by Sean Norris for Promo Marketing Magazine
January 24, 2019
You can probably guess how the rest of the article went, but here’s the gist. The promo industry produces a lot of cheap, disposable goods, many of them overseas. Brands buy a ton of these items, slap their logos on them and hand them out at conferences. Attendees leave with bags full of junk they don’t want, and throw most of it away. With the planet on the brink of an ecological crisis and consumers (especially younger ones) increasingly drawn to experiences over stuff, brands should seriously consider alternatives to promotional products.
Or, more succinctly: “We could get rid of cheap swag altogether.”
It wasn’t exactly a flattering portrayal of the industry. And, needless to say, it didn’t just strike a chord in promo circles—it was like an entire orchestra blaring at once. PPAI issued a response within hours, addressing criticisms of the industry’s environmental footprint and challenging the assertion that people toss most promos they receive. A widely shared post from commonsku more or less agreed that the industry has some work to do, while pointing to the progress it has made and arguing that a particular passage in the article inadvertently proved how effective promotional products are. (More on that later.) Other industry voices contended that, actually, promotional products do work, and people love them, and nothing to see here.
It was encouraging to see such a swift, concerted response from industry leaders. And it was even more encouraging to see the article spark serious conversation and thoughtful self-reflection. Commonsku’s post, in particular, caught the attention of Elizabeth Segran, author of the Fast Company piece. “Read this with great interest,” Segran said in a Twitter reply to the post. “Thanks for writing it.”
It seemed like a relatively happy ending to what was unequivocally a bad look for the promotional products industry. Damage control was done. Civil discourse was had. And, in what may have been a first for Twitter, nuance was acknowledged and—it sounds crazy, I know—even appreciated. The industry acquitted itself well, and came out looking better for it. Mission accomplished. Crisis averted. Or was it?
When I talk to Segran a few days later, via email, the buzz surrounding the article has mostly died down in promo circles. But I want to know if the industry response had changed her mind, if the volley of statistics and counterpoints made her think differently about promotional products. It hadn’t—not really, anyway. She agreed that certain branded merchandise, the kind people seek out and pay for, wasn’t necessarily in the same class as the piles of stuff foisted upon people in convention halls. And she acknowledged that the small-but-growing number of companies producing sustainably and ethically sourced promotional products was a “good intermediate step.” But, for the most part, she stood firm.
“I actually do think that the broader promotional products industry is problematic—not just conference swag,” Segran tells me. “In the midst of the current environmental crisis, I think that producing products whose ultimate utility is not functionality, but to serve as a canvas for a brand to improve its recognition is not a great use of resources. There are so many creative, non-wasteful ways to communicate today, especially on social media. And of course, since utility is not the ultimate goal of these products—since they are ultimately just billboards—they are often made cheaply, which makes them somewhat disposable. I still think there are far better ways to develop brand recognition and loyalty that aren’t as destructive to the earth.”
Segran’s not some college freshman with a Tumblr blog and a bunch of blind idealism. She’s written extensively about fast fashion and its social and environmental impacts. She’s been published in The Atlantic, Foreign Policy, The Nation, The New Republic and more. She’s got a Ph.D. from UC Berkeley. She knows her shit. And, more importantly, she’s the voice of the modern consumer. Writing her opinion off as an outlier would be a bad idea. Shrugging and forgetting about it would be worse. Do either, and you’ll only end up with more articles like hers, more people nodding in agreement as they read along. Her viewpoints on sustainability might have been extreme 10 years ago. Now, they’re commonplace.
And, besides, to ignore the criticism would be to ignore the bigger challenge for the promo industry, one that the responses and reactions and discussions in the aftermath of Segran’s article hinted at but never quite hit on: Despite the best efforts of a handful of forward-thinking companies, organizations and individuals, the perception that promotional products are mostly cheap novelty stuff—the proverbial trinkets and trash—is alive and well. And, more than that, it’s a perception rooted in reality.
“The industry is nowhere near close to doing enough,” Tim Brown, MAS, executive director of Quality Certification Alliance, the industry corporate social responsibility accreditation organization, tells me. “Moreover, in some cases, it is a reality, not a perception. The industry trade association and other organizations such as ours are continuously shouting the message of value and responsible sourcing. Yet, no matter what industry representatives—the trade association and others—do, ultimately it is up to industry practitioners to own it, which to this point only a select few truly do.”
The question is, how do you get 23,000-plus promo businesses to own it—and what happens if you can’t?
He’s not wrong. Just look at fast fashion. That industry revolutionized consumer apparel by optimizing the supply chain, cranking out an ever-rotating assortment of cheaply made T-shirts and spaghetti tanks, and selling ’em for $2 a pop. Its success—H&M made $22.7 billion in 2018, Zara $23.3 billion—was no accident. By and large, consumers have shown they want cheap, mass-produced stuff, and companies have been more than willing to provide it. This has been going on for a while. It’s how we ended up with Walmart and Amazon. It’s how we got five Michael Bay “Transformers” movies.
