Promotional products distributors in the US enjoyed another year of growth in 2016, according to the Promotional Products Association International (PPAI). Total industry revenue was up by 2.4% to a new high of $21.3 billion, which PPAI says puts it ahead of both the consumer magazine ($14.5 billion) and newspaper advertising ($14.2 billion) industries, among others. (Those figures were gathered from third party sources for the report.)
The gains were mainly experienced by smaller distributors – those with less than $2.5 million in annual sales. These distributors saw an increase of almost 5%, compared to the 0.4% rise for their larger ($2.5 million+) counterparts.
As a result, smaller distributors accounted for 46% of industry sales, a year-over-year growth in market share of 1% point.
Sales and Profit Trends
Despite the increase in sales volume, the share of distributors reporting a sales decrease grew in 2016 (25%) from a year earlier (20%). Moreover, both large and small distributors were less likely to have experienced sales increases in 2016 (68% and 56%, respectively).
Similarly, while a majority of large (60%) and small (53%) distributors reported profit growth in 2016, those figures were down from the year earlier.
Worth noting is that with both sales and profits, the year-over-year decline in those seeing growth was more severe for large than small companies.
The study points out that promotional products are part of a larger variety of revenue streams for many of the industry’s smaller participants. More than one-third (35%) of these companies generated less than 80% of their total revenue from promotional products. And for these companies, promotional products accounted for just 27% of their overall revenues.
Looking ahead, two-thirds of distributors expect sales to be greater this year than last, with large companies (75%) particularly confident. More than 6 in 10 (63%) likewise expect profits to grow this year, with larger companies again expressing more confidence (68%).
Product and Program Categories
The wearables category continued to be by far the largest, accounting for more than one-third (34.3%) of total sales, up from around 29% in 2012. Wearables (such as T-shirts, golf shirts, caps, jackets) tend to be the most commonly recalled promotional product categories, according to prior research from PPAI.
Following wearables, the next-largest categories are drinkware (9.5%), bags (8.2%) and writing instruments (7.8%), per the report.
The breakdown of sales by program category shows brand awareness as the top single category (14% of sales), followed closely by business gifts (13.4%). Employee relations and events (11%) and trade shows (9.4%) are also significant categories.
About the Data: PPAI describes its methodology as follows:
“To compile PPAI’s 2016 Estimate of U.S. Distributors’ Promotional Products Sales, the survey was distributed both by email and mail to more than 25,000 distributors, both PPAI member and nonmember promotional consultant companies. As in previous years, the sample was drawn from a merge/purge of several separate industry databases, including PPAI and UPIC (Universal Promotional Identification Code) lists. The Top 50 distributors were also reached by phone to make sure their information was included in the analysis since omission of any distributor with a large volume of business could distort the statistics. A census of all distributors doing $2.5 million or more in sales was also included. Combining the samples from the different data collection methods used resulted in a total of 22,466 (21,577 small firms and
889 large firms) distributor surveys covering the entire U.S. industry. Completed replies collected by internet, phone and mail resulted in 910 usable surveys (a 3.52 percent response rate) which, combined with census data, provided a total of 1,662 records used in the analysis. The margin of error was ± 4.14 percent at the 95 percent confidence level.”