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PROMOTIONAL PRODUCTS & CORPORATE APPAREL : The Gift of Giving Wh by Perkal

Trinkets are doing brisk business. Baubles, bagatelles, tchotchkes... call them what you will, little things with logos on them are keeping a lot of people busy in New Zealand.

Bob Faram, director of Below the Line Marketing, reports he is "bouncing off the walls" with deadlines. John Withers, partner at JPS Marketing says his sales team are rushed off their feet. But the trend isn't universal. Phil Monastra of Imprint Marketing reports the past 12 months or so have been unusually quiet, after an intensely busy first half of 2005. However, he agrees with his peers that the next 12 months look to be busy for the promotional products market.

It sounds strange, really, predictions of prosperity when media reports picture a softening economy in the year to come. But Craig Rogers, group product manager for Crippz Promotional Products, says it makes perfect sense.

"When the economy slows, we go into overdrive," he says. "The marketing dollar certainly becomes tighter, but also more focused. Companies prefer to target smaller groups of ideal customers." That's where mainstream media schedules get pruned, and promotional products clean up.

Bill Kestin, CEO of the Australasian Promotional Products Association, says promotional products push the marketing dollar further. "When you look at something like advertising space on TV, you might pay $10,000 for a 15-second spot on one channel in one city," he says. "That same $10,000 would buy you close to 8000 mouse mats, or 2500 caps."

Innovations abound in this industry; whether it's high-tech gadgets that plug into your computer to keep your coffee warm, or completely liquid-proof teflon shirts. (Rogers points out they not only don't stain, you can also pour a beer in your pocket and stick a straw in for some mobile refreshment.)

Technology is becoming an increasingly acceptable choice, particularly for corporate gifts. Monastra attributes this to the business community's increasing familiarity with computers. "When flash drives first came on the market they were quite expensive," he adds. "Now they're coming down to that $40 or $50 mark, and they're quite affordable."

But despite the innovations, the two top contenders for promotional product budgets are the old favourites: apparel and writing implements - clothes and pens.

"I think people always want to see new ideas, they want to find different products but invariably some of the standards still work," says Kestin. "People love their favourite t-shirts."

Apparel makes up a higher percentage of promotional product spend (27 percent) than the next two categories combined. It's big business, with many companies discovering the value of putting their brand on willing customers happy to wear branded apparel.

"People are using [corporate apparel] as part of their marketing spend now," says Sharon Thompson, manager of Ezibuy's corporate division. "Historically people were using it to outfit their teams, just to brand their frontline staff, but I think they are increasingly using it to be onsold as a promotional item, and give- aways to customers, so they've got permanent advertising walking around on the street."

Another trend some are noticing is the movement towards co- branding. Perceived value is particularly important, so some are insisting on brand name apparel for their own branded clothing.

"People are recognising if you brand, for instance, MacPac gear and Line 7 clothing, it's cheaper than retail, but it has a very high perceived value," says Vern Pere, director of AMPM Marketing. He points out that some brands are extremely choosy about who they associate with. Icebreaker, for example, insists on knowing the end use of its product in every co-branding proposal, while others let promotional apparel companies negotiate on their behalf.

Kestin says this trend is not likely to grow, at least on an international scale, because of high licensing fees and strict rules around brand use. "You can get a high-quality garment but the second you put Nike or adidas on it, you have to pay the licensing fee, which can be incredibly high," he says. On the issue of brand sensitivity, he adds, "I've had complaints from people who've dealt with non-APPA members where a company like Nike has withdrawn co- promotion because it is very protective of its global brand."

Kestin points out that APPA members have been educated around issues like co-branding in order to safeguard clients from similar incidents.

Ezibuy's Thompson has seen an opposite trend: "We have our customers asking us to brand their shirt as just theirs," she explains. "We manufacture and distribute it, but for all intents and purposes there's nothing on here that says it's an Ezibuy shirt. Not that we're not proud of it, but they [only] want their brand there!"

Meanwhile, on the desktop, the search for relevance continues. People are far more picky than they once were, and some clients are demanding the ability to customise products to be truly unique. As with apparel, perceived value is hugely important, particularly in the corporate gift market.