All of that extends to the promo industry. For every person who prefers a free massage or some other experience, as Segran suggests in her article, there are 10 more shoving piles of stuff into their convention tote or rolling suitcase. For every brand that pays to work with an accomplished distributor on a smart, targeted promotional campaign using responsibly sourced products from a reputable supplier, there are 10 more happy to order a bunch of cheap items from who-knows-where on the internet. So, yeah, brands and consumers aren’t off the hook here. It starts with them.
“The fact is that the waste and product quality is typically driven by the brands and consumers that have commoditized the medium,” Brown tells me. “Far too often, brands seek to do nothing more than provide a giveaway, at the lowest price they can, without giving any thought to how it ties into their marketing message, or how effective it may or may not be for a given promotion. By focusing on price and quantity—instead of value-added messaging, advertising effectiveness, client or prospect satisfaction and value, usefulness and even desirability of the product—brands and consumers are getting what they are asking for. The industry is merely responding to their demands.”
And who could blame it? Right now, promo business is booming. In 2017, total industry revenues reached $23.3 billion, the highest sales volume in 18 years. Revenue increased 9.31 percent over the prior year. Overall sales have risen for eight years straight. But how long will it last? The fast fashion industry is already showing some cracks. H&M is still a global powerhouse, but in 2018 its profits dipped to their lowest level in 16 years. It opened 390 new stores last year, but closed 170, the most since 1998. According to Bloomberg, that’s a 44 percent ratio of closures to new stores—up from 19 percent in 2017 and significantly higher than its 12 percent average between 1999 and 2017. Forever 21, another fast-fashion retailer, saw its revenue decline by 15 percent in 2017.
“Promotional specialty advertising is not a do-it-yourself activity,” Gregg Emmer, vice president and chief marketing officer for Kaeser & Blair Inc., the distributor based in Batavia, Ohio, tells me. “People that simply buy specialty items on their own make several serious mistakes. The most critical is that there is no real understanding of what they want to accomplish, and their most important consideration is cost per unit. Next, if any attention is put on objective, it is based on the thought process of a producer, not a consumer. So the message is not usually as effective, or effective at all.”
That all adds up to a lot of products of questionable origin and purpose landing in consumers’ hands. Supply and demand. Factor in those shifting consumer preferences, and you’ve got a whole bunch of potential landmines hitting the marketplace.
Sometimes, they blow up.
Every week there are more stories about the devastating impact of climate change on our lives. Do brands really want to be contributing to the problem?
—Elizabeth Segran, Fast Company
Then there’s what we can infer from Google News. For weeks after it ran, the article was at or near the top of Google News results for the search terms “promotional products,” “swag,” “promo items,” “promo industry,” “conference swag” and more. Google has its news algorithm sealed up tighter than The Rock’s peanut butter jar, so nobody outside of Mountain View knows exactly how it determines what stories rank where. But we do know that traffic plays a central role in how the algorithm prioritizes news stories, making an article’s Google News ranking a rough indicator of its popularity. That tells us two things: One, enough people were reading Segran’s article that it maintained top status for weeks, and two, that led to a snowball effect, wherein anyone who searched “promotional products” or related terms was likely to see the story.
On social media, the article was met by enthusiastic retweets and shares, including one from Associations Now, which published its own article summarizing and endorsing the Fast Company piece, and one from MeetingsNet, which bills itself as “the meeting industry’s portal for decision-makers planning meetings, incentives and events.” Associations Now has 10,272 Twitter followers. MeetingsNet has 20,792. Fast Company, which also tweeted the article, has 2.32 million.
That, on its own, is a lot of negative exposure for the promo industry. But this isn’t the first or only time this has happened. There has been worse.
On Nov. 9, 2011, then-President Barack Obama signed Executive Order 13589, subtitled “Promoting Efficient Spending.” Aimed at “cutting waste in federal government spending and identifying opportunities to promote efficient and effective spending,” the order directed government agencies to trim budgets by 20 percent in a half-dozen different areas, including travel, technology, printing and car services. But it was Sec. 7. that got all the headlines: “Extraneous Promotional Items: Agencies should limit the purchase of promotional items (e.g., plaques, clothing, and commemorative items), in particular where they are not cost-effective.”
This was already a blow to the promo industry. Here was an entire vertical market, or at least a major subsection of one, suddenly slashing its promotional products budget in incredibly public fashion. But, somehow, it got worse still.
