Promotional Products Industry Posts Record Growth
The 19.5% increase for 2000 easily outdistanced growth in 1999 of 13.3% and growth in 1998 of 11%.
The industry showed much stronger gains than traditional forms of mass media. Magazines, newspapers, television, cable television and radio posted increased sales between 6% and 16.6%, according to Advertising Age. Outdoor media, however, showed an increase of 20.3%.
"It's an extraordinary time for the promotional products industry," said Steve Slagle, CAE, president of Promotional Products Association International. "While sales in 2001 appear to be tracking the downturn in the economy so far, last year's results indicate a very healthy and thriving industry. The growth reflects the increased value our members bring to their clients who are seeking creative solutions and programs. Sales growth is just one indicator that promotional products continue to be an important advertising and marketing medium for businesses everywhere. "
According to the study, the most popular promotional product category continued to be Wearables/Apparel, which cornered 29.1% of the market - down slightly from 29.5% in 1999. Writing Instruments held the second-largest category and also the largest category increase - 10.5% in 2000 and 9.4% in 1999. The Wearables/Apparel category includes aprons, uniforms, headwear neckwear, footwear, etc.
Other top categories included Desk/Office/Business Accessories; Bags; Calendars; Glassware/Ceramics and Games/Toys/Playing Cards/Inflatables.
Promotional products are used for a wide range of business activity, but business gifts continued to lead the way with 15.2% of the industry in 2000, slightly down from 17.6% in 1999. Other popular uses for promotional products included Dealer/Distributor Programs; Employee Relations & Events; and Brand Awareness.
The biggest gainer was use of promotional products for Internal Promotions at 8.4% in 2000, up 3.8% from 4.6% in 1999.
For the past 10 years, companies with sales under $2.5 million controlled a majority of the promotional products industry. The exception was in 1999, when companies with sales under $2.5 million controlled just 38.32% of the market while larger firms controlled 61.68%. In 2000, the tide turned to reflect previous market share trends as distributors with sales under $2.5 million controlled 52.6% of the market and companies with more than $2.5 million in sales had 47.4% of market share.
In 2000, the number of small distributors (those with sales below $2.5 million) fell by 2,000, to 21,300. But the average sales for companies under $2.5 million jumped from $246,043 in 1999 to $440,741 in 2000 - a whopping 63.9% increase.
For the first time in this annual study, an attempt was made to capture promotional products sales over the Internet. Of the large companies - 86.4% or 114 - reported Internet sales capability. Of those, 106 reported making actual sales via the Internet. Average sales online were 7.5% of their total product sales. If this average was extrapolated to total promotional product sales for large companies, then some $635 million in sales would come from doing business on the Internet in 2000.
"We're excited that we were able to measure the size of the online segment for the first time," said Bob Davis, CAS, chairman of the board of PPAI and owner of distributor Specialty Incentives Inc. in Denver. "This sales figure is actually a very conservative estimate of online sales based on information supplied by survey respondents. I anticipate that we will see sales swell in this area over the next few years as more companies participate in online selling."
Nearly half (49.17%) of smaller companies reported Internet sales capability. Of the 856 that were online capable, 492 reported having sales via the Internet. The average sales figure for small companies was 7.6%. When applied to total sales of small companies, the online share of the market from small companies is $71,347,153. Total estimated industry sales via the Internet were $703 million.
The study was conducted exclusively for PPAI by Alan D. Fletcher, Ph.D. at the Manship School of Mass Communication at Louisiana State University and Rick Ebel, former marketing communications director of PPAI, and principal of Glenrich Business Studies in Hot Springs, Ark.
For charts showing sales by category and program type, visit >A href='http://www.ppa.org/salesvolume'>www.ppa.org/salesvolume.