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Growth Opportunities in Promotional Products

Ad specialties could offer a simple way to expand your sales — especially if you’re a garment decorator or sign company.

Do me a favor. Take a few seconds and look around your office. Now, count how many logoed items you see. I’m betting you have at least one or two pens advertising your local bank or maybe your dry cleaner, as well as a stylish coffee mug bearing a company’s name and possibly even a T-shirt or cap branded by the sponsor of your kid’s soccer team or the last 5K you ran. Chances are you have a logoed USB, mouse pad, and calendar on your desk, too.

What’s the one thing that all these items have in common, besides the fact that you use them almost every day? Some organization gave them to you for free. Whether you call them promotional products, ad specialties, freebies, or “stuff we all get,” these items add up to a $20.5 billion industry—one that’s easy to join, especially if you’re already in the advertising business, as many readers of this publication are.

“One of the common traits of the most successful screen printers I interact with is their ability to sell much more than T-shirts,” said Ryan Moor, CEO of screen-printing supply company Ryonet. “When I ask them about promotional products, they often say it comprises 35-40% of their business. This is also almost always their favorite line of business because they make great money on it and don’t necessarily have to do any production.”

At ASI, an association serving the ad-specialty trade, we’re seeing a lot of new members from the screen-printing and signage industries. Many of them are small businesses or ambitious entrepreneurs who want to add promotional products to their existing line in order to make more money. Businesses are like sharks—they need to keep moving forward or they die. One way to keep your business in the black is by sensibly cross-selling more products to customers you already have. This delivers more dollars and positions you as a brand-management expert, while keeping competitors off of your playground.

Think of promo products (defined as anything you can imprint with a company logo, name, or brand—from cups and caps all the way to beer coolers and air cannons that shoot T-shirts 150 feet) as adding a side dish to your main entrée. Entering this niche industry requires a very low overhead and initial investment, especially when you already have an existing business. Often, you don’t need to invest in any new equipment or additional staff.

For screen printers, cross-selling ad specialties can be as easy as asking current customers if they’ve ever promoted their company or event using promo products. Chances are they have, since nearly every brand in America does. Or while you’re on a sales call, complement a client on the pen they are using that came from, say, their favorite coffee bar. Ask them how many times they use the pen—and look at that logo—every day. Speculate how many impressions that would add up to over time if 500 prospects had such a pen with your client’s logo on it.

Start by promoting your company as a one-stop shop and redefining yourself as a proven, trusted brand manager. Instead of initiating a conversation with a potential client by talking about price, talk about the additional ways you can help them market their business. That way, instead of going someplace else for their ad-specialty needs, the customers will come to you. You’re already putting their logo on signs, shirts, caps and other advertising vehicles, so why not on promotional products? In the end, most clients want control and reliability. It’s not always about money. They want to make sure you can manage their brand consistently. When they come in for a sign, they can leave with some promotional products as well—the same logo, with a better end result for you and for them.

Studies show that on average, customers buy signs twice a year, but invest in promotional products three to four times a year. That means that you could double the number of selling opportunities with the same client.

“We have grown our business significantly by adding ad specialties,” said Judy Brumley of PIP Printing and Marketing Services Triad, a franchisee in Burlington, NC that offers a variety of branding services, including signage and graphics. “Along with helping clients to brand themselves in a professional manner, corporate gifts are another very profitable addition.”
Corporate gifts are a big segment of the promo-products industry. ASI’s annual corporate gift-giving survey, released in November 2013, showed spending on employees and clients was the highest it’s been in four years. The popularity of products like food and beverages (such as food baskets, wine bottles, or even a tequila shot glass carved from Himalayan pink salt or a gourmet surf-and-turf meal sent in a reusable bucket and branded with a company’s logo) rose nearly 9% over the previous year.

Just how does this industry work?
The promotional-products industry has four primary channels:
• Suppliers who import or wholesale products
• Distributors who have relationships with end buyers
• Manufacturers with primarily overseas factories who are making the products
• Decorators who embroider or decorate apparel or other promotional items

When someone wants to promote a company, product, or event, they first contact a distributor for ideas. The distributor provides the end buyer with product suggestions and when the client makes a decision, the distributor contacts a supplier to place the order. As the owner of a printing or signage company, you could enter the channel as a distributor or a contract decorator, or possibly both, depending on the types and volume of goods you can (or want to) print in house.

