I read an interesting article today on the PM (Promo Marketing) website referencing IBISWorld’s market survey on promotional products. The good news is that revenue is increasing.
What Are Promotional Products?
First of all, this is a broad category of printing, somewhat hard to fully grasp. Promotional products include pens, mugs, t-shirts and jackets, hats, bags, lanyards, stress balls, tree ornaments, can coolers (foam can holders that keep the cans cool), vinyl and leather pad portfolios—even cases for small bottles of hand sanitizer and canvas folding chairs.
All of these products have one thing in common. Somewhere on the item there’s space to print a company logo and name. So the purpose of the items is to promote a company, presumably more effectively than by advertising alone since every time you take that tennis racket cover off you see the word “Dunlop,” and every time you sit on the folding chair you see the word “Nike” (or whatever). Promotional products expose the owner to a brand every time the item is used.
Promotional products are printed using any of the following methods: screen printing, dye sublimation printing, inkjet printing, and thermal transfer printing. Unlike other printed products, however, almost all promotional products start with premanufactured “blanks”: items produced by other vendors prior to personalization by promotional printers.
What’s Happening in the Industry?
According to “Promotional Products Industry Revenue Expected to Increase 4.1% in 2012,” the news is good. Following the financial crisis, the promotional products industry has begun to recover, showing positive growth each year since 2007. According to the Promo Marketing article, the industry is expected to grow 4.1 percent in 2012.
Why the Increase in Promo Product Revenue?
Here are three reasons:
- Advertising budgets have been expanding as the economy has been improving.
- The 2012 Olympics increased demand for promotional products.
- The 2012 presidential and congressional elections increased demand for promotional products.
But Not All the News Is Good
Unfortunately, there has been a decrease in promotional item print buying by one large industry: pharmaceuticals. In 2009, the pharmaceutical industry stopped printing and distributing non-educational promotional items (according to Anna Son of IBISWorld). Since the pharmaceutical industry is such a large player (11 percent of the market at the time), these self-imposed marketing rules cut industry revenue by 14.4 percent (in 2009), when combined with reduced advertising spending.
In addition, consumer safety laws (such as the Consumer Product Safety Improvement Act of 2008) have driven up the cost of insurance and product testing. And, according to the Promo Marketing article, globalization has facilitated clients’ buying directly from manufacturers rather than from promotional product printers. These two developments have caused some promotional product firms to go out of business and others to consolidate.
The Take-Away
So the current state of the promotional product industry is as follows: Advertising budgets are expanding, and companies are focusing on integrated marketing, a coordinated effort incorporating every technology from ink on paper to digital-only products to promotional items. Promotional items are considered efficient and cost-effective marketing vehicles since they expose an individual user to the brand many more times than print ads or broadcast media ads. Therefore IBEXWorld forecasts growth during the next five years.
An Industry with Many Small Players
“Promotional Products Industry Revenue Expected to Increase 4.1% in 2012” also includes two particularly interesting facts about the promotional products industry:
- No promotional products company holds more than a 3-percent share of the market.
- The four top companies in the promotional products industry capture only 9.2 percent of industry revenue.
According to the Promo Marketing article, these facts reflect “an industry [that] consists of a large number of small, niche operators that focus services on local and regional markets.”
Why You Should Care
Any news that reflects growth within the custom printing arena is positive, in my opinion. In addition, increased demand in any printing-related venue means more work for graphic designers, commercial printing suppliers, print brokers—the list goes on.
This entry was posted
on Sunday, December 2nd, 2012 at 7:27 pm and is filed under Promotional Products.
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