Here’s how CBS News covered it:
Then there was a report from Cause of Action, a nonprofit watchdog group that, in 2012, launched a six-month investigation into how government agencies adjusted their promotional products spending in accordance with Obama’s mandate. While the report was mostly critical, punctuated by itemized lists of agency expenditures on “hamburger yo-yos” and “USB flash drives shaped like police cars,” it praised a handful of government entities that had complied with the order. That section read:
The best promo companies figured this out a long time ago. The top distributors have been doing it for years. Paul Bellantone, president of PPAI, preaches it. “We have our Get In Touch! campaign, which is actually a multi-year, multi-million dollar program,” Bellantone tells me over the phone. “At the end of the day it’s an advocacy program. We’re advocating for the benefits of using promotional products, and then the benefits of working with trained professional promotional consultants. We’re advocating because we believe that the combination of those two—our industry with the right consultation—helps avoid that perception that we’re just cheap products.”
PPAI created Get In Touch! in 2016 as a way to raise the overall profile of the promo industry, to enhance its perception with consumers and, hopefully, increase the overall share of advertising dollars coming the industry’s way. As part of the campaign, PPAI places national ads, runs broadcast TV spots, created a free local marketing toolkit of downloadable materials for promo businesses—digital ads, gifs, logos and graphics, a buyer presentation—and increased its presence at Advertising Week. In 2013, the association launched Promotional Products Work! Week, a now annual celebration of the industry that also aims to get the message out about its value and purpose. It also has Product Safety Aware, “a larger PPAI initiative to create confidence in promotional products.” Bellantone, as the face of PPAI and, by extension, the promo industry, advocates for promotional products wherever possible. When Fast Company published its article, he had a reply up within hours.
“We talk directly to media buyers, and the agencies and corporations that are buying promotional products through our outreach—like with Advertising Week in New York, the interviews that I did with Ad Age, and our partnership with the American Marketing Association, our work with professors and students,” Bellantone says. “We’re talking about the viability of our industry. We also have our legislative events where we go to Washington, D.C., and we say, ‘We’re frustrated when you hold up a promotional product and tag us in that same sentence about waste, fraud and abuse when you talk about government expenditures. Because we can give you case-by-case analysis of where promotional products have moved programs forward faster and for less money than had you not used promotional products.’”
Indeed, there’s a large body of evidence that the products work. PPAI has a library of studies showing their recall rate, return on investment, cost per impression and other convincing statistics. In his response to Segran’s article, Bellantone listed a number of them. Everyone I talked to for this story has seen it firsthand. “What do people say when you give them something quality, something good? You say, ‘Thank you,’” Jeremy Parker, the Swag.com co-founder, tells me. “It’s really the only ad medium and marketing medium where somebody says, ‘Thank you’ after receiving it. So we know how powerful it can be, but it only really works if the quality is there.”
You still have something like 95 percent of our industry is really one- and two-person operations, at least on the distributor side, and their focus is really on their day-to-day survival of their business.
—Bill Mahre, president, ADG Promotional Products
“Some people may say on environmental things we’re evolving more slowly,” he adds. “I just know that we’re working on it.”
“We understand that for the industry to improve, it will only happen when the market demands that change,” Tim Brown, the QCA chief, tells me. “That being said, I hear all the time from suppliers and distributors that they are waiting for more demand from their customers before they will invest in going above and beyond in these areas. This type of mindset only serves to prove that the industry has more work to do.”
As we saw up there, the industry really has come a long way on value and sustainability and responsible sourcing. The best companies and individuals—the most successful ones—are doing all those things, attempting to dispel the notion that promotional products are cheap crap. They really are working on it. But it takes a village, as they say, and the promo industry is less village and more Greater Los Angeles Metropolitan Area. It’s sprawling. “I think with any of these things, it’s all basically volunteerism, and when you look at our association or industry, you’ve got 25,000 entities between suppliers and distributors, if not more,” Bill Mahre, president of ADG Promotional Products, Hugo, Minn., tells me over the phone. “I think the last number I saw was in excess of 400,000 people. So it’s a pretty big animal to get people lined up and all on the same page, and that makes it difficult to get a consistent message out there. I think that’s the biggest challenge.”
Mahre, who’s been in the industry for 10 years, is deeply invested in its success, so much so that he ran for PPAI board of directors last year, winning a four-year term that begins January 2019. And he’s right about the numbers. According to PPAI’s own statistics, there were 23,563 distributor companies in 2017. Getting the message out to all of them is difficult. Getting them all to actually buy in feels nearly impossible. The industry’s structure makes it that way. The largest 843 distributors, those with yearly revenues greater than $2.5 million, account for 58 percent of industry sales, but make up just 3.6 percent of industry businesses. That leaves 42 percent of the market share, a sizeable $9.8 billion, for the other 22,721 distributors, most of them smaller.
