Promotional Products Market Faces New Challenges

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Many of AccuList’s promotional products marketing clients have been able to ride corporate buyers’ profits to an average 1.3% annual growth rate in the last five years through 2019, reaching $17 billion in U.S. revenues this year, per IBISWorld market research. But a number of challenges, requiring innovative solutions, lie ahead.

Tariffs, Amazon, Economy May Challenge Growth

Continuation of the tariffs imposed in the U.S.-China trade war are likely to have a direct impact on the promotional products market, where the vast majority of products come from China, creating rising product prices and uncertainty, even though most suppliers and distributors have continued to post sales gains this year. One of the options that some companies are already taking is a shift to sourcing from countries outside of China, such as Vietnam, per the Advertising Specialty Institute (ASI). Meanwhile, the promotional products market is facing competitive challenges from the entry of big online competitors such as behemoth Amazon. Market execs have told ASI that they believe the entry of the e-commerce power threatens to potentially cut out suppliers and distributors by positioning itself as the lowest-cost provider from a product and freight perspective. Their worries include Amazon opting to partner with only select suppliers and distributors; selling direct through its platform; and/or using its search presence for rankings that create winners and losers, and force up advertising expenses for all. Web-based distributors and large online stores are on the front lines, but all promo products firms fear competing with the e-commerce giant’s buyer expectations and immediate delivery and return services. Finally, the potential of an economic slowdown or even recession has some nervous, too. To prep for that possibility, promo product pros say they are putting more stress on prospecting and networking, distributor-supplier partnering to reduce costs, and lower-ticket items with good repeat business.

E-commerce and Technology Will Be Key Drivers

ASI recently interviewed 10 leading suppliers and distributors in the promotional products market for their visions on handling such challenges over the next 5-10 years. The good news is that all foresaw continued growth, albeit with increasing consolidation and online dominance. For example, Mark Simon, president/CEO of distributor HALO Branded Solutions, forecast: “Technology will drive every aspect of the industry in the next 10 years. Buyers will require more robust and more diverse methods to select and purchase products, and follow their orders throughout the order life cycle… Our industry must keep pace with the enhanced buying experience other channels are providing to stay relevant.” E-commerce will be the standard, benefiting big players but leaving room for niche firms as Mark Freed, President/CEO of distributor Genumark, predicts: “I see continuous growth from the large online players that provide a fast, painless, accessible solution for clients looking for simple, inexpensive drop-shipping. I also see continuous growth and consolidation for multifaceted large distributors providing a suite of features that meet a variety of complex requirements for sophisticated clients, which could be related to logistics and fulfillment, quality and compliance, off-the-charts creativity and relentless customer service. There will still be a place for smaller, boutique-size distributors, but they better have a niche like specialized knowledge of the client’s industry or unbelievably innovative ideas.”

Bigger Roles for Data Analytics, Personalized Service, and Creative Marketing

Meanwhile, in the expanded digital environment, data management will loom large; Sharon Eyal, CEO/owner of supplier ETS Express, asserts that “in the next five years, a reliance on data will be more important than ever… We look at how many orders we have in production, which materials are being used, which items are being ordered, which types of decoration, etc. and then we expand and contract in departments as needed.” Up against Amazon, personalized customer experience will be key, too; Jana Schmidt, CEO of distributor Harland Clarke, stresses the “need to provide a personalized, frictionless experience to businesses as clients seek to promote their brands. There’s separation between having an e-commerce presence and truly building the online buying experience.” And creativity will count for even more; Debbie Abergel, chief strategic officer of Jack Nadel International, says, “There will also be a growth of creative promotional agencies – the rise and marriage of creativity and custom. Think about corporate clients that invest in giving their clients and employees a true brand product experience; not price-focused, but looking to build their brand name.” She cites the interest in reusable straws as an example. Read more predictions for the promotional products industry.

Corporate Gift Marketers, Buyers Ready for Year-End Holiday Push

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Corporate holiday gift-giving lies ahead, and AccuLIst’s clients offering food and wine gifts and promotional products designed to clinch customer loyalty are gearing up for a key business-to-business marketing season. So what are major factors affecting corporate gift-giving in 2019?

Meeting and Exceeding Expectations

Corporate gift buyers and gift marketers will want to keep in mind some of the essential factors that affect gift satisfaction, as cited in a recent The Balance Small Business blog. To generate the desired client response, corporate gift givers should keep in mind 1) organizational policies, which may limit the dollar value of gifts or even prohibit gifts; 2) the personal preferences and needs of the recipient (note that today’s customer expectations of personalization apply); 3) any cultural/local differences (for example, a white-wrapped gift may not be well-received in Asia where white is the color of death); 4) the perceived quality of the gift and its packaging (although gift value should be proportional to client value so that a $200-a-year client doesn’t get a $300 gift); 5) today’s preference for a personal touch, such as a handwritten note or in-person delivery; and 6) IRS deductions (business gifts in the U.S. are tax deductible up to $25 per person for the tax year, although rules differ by business structure). What type of gift will meet most businesses’ requirements? The American Express Semi-Annual Small Business Monitor survey found that today’s top corporate gifts include cards or calendars (49%); gift certificates for retail or restaurants (26%); company-branded items (23%); a fruit/food basket (18%); a charity donation (18%); flowers/plants (10%); and wine/liquor (10%).

