The Power of Promotional Products

Promotional Products Association International

Table Of Contents

Section A: Industry Information and Statistics

Section B: Applications of Promotional Products Section C: Research Studies

Section D: Conclusion

SECTION A

INDUSTRY INFORMATION AND STATISTICS

Items used to promote a product, service or company program, including advertising specialties, premiums, incentives, business gifts, awards, prizes, commemoratives and other imprinted or decorated items.

What are Promotional Products?

.

How big is the Promotional Products Industry?

$18,013,763,752

Source: The PPAI 2005 Sales Volume Estimate

Growth of Industry Sales(PPAI Sales Volume Estimates by Year)

$5.01 $5.12 $5.23

$6.22

$7.01 $8.04$9.49

$11.88

$13.18$14.94

$17.85 $16.55$15.62$16.34

$17.31 $18.01

0

2

4

6

8

10

12

14

16

18

20

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

In Billions Of Dollars

2005 SALES BY PRODUCT CATEGORY (2004 Figures in parentheses)

Wearables 29.16% (29.98%)

Writing Instruments 10.39% (10.61%)

Calendars 7.20% (7.46%)

Drinkware 6.20% (6.25%)Bags 6.02%

(5.46%)

Desk/Office/ Business Accessories 6.02% (5.69%)

Recognition/Awards/Trophies/Jewelry 4.54% (4.32%)

Other 2.74% (3.76%)

Textiles 2.60% (2.60%)

Sporting Goods 2.44% (2.34%)

Magnets 2.40% (1.84%)

Housewares 2.36% (2.30%)

Computers 2.28% (1.96%)

Automotive 2.27% (2.15%)

Clocks & Watches 2.20% (2.16%)

Buttons/Badges/ Ribbons 2.12% (1.53%)

Stickers & Decals 2.02% (2.12%)

Electronics 1.95% (1.71%)

Games 1.77% (2.72%)

Food 1.74% (1.73%)

Personal 1.58% (1.31%)

Source: 2005 PPAI Product and Program Category Surveys

1. Education 2. Financial 3. Healthcare 4. Not for Profit 5. Construction 6. Government 7. Trade, Professional Associations etc. 8. Real Estate 9. Automotive 10. Professional: Doctors, Lawyers, CPA’s etc

Top Buyers of Promotional Products

by Industry

SECTION B

APPLICATIONS OF PROMOTIONAL

PRODUCTS

2005 SALES BY PROGRAM

CATEGORY (2004 in parentheses)

Source: 2005 PPAI Product and Program Category Surveys

Business Gifts 18.22% (17.84%)

Trade Shows 12.18% (12.14%)

Brand Awareness 9.29% (9.70%)

Employee Relations & Events 8.39% (8.76%)

Public Relations 7.62% (6.92%)

Dealer/ Distributor Programs 7.60% (6.91%)

New Customer/Account Generation 7.25% (6.53%)

New Product/ Service Introduction 5.94% (5.78%)

Employee Service Awards 5.45% (5.46%)

Not-For-Profit Programs 4.69% (4.99%)

Internal Promotions 4.31% (5.63%)

Customer Referral 3.15% (3.61%)

Safety Education/Incentive 3.05% (3.39%)

Marketing Research 1.18% (1.21%)

Other 1.69% (1.13%)

Advantages of Using Promotional Products

Flexible

Tangible and long-lasting

Impact easily measured

Higher perceived value

Complements targeted marketing

Complements other advertising media

SECTION C

RESEARCH STUDIES

Promotional Products’ Impact on Brand/ Company Image

An experimental study conducted by Georgia Southern University shows that recipients of promotional products have a significantly more positive image of a company than those who do not receive promotional products.

For the study, the researchers selected, as the test company, a restaurant located in a college town a few miles from a university campus.

00.5

11.5

22.5

33.5

44.5

55.5

Product No Product

Overall Image

Image Uniqueness

Perception Lunch Patronage Likelihood

Dinner Patronage Likelihood

A 2005 Study by Georgia Southern University

Promotional Products’ Impact on Brand/ Company Image (contd.)

The group receiving the promotional product was significantly more likely to recommend the business to others than the group that received nothing.

2

2.2

2.4

2.6

2.8

3

3.2

Likelihood To Recommend The Business

Product No Product

Promotional Products’ Impact on Brand/ Company Image (contd.)

The group receiving the promotional product had a more positive image as evidenced in their comments about the company than the non-recipient control group. The difference was statistically significant.

0

0.2

0.4

0.6

0.8

1

1.2

Perception Of The Business As Reflected By Positive Comments

About The Company

Product No Product

Promotional Product Incentives Produce Valuable Referrals From Satisfied Customers

Accompanying a request for referrals, an offer of a promotional product incentive or an offer of a promotional product incentive and eligibility in a sweepstakes drew as many as 500 percent more referrals than an appeal letter alone.

Offers of promotional product incentives are likely to be substantially more effective than enclosing free promotional products with an appeal letter.