“You still have something like 95 percent of our industry is really one- and two-person operations, at least on the distributor side, and their focus is really on their day-to-day survival of their business,” says Mahre. “So they’re probably not going to spend as much time and energy educating customers and doing that kind of research. They’re building their relationships and they’re maintaining their connections for their business.”
“You have the top-tier, respected distributors who provide creative solutions and products that enhance a brand,” says Jordy Gamson, of The Icebox-Cool Stuff. “There is also the competing force of mediocre distributors who are pushing products without regard for what is best for the customer. These are the companies that sell ‘trinkets and trash,’ and are viewed as such and damage the overall reputation of our industry.”
In the online discussion following the Fast Company article, a common response among promo professionals was that there’s an easy solution to the problems it raised: Just don’t sell the kinds of products Segran was talking about. Many distributors said they regularly turn aside sales if customers are looking only for product at the lowest price. Others told me they don’t go for low-cost clients at all. Larger distributor companies—and the most successful, business-savvy individual distributors—can get away with this. But, like Mahre said, smaller companies don’t necessarily have that luxury. They can’t refuse sales so easily, especially not on the basis of some intangible, far-off concerns. When you’re trying to survive in an increasingly competitive marketplace, it’s easy to miss the big picture.
“As an independent business that succeeds based on how we serve our clients, we are here to support them,” one distributor, owner of a three-person operation, told me. “I think we could be a voice in our marketing and in our client meetings to promote sustainably and ethically sourced products, and especially items that will be used and kept by end-users long term, as opposed to quickly discarded along with the branding message. But it is unrealistic for our company to only sell these at this time.” That distributor said his business, despite having products on its website, doesn’t allow customers to place orders online, and that it tries to avoid items with known quality issues. But, ultimately, it comes down to the customer. “The final decision on what to buy lies with our clients,” he says. “We will facilitate an order that they want unless it is clearly not available to meet an in-hands date, or has a known recall or similar legal reason for not being suitable.”
So, what the heck does the industry do? One option is to wait. As the industry continues to consolidate at the top—and as large outside competitors continue elbowing their way in—the businesses that don’t figure this stuff out will be the first to disappear. Time and market forces will solve some of the problem naturally. Or maybe demand will shift so slowly that the industry will have time to adjust in step. After all, it’s humming along just fine at $24 billion and growing. Right now, this isn’t an industry-wide existential crisis so much as one more challenge each individual business will need to overcome in order to grow or, depending on the situation, survive.
It won’t be easy. Changing perception never is, especially when that perception has been shaped by decades of truth. And it may not even be possible to win over the hardliners—those who, like Segran, believe we simply own too much stuff. But that doesn’t mean we shouldn’t try. And at least we’re having the conversation. That’s a start. And there are a few things everyone can do, right now, to build on it.
“Distributors should always ask the question ‘why?’ says Taek Sung. “Remember, buyers are millennials now, and it’s important to understand their perspective as we move into the future. It’s the responsibility of suppliers, distributors and end-clients to end the waste. Suppliers should stop making the junk, distributors should stop selling the junk, and end-clients should stop demanding the junk. I, for one, with my company as a supplier, promise to put only useful items out there. You can be low cost and innovative.”
“I’d like to see more distributors, suppliers and end-users discussing this,” says Natasha Rawls, of Sourcepoint by Proforma. “I’d like factories and items to be recognized to see which products or companies have the lowest or most reduced carbon footprint. If items are discovered to be poor quality, they should be removed. We should all share information for suppliers that are succeeding, and bring attention to those who may need some help reducing their carbon footprint, too. We’re all learning, and we can all help each other.”
“I don’t know that we’re not going to see articles like this, because society evolves and the things that are important evolve,” says Paul Bellantone. “I think what’s more important than whether or not it ever happens is do we have a good story to tell? I don’t mean story like in a fake way, but do we have the answer that somebody might not be aware of that we can share with them? As society evolves I think we as an industry have to have the courage and the confidence to evolve along with it. I was at Advertising Week and I heard somebody say this: ‘the confidence to evolve.’ It was really about how do you brand your company, how do mature brands deal with disruption. The thing that they said was, ‘They have the confidence to evolve.’”
“I really took that to heart for our industry,” Bellantone continues. “We’re 115 years old as an association. As long as we have the confidence to evolve, I think we’re doing what we should be doing. People will argue in the margins of whether we’re doing it fast enough or strong enough or putting enough impact on it, but I see us evolving in the ways we’re talking about here.”
“We can do everything we want, but over time, the marketplace dictates your brand and your image,” says Mahre. “You’re right, we are fighting some historical past, but the bottom line is the industry’s improving, the message is much better, and I think there’s a really good story to tell.”