of 13.5% versus 2009. Among those expecting lower sales, the average decrease is 16.5%.

The Promotion Products Association International reported that 2008 sales plunged to $18.1 billion from $19.4 billion in 2007. Revenue had been climbing steadily since 2002, when sales were $15.6 billion, before setting a record breaking $19.4 billion in 2007.

The largest percentage of products purchased (12.6%) were used to promote brand awareness and loyalty. Employee relations and events ranked second at 11.9%, followed by tradeshows at 11.5%, PPAI found. Online sales continued to grow from $1.3 billion in 2006 to $1.5 billion in 2008.

The Top 20 2008 Sales by Product Category

Source: Promotional Products Association International