PPAI Report Suggests Distributors Are Playing Overlooked Role in IRR Market and Gifting
The recently published Promotional Products Association International Market report and the popularity of Stanley mugs in the promotional market suggest that the promotional products industry is playing a far greater role in the incentive, rewards, and recognition market than one would know based on the amount of prominence dedicated to brands, incentive, and recognition at their shows or in the industry media, education, and research. By Bruce Bolger
Identifying Additional Needs and Partners
Is Stanley Brand Success a Game Changer for the Promotional Field?
It Comes Down to Education and Awareness
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“Promo’s revenue totals in 2023 show that the industry is healthy, but growth in promotional products has tapered off since 2022’s explosive returns,” says Alok Bhat, market economist and research lead at PPAI. “Business strategy will be important going forward and capitalizing on upward trends is advisable.”
Nonetheless, the report suggests that distributors are playing a far bigger role in the incentive, rewards, and recognition (IRR) business than one can directly gather from current research from PPAI, the Incentive Research Foundation, or Incentive Federation, and may be worth of more exploration.
Based on an analysis of the most recent PPAI report, Bhat is correct about the opportunities for distribution to create new value based on their unequaled access, relationships and trust in a world in which cold-calling by phone and email is increasingly unproductive. Distributors need look no further than their own customers and prospects to find growth opportunities, and it appears that they are. According to the PPAI report, most distributors already get their business from programs involving:
- Brand awareness, 22.5%
- Business gifts, 18%
- Employee incentives, 9.2%
- Employee relations, 8.2%
- Resale (Reseller programs), 8.1%
- Trade shows, 7.2%
- Customer retention, 5.3%
- Customer acquisition, 5.3%
- Workplace wellness, 3.8%
- Market research, 1.3%
Identifying Additional Needs and Partners
Obviously, the companies distributors are calling on are using more than promotional products to engage people, and that obviously includes brands; employee, sales, channel, and other stakeholder engagement programs and technology. Their entire business model entails helping clients solve problems using third-party products and services—very few distributors produce anything except ideas and presentations. In fact, they add value by sourcing the most appropriate solution rather than trying to sell customers on something not best suited to their needs.
The PPAI research and the growing business of master fulfillment companies such as Links Unlimited, Partners for Incentives, and Power Sales, and others focusing on this market suggests distributors are doing a lot better job of capturing this market than industry research suggests.
According to the report, the industry’s revenue topped $26 billion in 2023, the growth rate was 2.24%, failing to outpace inflation. In 2023, the share of total sales by the smaller distributors took a slight dip to 46.3% (down from 46.8%).
Several dozen brands, master fulfillment, and incentive companies already are generating revenues at least $1 billion through this channel, when tallying up estimates of the major players active in the market.
Is Stanley Brand Success a Game Changer for the Promotional Field?
To Liz Haesler, Chief Merchandising Officer at PCNA, a Pennsylvania-based national distributor, the answer is yes. PPAI reports that the he Stanley Quencher remains a red-hot promo product and has created a “Stanley apparel collection that includes T-shirts, sweatshirts, hats and socks. Its colorways and decoration choices are on trend, from a light pink corduroy cap with a vegan leather patch to the earthy ‘Stanley green’ (sage), cream, dusty blue and pale orchid tees and sweats,” according to the article.
Haesler explains, “This level of brand passion is unparalleled and signifies a shift in the promotional products industry. For the first time, we’re witnessing a major trend being actively driven by our sector, highlighting the growing demand from end consumers for trending, quality products,” she says. “The era where only post-peak brands dominated the promotional space is over; consumers demand what’s current and exciting, and Stanley has delivered on this new expectation.”
It Comes Down to Education and Awareness
As one of the individuals who pioneered educating distributors on the use of brands and incentive and recognition programs both with ASI and PPAI in the 1990s, I quickly learned that the challenge was educating distributors on a new way to make money that required what seemed like a significant change in their business model for a rounding-error opportunity. The growing number who are succeeding are mostly doing so because they have found trusted partners who handle all the program design and support elements and who have mastered the art of finding out what a client needs outside of promotional products.
These distributors are satisfied with the lower margins because once up and running and managed by the right partners the business requires little time and support other than making sure the customer is happy, which often means an opportunity to learn about other needs. For these distributors, these advantages combined with usually much higher gross sales offset the lower margins. The emergence of engagement technologies and availability of third-party companies to provide program design, implementation, and measurement support, driven by the continuous need of organizations of all types to attract and retain customers, employees, distribution partners and other stakeholders, provides endless opportunities for those who know how to identify needs.
As reported recently in this RRN article, see RRN: Partner for Incentives—A Roadmap for Distributor Success, it all boils down to knowing how to ask the right questions and find appropriate business partners, which is the essence of most successful distributors.
How RRN and Brand Media Coalition: Your Partner in Success in Incentives, Rewards, and Recognition
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