Value and Personalization Score with Clients

For more ideas, check out a 2019 Hubspot article listing more than 20 gifts rated as likely to keep clients thinking positively about a company throughout the year. Most fell within the general categories noted above, but here are the more specific descriptions for added inspiration: a terrarium or succulent garden; professional notebooks; coffee or tea blend packages; calendars; a coffee table book; a toiletry bag for travel; a gourmet food basket; a portable phone charger; a K-Cup coffee sampler; a Kindle e-reader; a custom-quality water bottle; online classes; a BarkBox gift for a pet owner; a charity donation; a beer brewing kit; quality clothing with a subtle logo; a restaurant gift card; a bakery delivery; a cook’s basket; a catered lunch; custom balls and tees for the golfer; and headphones. Note that six gifts involve a food and/or beverage basket. In choosing that basket, gift buyers may want to consider the 2019 ratings just out from Top Ten Reviews.

Top-Rated Gift Baskets for 2019

AccuList’s client Wine Country Gift Baskets once again ranked high with Top Ten Reviews for 2019. The reviewers tested baskets from the top 11 gift basket companies for taste, presentation, pricing/value, payment and delivery, customer support, number of basket types and special options (such as Kosher). Harry & David’s Founders’ Favorite Gift Box was rated “best overall,” while Wine Country Gift Baskets’ Gourmet Choice Gift Basket received “best value” for the amount and selection of foods for the price. For foodies, igourmet.com’s California Classic Gift Box was rated as “best for food connoisseurs.” To really personalize to individual tastes, the Design It Yourself company lived up to its name and was ranked as the “most personalized” option, while Gourmet Gift Baskets impressed among alcohol-themed hampers. Read more details on all gift basket ratings.

2019 Promo Products Embrace USA-Made, Retail Quality

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The “2019 Ad Impressions Study” by the Advertising Specialty Institute has many nuggets to help AccuList’s promotional products marketing clients woo targeted buyers. For example, promo products purveyors can point out how their items beat other ad media not only with high ROI, thanks to a cost per impression as low as a tenth of a cent, but also high impact, with consumers under age 55 preferring promo products over all other media for advertising, including newspapers, radio, magazines, television, internet and mobile. In fact, consumers are nearly 2.5 times more likely to have a positive opinion of promotional products compared with online advertising, per ASI.

Not All Promo Products Are Created Equal

When it comes to consumers’ favored promotional products, ASI’s study shows the highest ownership for writing instruments (89%), drink ware (88%) and T shirts (80%). Looking at numbers alone, outerwear is a big winner with the most impressions (6,100), the greatest memorability (85% of consumers remember the advertiser giving branded apparel), and the greatest staying power (outerwear is kept an average of 16 months compared with 9 months for writing implements, for example). But winning even with a popular category means keeping up with trends. Among the latest spotted by Promo Marketing Magazine at the 2019 Promotional Products Association International (PPAI) Expo is the boost in re-usable, environmentally friendly products now that cities and states are banning single-use plastic bags and straws. A return to natural and vintage is not surprising in this anti-plastic mode, with a rise in the popularity of wooden pieces, from cutting boards to awards. Plus, multi-function items continue to grow in popularity, with suppliers adding tech functions to classic promotional items, so that water bottles double as Bluetooth speakers and business card holders can be used to prop phones.

Design-wise, Think Retail Quality, Bundling, USA-Made

The marketers at Delta Marketing Group (DMG) get even more specific about trends in design affecting a range of product categories. As more retail brands become available as customizable promotional products, even non-brand items are starting to emulate the retail look and feel, the agency points out. Quality over brand-logo-blasting also is taking hold, for example with branded apparel using small embroidered patches, subtle custom tags, and understated tone-on-tone colors instead of large logo imprints. Creative materials and refined finishes are forecast to come to the fore in 2019, with bright colors, matte and soft-touch finishes, and heathered and burlap fabrics. DMG also predicts that gift sets packaging several cohesive promotional items together will peak in 2019. Watch for desktop accessories to gain popularity, such as branded mousepads, coasters and phone stands, etc., often bundled as a new-employee or a new-student welcome kit. Plus, with the advent of experiential marketing for events, promotional products are trending toward event-specific giveaways that complete the brand’s event experience. Finally, the made-in-the-USA trend stays strong, per ASI’s study. About 53% of consumers have a more favorable opinion of an advertiser if the promotional product is made in the U.S. versus elsewhere, and that sentiment is especially strong in New England, where 73% of consumers prefer buying made-in-the-USA items. For details from the ASI study, see https://www.asicentral.com/news/web-exclusive/january-2019/2019-ad-impressions-study/

Use Direct Mail to Push Trade Show Attendance Ahead of the Pack

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After many years of supporting the marketing of trade show and conference managers and exhibitors, AccuList USA can attest to the continued power of direct mail in building audience. While exhibitors who do a pre-show campaign 1-2 months before a show can increase attendance by up to 50%, according to the Center for Exhibition Industry Research, a post by the NextPage agency recently explained how direct mail will push those pre-event promotional efforts several steps ahead of competitors.

