Dueling Estimates
The quote, “There are lies, damned lies, and statistics,” is attributed either to Benjamin Disraeli or Mark Twain — neither of whom ever had to estimate growth in the promotional products industry.
Three sources did this year and, true to that quotation, all three reached different conclusions.
Promotional Products Association International, the Advertising Specialty Institute, and PROMO each recently estimated significantly different growth rates for the marketplace in 2001. The discrepancy isn’t so much with total sales — all three sources say they fell between $16 billion and $16.5 billion last year — but in how the industry got to that figure.
All three sources also agree that the ongoing recession and the Sept. 11 tragedies wreaked havoc on marketing budgets. They likewise agreed that most large product distributors took it on the chin, while many small and middle-sized companies weathered the storms fairly well.
PROMO estimated that sales fell 10.4 percent (to $16 billion). Irving, TX-based PPAI pegged the drop at 7.3 percent (to $16.5 billion). And ASI says sales actually rose 2.9 percent (to a similar $16.5 billion).
PROMO’s estimate was based on the results of a survey conducted in January with the Promotion Marketing Association (March PROMO). The survey polled 450 corporate marketers, agency executives, and marketing services representatives. PROMO also incorporated interviews with dozens of product suppliers and distributors. The magazine’s editors used PPAI’s sales estimate for 2000 as a starting point.
Irving, TX-based PPAI, which has been sizing the industry for decades, bases its estimates on a survey that is part census, part sampling. The association uses its own database of distributors as well as four others from various organizations to field a sample of 15,775 distributors (out of an estimated universe of 21,194) to survey. It then determines an average growth rate for the group. “We’ve been using this methodology for 40 years,” says Saritha Kuruvilla, PPAI’s manager of research.
“It’s true that 2000 was a banner year. But after New Year’s 2001, the bottom fell out,” says Rick Ebel, principal at Glenrich Business Studies, Hot Springs, AR, which conducts the survey for PPAI.
Estimating newbie ASI, Trevose, PA (which began conducting industry estimates last year), surveyed its database of roughly 17,000 members. “We were aware that a lot of companies weren’t doing that well, but we heard that more about suppliers than distributors,” says Richard Kern, editor in chief of The Counselor, ASI’s monthly magazine.
Slightly less than half of the ASI survey’s larger distributors reported a drop in sales, but smaller players said business was steady. “A lot of smaller shops are insulated from the problems facing the bigger guys,” says Kern. “When General Motors slashes its $80 million budget in half, that’s $40 million. When the sprinkler company down the road cuts theirs, that might be a couple thousand at most.”
At the annual ASI Orlando show in January, the organization polled 500 attendees electronically; 62 percent reported growth, and an additional 14 percent said sales were flat, according to Kern.
What’s more, all three sources may be shortchanging the segment by not including sales from retailers and catalogers like L.L. Bean and Lands’ End (which don’t belong to trade organizations, or don’t classify promotional sales as such).
“There are still a tremendous amount of sales not being counted that are higher than anything either ASI or PPAI has put together,” says Kern.
Maybe next year.