"The metal part of promotional products - clocks, radios, pens - that part of the market is increasing for us," says Pere. Grant Furlonger of Bright Sparks Marketing in Christchurch concurs: "People are a lot more particular now, about what they put on the desk. The days of the old cheap plastic items to go on a desk are pretty much gone."

Rogers points out that relevance, not recency, is the key. "I'm amazed that I can show a client a product today that I've had for five to seven years and they'll think it's the latest and greatest thing they've ever seen in their lives," he says. "I can show the same thing to another client and they'll say that's been and gone."

The promotional products industry is facing consolidation, with several operators including XLR8 and Corporate Image exiting the market in 2005 and others being acquired by large operators.

Withers says, "A lot of the experience in the industry is gone, but I'm not 100 percent sure that there are new people coming through at the bottom end."

Operators agree the survivors will be the larger firms with the capital and logistics capabilities to provide a full service. The role of these larger operators has evolved from simple importers and logistics providers and often involves strategic marketing thinking.

"I don't think there'll be any middle-sized primary companies around for much longer," says Rogers. A key reason, he sees, is the need to finance campaigns and the capital that goes into that. "If a large blue chip client came to us for a million dollar campaign, we can fund those campaigns, but the smaller companies just can't fund that sort of programme," he says. Promotional products companies don't usually receive payment until the job is finished, yet they must pay their overseas suppliers the day the order is lodged. "A lot of people forget that - we pay the full amount, we take the risk," he says. "And I think that's why the big companies do well."

Corporate clients are also attracted to other infrastructural qualities such as national coverage, warehousing and solid offshore supplier links. But the intangible assets of marketing and branding expertise are also becoming vital for the promotional products industry.

"Promotional product companies have the experience," Kestin points out. "They've done thousands and thousands of promotions, whereas marketing professionals might do 100 promotional campaigns in their career," he says. "Promotional products companies do this day in and day out, so utilise the creativity that's available."

Many operators work with a mixture of agencies and directly with the client. They usually express a preference for direct client work, not because agencies don't do a good job but the extra layer of communication sometimes causes confusion.

"With our [direct] clients we can generally be a little more proactive," says Pere. "We can know when their financial year is and talk to them about their requirements and put together some suggestions based on that." The agency relationship tends to be more reactive, he says. "They're putting together a campaign and we're at the end of that process. 'We need XYZ by tomorrow, can you help?' And they may be talking with three or four people about that."

"We don't charge for our time, while advertising agencies can," says Furlonger. "So they may give us a brief - which may be their brief, not their client's. Then we spend a lot of time doing it, and the thing will come back and the budget's not right. We can get to the bottom of what they need when working directly with the client. It's a bit quicker than going to an intermediary. But then again they [the agencies] have the ears of some clients and as long as they get the right brief, we can do the job for them. As long as they get the right brief."

He's quick to point out that each agency is different. "Ad agencies can be demanding, and for the good ones, demanding is not a problem if you know exactly what you're doing."

Pere says there's a much stronger awareness among corporates now that promotional products form a part of targeted marketing campaigns. "Five years ago a budget for promotional products was a bit ad hoc," he says, "but now they're allowing a budget for it. It's part of a campaign, not just the be-all and end-all."

It's heartening for operators to see many marketers include promotional products in their marketing bud-gets; what still hasn't changed are the extremely short lead times.

"Nobody plans marketing any more," laments Monastra. "Ninety percent of what we do is urgent." He sees the perception of marketers - particularly younger ones - is that the capacity for virtually immediate turnaround makes planning irrelevant. "Unfortunately, as an industry we've fulfilled that situation because we have all jumped," he says. "It's a fact of life, you want to stay in business, you try to be faster than anyone else. But what tends to happen is the perception you don't need lead times."

Faram commiserates: "Even though they've got their brand plans and strategies in place, promotions tend to take a back seat to the main, above-the-line strategic work and we don't often get the time we'd like."

Furlonger says clients who take shortcuts miss out on both creativity and cost savings. He cites the example of indented products where the personalised indent is done offshore and delivered in one shipment. "There's some real economic benefits out of that but you do need an 8-12 week period, because very few companies offshore, particularly in Asia, can carry stock. They make to order," he says. "So it's got to be made, it's got to be personalised and it's got to be shipped. If you want best value for money, you've got to give us that three months' notice."

This article was published on Saturday 05 April, 2008.

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