If you’re a contract decorator and want to start or pump up your promo business, you need to set yourself apart from the competition. Provide fast, reliable turnaround. Keep your damage rate at 1% or less. Provide quality decorating and know what works best on which fabrics and substrates. Improve your design services and expertise. You know the old saying, “The devil is in the details?” In this industry, paying attention to the details is what will quickly separate you from the pack.

Other tips:
• Combine extensive product knowledge with a consultative selling approach.
• Explain to clients how different items can work together to capture measurable ROI.
• Understand your client and the intended audience, and find products that will be effective for them.
• Attend trade shows, meet with supplier reps, and track industry and retail trends to stay informed of emerging and established products that may appeal to different buyers and audiences.
• Set up an attractive showroom, modeled on a retail store setting if possible, in which you display a range of products you have provided for clients. When feasible, have prospects and clients visit the showroom.
• Be prepared for contingencies. As a promotional products distributor, you don’t have to manufacture anything. You don’t have to hire extra people to come in when you have a rush order. As a decorator, then you may not be in a position where this is someone else’s problem. Either way, you don’t want delays and mistakes to become your client’s problem.

The best part of promotional products for me is how easy it is to sell them to existing or new clients alike, since the investment is modest, more targeted, and more achievable for smaller businesses than other forms of advertising. And, with a CPI of about half a penny, promo products offer the best value when compared to more expensive forms of advertising like radio or TV.

They also create a different dynamic between the brand and the consumer. Other forms of advertising can prevent people from doing what they want to do. Take TV commercials. What viewers want is to watch last five minutes of the game, but first they have to endure the commercials. Promo products help people do something they want to do, like sign a greeting card, sip coffee, or wear a cool shirt. That’s why ASI studies show that, on average, 52% of recipients feel more favorably about the advertiser after receiving a promo product. Think they’ll have the same reaction after listening to an annoying radio commercial? Think again.

The natural overlap between ad specialties and printing—not to mention the record amount of ad-specialty items that were sold in 2013—make this an exciting time to look into this growth opportunity. If you’re thinking about entering the industry, talk to others in the business. Get educated. Most importantly, get started.

Heather DiPrato is senior vice-president of distributor services at the Advertising Specialty Institute (ASI), an industry association that produces five trade shows per year (in Orlando, Dallas, Long Beach, New York City, and Chicago) and offers a certified educational program. She can be reached at hdiprato@asicentral.com.

 

Promotional Products at a Glance
• 2013 was a record-setting year for the industry with sales of $20.5 billion.
• The industry employs 400,000 in North America.
• Products are used by virtually every business and major brand in America and beyond.
• Shirts, bags, and writing instruments are the top three product categories, based on percentage of total industry revenue. Drinkware and caps round out the top five.
• The industry encompasses countless types of products. ASI’s online database features over 750,000, everything from T-shirts, caps, and hoodies to USBs, political yards signs, and M&Ms.
• Electronics—USB drives, gadgets, and accessories such as imprinted iPad cases and cell phone speakers—now comprise about 7% of the market.
• Health/medical/hospital is the single biggest market at 13.8% of industry sales in 2012. The education/schools/universities segment ranks second, accounting for over 11% of total ad-specialty revenues.
• The average distributor order size is $1058.

Source: ASI’s Counselor magazine’s annual 2013 State of the Industry report

New Signage + Decoration Pavilion
ASI’s Chicago trade show at McCormick Place (July 15-17, 2014) will feature the new Signage + Decoration Pavilion, hosted by The ASI Show and ST Media Group International. Inside, you’ll find equipment, consumables, software, and supplies along with decorating demonstrations. ASI will also offer special classes that will benefit anyone in need of advice on exploring new markets in promotional products. For more information, visit www.asishow.com/14Chicago.

 

Why Promo Products Work
• Impressive CPI. With a CPI of about half a penny, promo products offer the best value when compared to other, more expensive forms of advertising like radio or primetime TV.
• Strong ROI. Spending $500 yields 8300+ impressions, on average.
• Broad Appeal. On average, 52% of recipients feel more favorably about the advertiser after receiving a promo product.
• Consistent Recall. In the US, nearly nine in 10 consumers (87%) can identify the advertiser on promo items they own.

Source: ASI’s 2013 Global Advertising Specialties Impressions Study

 

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