Make Direct Mail an Engaging, Personalized Invitation

Show marketers looking for an edge with multi-channel audiences will embrace direct mail’s higher response rates and retention rates, urges NextPage, leveraging the deliverability of a tactile and visual attention-getter in an era of crowded digital mailboxes and websites. By combining variable printing with segmented list targeting, savvy marketers can create a pre-event mailing that is highly personalized. Custom shapes and dimensional options, textured paper, intriguing folds, eye-catching graphics and taglines, and more will then help mailings stand out and engage.

Include Incentives That Spur Booth Visits

NextPage also advises including an incentive in the mailer to spur booth visits, such as a raffle ticket or product sample. Creativity pays off, and the blog cites some incentive success stories. For example, trade show expert Marlys Arnold uses scavenger hunts in pre-show campaigns, with a direct mail piece that lists five questions and gives a web address where attendees can print off an answer sheet to fill out and bring to the show. She reports earning satisfying lines at her booths compared with more passive giveaways. In another example, independent copywriter named Mark Johnson wanted to target subscription newsletter marketers at a Las Vegas Conference and created a special website with case studies and a free offer that he touted in a postcard. The free offer was an exclusive 30-minute consultation with Johnson to review current marketing campaigns. Johnson rented the conference association’s membership list and mailed the card only to qualified leads five weeks before the show. Out of 400 pieces mailed, 406 people visited his site, and he generated five solid leads!

Use Targeted Lists of Qualified Prospects

Yet the real key to success with a direct mail campaign is targeting of qualified leads, starting with a list of current clients and prospects and moving on to lists of registered attendees, association members, subscribers to relevant trade publications and newsletters, multi-channel buyers of relevant products, etc.  Marketers can then segment and tailor messaging by geography, industry, product interest, title, firm-ographic data (such as number of employees) to increase response.

For more direct mail advice, see the blog post.

Promotional Product Marketers Can Hone Proven Tools

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AccuList USA recently completed a proprietary analysis of the top-performing direct mail and e-mail lists for promotional products companies to help buttress the continued success of this evergreen marketing tool.

A Message About Proven Success

Promotional product providers already have some powerful arguments in wooing business-to-business and business-to-consumer marketers. For example, per industry surveys, eight in 10 consumers have one to 10 promotional products, 53% use the giveaways at least once a week, and 60% retain the products for up to two years. Before receiving a promotional product, 55% surveyed had done business with the advertiser, but after receiving a promotional product, 85% did business with the advertiser. With promotional products delivering such regular, repeated brand exposure and enhanced outreach, it’s no wonder the U.S. promotional products industry is forecast to generate $24 billion in 2018, growing at 2.5 % annually.

Many Industries Worth Wooing

Plus, while not every industry is a good target for a promotional product pitch, prospective buyers abound. A recent post by Designhill, a graphic design platform, cited some top promotional users they have supported. Real estate promotions lead in distributing branded notepads, keychains, calendars, magnets, door hangers and more, for example. The education sector often offers writing instruments, apparel, water bottles, folders, and frisbees at college fairs, seminars, expos and open houses. In today’s competitive healthcare market, clinics, hospitals, outpatient clinics and surgery centers go beyond branded tote bags to first-aid kits and custom ice packs. Nonprofits are big consumers of tumblers, tote bags, wristbands and lanyards, while banks, credit unions and insurance firms opt to reward both employees and new accounts with everything from travel bags and mugs to fidget spinners. With the midterm elections ahead, don’t forget that political candidates are a big market for flags, stickers, decals, apparel and hats (following in MAGA footsteps). On a global basis, the top 25 promotional products purchasers include seven from the consumer-goods industry, six from the communications industry, and a dozen more from pharmaceutical, technology and automotive industries.

Targeted Data Available for Mail, Digital & Social

The key to success is targeted data. Promotional products are visual sales, which is why direct mail and catalogs using targeted mailing lists have such a role in the industry. Now social media options such as Instagram, Pinterest, Facebook and LinkedIn also allow for visual, targeted promotions, including video. And tools like AccuList USA’s Digital2Direct can link highly targeted direct mail with social media advertising on Facebook, or send direct mail with timely opt-in e-mail to the same recipients. In a digital world, house e-mail databases, enhanced by LinkedIn connections, lead capture forms or event contacts, are very cost-effective marketing tools for promotional products—as long as the e-mail database is accurate, up-to-date and targeted, which is among the data support services that AccuList USA also offers promotional product clients.