A 2005 Study by Louisiana State University and Glenrich Business Studies

0.80%

0%

4.80%4.80%

0

0.005

0.01

0.015

0.02

0.025

0.03

0.035

0.04

0.045

0.05

Appeal Letter alone

Letter plus free promotional product

Letter + promotional product incentive for referral

Letter + promotional product incentive + sweepstakes

Effectiveness of Promotional Products at Tradeshows

71.6% of attendees who received a promotional product remembered the name of the company that gave them the product

76.3% of attendees had a favorable attitude toward the company that gave them the product

71.6%

28.4%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

PERCENT OF COMPANIES THAT REMEMBERED THE NAME OF

THE COMPANY

Yes

No

A 2003 Study by Georgia Southern University

Increase Booth Traffic with Promotional Products

Are Pre-show mailings with

Promotional Product Offerings

More Effective in Increasing Booth

Traffic Than Mailings Without?

Including a promotional product with a pre-show mailing or an offer of a promotional product increases the likelihood of an attendee stopping by a tradeshow booth

As a general rule, promotional products of greater value generate more sales leads than products of lower value

23%

36%

41%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Mailer Only Mailer withMagnet

Mailer with T-shirt Offer

A 2004 study by Georgia Southern University

Impact, Exposure and Influence of Promotional Products

53.10%

76.10%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

Print Media PromotionalProducts

Reach:

71% of business travelers randomly surveyed at DFW Airport reported receiving a promotional product in the last 12 months

33.7% of this group had the item on their person - a coveted location for advertising

Recall: 76.1% of participants could recall the name of the advertiser on the promotional product that they received in the past 12 months

In comparison only 53.5% of participants could recall the name of an advertiser they had seen in a magazine or newspaper in the previous week.

A 2004 Study by L.J Market Research

Impact, Exposure and Influence of Promotional Products (contd.)

Impression of the Advertiser

52% of participants in the study did business with the advertiser after receiving the promotional product.

Of those who had not done business with the advertiser that gave them the product, almost half stated that they were more likely to do business with the company that gave them the item

52.1% of participants reported having a more favorable impression of the advertiser since receiving the item.

Impact, Exposure and Influence of Promotional Products (contd.)

Frequency of Exposure/Lower Cost Per Impression

73% of those who used the promotional product that they had received stated that they used it at least once a week

45.2% used it at least once a day

The greater the frequency of exposure, the lower the cost per Impression

Repeated Exposure

55% of participants generally kept their promotional products for more than a year.

22% of participants kept the promotional product that they had received for at least six months.

Impact, Exposure and Influence of Promotional Products (contd.)

Why Keep the Promotional Product 75.4% of those who received a promotional product stated that they

thought the item was useful 20.2% kept the promotional product because they thought it was

attractive

Pass - Along Exposure Participants of the study were asked what they do with promotional

products that they do not keep. 26% of participants reported that they give the item to someone else.

Clients Respond to Business Gifts

A study by Wayne State University demonstrated that business gifts not only improved sales but also customer attitudes.

Results were compared among three groups: a) The letter Group -a group that received a letter of thanks b) The Silver Group - those that received a letter plus a silver desk set (a $20 value)c) The Gold Group - those that received a letter plus a gold desk set (A $40 value)

A 1998 study by Wayne State University

Clients Respond to Business Gifts

3.02.8 3.6

3.74.2

4.7

0.00.5

1.01.52.02.5

3.03.54.04.5

5.0

Letter Letter+Silver Gift Letter + Gold Gift

SatisfactionIntent to Buy

1 = Very Dissatisfied/Very unlikely to buy and 7 = Very Satisfied/Very likely to buy

Trade Shows

To promote traffic at its booth, an exhibitor sent invitations to 4900 trade show registrants. Registrants were further broken down into smaller groups, each of which received from zero to three gifts(before, at, and/or after the show).

The researchers measured booth traffic, post-show memory of having received the invitation and goodwill toward the company.

A 1991 Study by Exhibit Surveys, Inc

Trade ShowsBooth Visitation Rates

11.6%

4.2%

0%

5%

10%

15%

20%

25%

Product + Offer for MatchingIncentive at Show

Invitation Only

176%

Increase

The use of promotional products in this study increased:

Booth visitation Remembrance of the invitation Feelings of goodwill

Improve Direct Mail Response Rates with Promotional Products

The use of promotional products in conjunction with a sales letter can make a significant difference in direct mail response rates.

The use of promotional products can also improve a business’ effectiveness in converting leads to sales appointments.

A 1992 study by Silver Marketing Group

Findings

1.8%2.7%

7.3%

-1%

1%

3%

5%

7%

9%

11%

13%

15%

Sales Letter Letter & PromotionalProduct

Letter plus offer ofPromotional Product

Incentive* In terms of appointments secured

The inclusion of a Promotional Product to a mail promotion increased the response rate by 50%

The use of Promotional Products as an incentive to respond generated four times as many responses as a sales letter alone

The use of a Promotional Product as an incentive to respond reduced the cost per response by two- thirds.

Repeat Business

New customers who receive promotional products, on average, return sooner and more frequently, and spend more money than new customers who receive coupons. In two separate studies, SMU researchers tested whether promotional products would outperform coupons in the area of repeat business and sales. Promotional product recipients spent 27% more than coupon recipients and 139% more than welcome letter recipients over an 8-month period.

