Targeting Drives Growth

Marketers’ purchase of nearly $12 billion in ad specialties last year represented record growth of 25 percent from 1996.

While most of the growth in 1996 was attributed to the nearly 500 first-tier distributors, 1997 “saw tremendous growth for large and small distributors alike,” reports the Promotional Products Association, Irving, TX. The association tracks 15,500 distributors’ sales through an annual survey of 13,000 distributors, conducted by Baylor University researchers.

Use of ad specialties likely will continue to grow as advertising becomes more targeted and marketers focus their promotion efforts on building one-to-one relationships with consumers. Ad specialties are most effective when marketers specifically identify their target audiences.

PPA defines an ad specialty or promotional product, as “an item of useful merchandise imprinted with a promotional graphic or message.” They differ from premiums on two points: They are always functional items and are given with no strings attached.

“Like subtle billboards, [ad specialties] constantly suggest businesses, brand names, and slogans,” according to PPA president Stephen Slagle, who defines a premium as “a promotional product that’s offered as an incentive for a specific action.”

Fully 20 percent of ad specialties are given as business gifts to foster goodwill and customer retention, PPA reports. Only 5 percent are given solely to foster brand awareness, and 4 percent accompany product introductions. Other top uses include employee relations and events (12%); traffic-building at trade shows (8.7%); public relations, including sponsorships (8.5%); and dealer incentives and co-op programs (7.6%).

Apparel continues to top the list of most popular ad specialities. Wearables accounted for 27.2 percent of total sales in 1997, up from 24 percent in 1996, per PPA. That includes uniforms, aprons, and footwear. Writing instruments – including that pen you walked away with from the bank – were 11.8 percent. (See chart for complete breakout.)

Ad specialties are especially popular for employee incentive programs and business-to-business campaigns. A recent PPA study of 64 business executives found that 95 percent have some kind of promotional product in their office. All say they kept the item because it’s useful, and 30 percent say they keep ad specialties for at least three years.

Electronics rule with execs According to the survey, 46 percent of execs have six or more ad specialties in the office; 16 percent have 10 or more. Execs’ favorite gifts are electronics, including calculators and desk clocks, preferred by 33 percent of respondents, followed by business accessories such as portfolios and paperweights, at 30 percent. Nearly 80 percent of execs surveyed say their own companies give ad specialties to customers, and 52 percent give them to business prospects, while 49 percent use them to reward employees.

A separate study by Southern Methodist University found that customers who get ad specialties from local businesses tend to return sooner and more frequently. They also spend more on average than customers who get coupons as a thank you for their business.

The 497 distributors posting annual sales in excess of $2.5 million accounted for $5.1 billion in sales; the 15,100 distributors under the $2.5 million mark sold a combined $6.7 billion. Small suppliers’ sales grew 27 percent, but they continue to be squeezed by price competition from large competitors whose huge volume drives down their costs. One solution for small players is franchising, a trend slowly gathering steam. Adventures in Advertising, a Quincy, MA, company that began offering ad specialty franchises in 1995, sold its 100th franchise in April this year. As the chain grows, so does its clout with its 175 preferred suppliers, who cut better price deals as the chain’s purchase volume increases. Adventures’ sales hit $7.4 million in 1997, up 43 percent from ’96; the chain projects 500 franchise units by 2002.

Early this year, PPA formed the Promotion Clinic, an online consulting service, on its corporate Web site, www.ppa.org. Marketers and agencies can use the site to access promotion ideas and ad specialty suppliers.

* Record growth: Sales jumped 25 percent in 1997.

* Second-tier suppliers grew 27 percent, but still face a price squeeze from top dogs.

* Targeted marketing will drive future growth.

* T-shirts and togs top the list of giveaways.