Promotional product recipients were also 49% more likely than coupon recipients and 75% more likely than letter recipients to return and patronize the business in each of the eight months studied.

A 1994 Study by Southern Methodist University

Total 8-Month Spending

$219

$173

$92

$0

$50

$100

$150

$200

$250

PromotionalProduct

Coupon Sales Letter

Employee Awards and Incentives

In 1994 Baylor University randomly surveyed 1,500 people, asking their opinions regarding employee awards and incentives.

Survey recipients were asked to rate how most employees felt about awards and incentives.

A 1994 Study by Baylor University

The survey found that:

Employees like awards and incentives Employees are motivated to win awards Employees work hard to win awards Employees encourage their co-workers to work toward awards and incentives.

Motivating through Incentives

A 1999 survey by the Incentive Federation Inc., revealed that incentive programs are both highly effective as well as cost efficient.

The survey was sent to 4,000 executives in a cross section of American Companies. Respondents were current users of merchandise and travel items for motivation/incentive applications.

The study revealed that American businesses spend $23 billion annually on merchandise and travel for motivational use.

A 1999 Incentive Federation Study

How Incentives are Used

82%

66%61%

48%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Sales Incentives Consumer/ UserPromotions

Non-SalesRecognition/ Motivation

Dealer Incentives

Percentage of Incentive Programs that Achieve Established Goals

83.10%83.70%

88.30%

80.00%

81.00%

82.00%

83.00%

84.00%

85.00%

86.00%

87.00%

88.00%

89.00%

Dealer Programs Consumer/ User Programs Sales Programs

Generate Customer Referrals Using Promotional Products

A 1993 study by Baylor University found that customers who receive promotional products are more willing to provide leads than customers who don’t receive promotional products.

Twenty Mary Kay consultants participated in a study where half of them distributed promotional gifts to customers and the other ten offered no promotional items to their customers. Both groups then asked customers (200 in all) to refer names of acquaintances.

A 1993 Study by Baylor University

Findings

44%

13.3%

35.8%

11.7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Referrals PerSalesperson

Number of Customersgiving Referrals

Gift

No Gift

Customers who received a promotional product were 14% more likely to provide leads than those who did not

Sales people who gave promotional gifts to their customers received 22% more referrals than sales people who did not use promotional products

40% of the salespeople who used gifts commented on how well the gifts were received by their customers

Build Customer Goodwill with Promotional Products

Promotional products foster customer goodwill toward a company and its salespeople.

A 1992 study by Baylor University, involved a textbook publisher sending 4000 educators either: 1) a pocket calculator plus a letter, 2) a lower priced highlighter pen plus a letter or 3) a letter only.

A 1992 study by Baylor University

Feelings of Goodwill Toward Company and Sales Representative

3.222.72

2.12

0

1

2

3

4

5

6

More Expensive Gift(Calculator)

Less Expensive Gift(Highlighter)

Sales Letter

Scale: 1=negative/6=positive

The use of promotional products in this study resulted in:

An increase in feelings of goodwill toward the company and its salespeople

A more positive attitude among those who received the calculator than for those who received the less expensive highlighter pen

On questions relating to the customers’ personal feelings toward the company and its sales representatives, customers who received the calculator scored 52% higher than the letter only group.

Dimensional Mailings

The packaging of promotional products can evoke curiosity as well as an increase in direct mail response rates. A 1993 Baylor University study revealed that the use of dimensional mailers can significantly improve response rates over direct mail alone.

For this study 3000 school administrators were divided into three groups and received either: 1) sales letter and sales literature, 2) sales letter, literature and a promotional product, 3) the sales letter, sales literature and promotional product but delivered in a box with a die-cut slot.

A 1993 Baylor University study

1.9%2.1%

3.3%

0%

1%

2%

3%

4%

5%

Sales Letter Letter and PromotionalProduct

Letter, PromotionalProduct & Dimensional

Packaging

Dimensional Direct Mail Response Rates

Improve Response Rates to an Advertising Campaign With Promotional Product Mailings

In a 1996 study PPAI helped a national tile distributor integrate the use of direct mail and promotional products into a print advertising campaign.

One group of subscribers received only the trade ad.

Other groups received a sales letter, a promotional product, or a promotional product incentive along with the trade ad.

1996 study by Dallas Marketing Group

Findings

.70%

2.30%

4.20%

9.55%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Trade Ad Ad+Letter Ad+ Stress Ball Ad + CalculatorIncentive

SECTION D

CONCLUSION

The value of Promotional Products is in their ability to carry a message to a well-defined audience. Because the products are useful to and appreciated by the recipients, they are retained and used, repeating the imprinted message many times without added cost to the advertiser.

The information contained within this presentation will provide a greater knowledge of promotional products, the industry and its applications.

This information has been made available to you courtesy of Promotional Products Association International

For more Information contact: PPAI, 3125 Skyway Circle North, Irving, Texas 75038 www.ppa.orgUPIC: PPAI