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The Confidence to Evolve

Explore the challenges and opportunities in the promotional products industry, including commoditization and distribution, and discover how to develop and communicate the next value proposition. Embrace the pace of change and make yourself unforgettable in a mature marketplace.

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The Confidence to Evolve

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  1. The Confidence to Evolve Paul Bellantone, CAE| President & CEO Promotional Products Association International August 2019

  2. “Promotional products are welcome in places and spaces no other advertising medium can touch and deliver pass-along rates that are the envy of advertising industry.”

  3. Our challenge as businesses, trade associations and industry is not about the obsolesce of promotional products as an advertising medium.

  4. Our challenge as businesses, trade associations and industry is not about the obsolesce of promotional products as an advertising medium. Our challenges and opportunities are commoditization and distribution of products.

  5. The past 20 years have been transformational for our industry due to access and transparency.

  6. The past 20 years have been transformational for our industry due to access and transparency. Our major value was the ability to procure product. Product procurement is now attainable by everyone.

  7. The past 20 years have been transformational for our industry due to access and transparency. Our major value was the ability to procure product. Product procurement is now attainable by everyone. How do we develop and communicate our (next) value proposition?

  8. “The pace of change will never be as slow as it is today.”

  9. The reality • 23,000 distributor companies. • 3,500 supplier companies. • Same price. • Same customers. • No territories. And the internet can serve 28 million businesses & any product, 24/7/365, for less.

  10. It is not your customer’s job to remember you. It is your job to make yourself UNFORGETTABLE.

  11. Price will be the deciding factor… …when VALUE is equal to zero.

  12. PPAI

  13. Discussion Points • PPAI • Industry and Marketplace • The Challenges and Opportunities • Buyer Research • Consumer Research • Questions and Discussion

  14. I am an optimist • PPAI dates back to 1903 • Promotional products predate the Association by at least 125 years • Our industry has withstood wars, depressions, recessions, manufacturing and technological revolutions, trends, culture • Promotional Products Work!

  15. PPAI Management Governance Based in Irving, Texas, USA Primary Members Suppliers & Distributors, Business Services, Multi-line Sales Representatives Board of Directors, Committees, etc. International Trade Association 80 staff Grow And Protect The Industry

  16. PPAI Strategic Plan Drive meaningful member value How we get members to love, trust, appreciate and engage with PPAI Advocate for the industry How we evangelize the power of promotional products and the profession Develop and leverage strategic foresight How we help PPAI, the members and the industry capitalize on market changes Manage an efficient and progressive organization How we continually retool PPAI to deliver second-to-none member experiences, interactions and engagement

  17. Industry vsMarketplace

  18. MARKETPLACE INDUSTRY We define the INDUSTRY as the value of products that are purchased through traditional suppliers and resold to buyers for distribution to consumers We define MARKETPLACE as the value of product in the hands of consumers regardless of how it got there VS

  19. Industry versus marketplace Over the past 20 years, the MARKETPLACE is growing 2 to 3 times faster than the INDUSTRY. YEAR INDUSTRY MARKETPLACE TOTAL 1998 $13.2 Billion $1.3 Billion $14.5 Billion 2018 $24.5 Billion $40-50 Billion $75 Billion

  20. VUCA

  21. Volatility. Uncertainty. Complexity. Ambiguity VUCA is an acronym used to describe or reflect on the volatility, uncertainty, complexity and ambiguity of general conditions and situations The term was first used in the 1990’s and derives from military vocabulary VUCA

  22. Volatility The nature, speed and dynamics of change, change forces and catalysts VUCA

  23. Uncertainty The lack of predictability and understanding VUCA

  24. Complexity The multitude of forces and the confounding issues Non-linear and no clear or apparent cause-and-effect VUCA

  25. Ambiguity The haziness of reality, the potential for misreads and the mixed meanings of conditions Cause-and-effect confusion VUCA

  26. VUCA

  27. VUCA

  28. VUCA

  29. Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content, Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world's largest accommodation provider owns no real estate. Something interesting is happening. • -Tom Goodwin, 2015

  30. The world’s largest taxi firm, Uber, is buying cars. The world’s most popular Media company, Facebook, now commissions content. The world’s most valuable retailer is now Amazon, and has more than 350 stores. And the world’s largest accommodation provider, Airbnb, increasingly owns real estate. Things change. • -Tom Goodwin, 2018

  31. Mature Marketplace Our industry must show the Confidence to Evolve.

  32. Thoughtfully Mature Marketplace Our industry must show the Confidence to Evolve.

  33. Thoughtfully Courageously Mature Marketplace Our industry must show the Confidence to Evolve.

  34. Thoughtfully Courageously Mature Marketplace Our industry must show the Confidence to Evolve. Quickly

  35. Trends

  36. US Industry trends 2018 $24.5 Billion +5.5%

  37. US Industry trends Sales Volume 2007 - 2018 2007 $19.4 3.5% 2008 $18.1 -6.9% 2009 $15.6 -13.6% 2010 $16.6 5.9% 2011 $17.7 7.0% 2012 $18.5 4.4% 2013 $19.8 7.2% 2014 $20.0 1.1% 2015 $20.8 3.8% 2016 $21.3 2.4% 2017 $23.3 9.3% 2018 $24.5 5.5% 9 consecutive years of distributor growth Uneven and inconsistent based on company size, structure and geography

  38. US Industry trends Distributor sales volume Less than $2.5 million 22,721 $9.8 billion +0.89% More than $2.5 million 889 $13.5 billion +16.34% Industry total 23,564 $23.3 billion +5.5%

  39. US Industry trends The disparity between large and small distributors continues to grow. Large distributors now account for 56% of industry sales.

  40. US Industry trends Distributor sales from non-industry suppliers increased by 11% over 2018 to $3.7 billion. Annual Growth +10.6% +4.8% +20.8%

  41. US Industry trends 2018 online sales are estimated at $6.0 billion (24% of total sales) up from $5.4 billion (23%) in 2017.

  42. US Industry trends

  43. US Industry trends 97% of distributors report less than $1 million in promotional products sales volume. Distributor member size breakdown (2019): Less than $250,000 94% $250,000 – $1,000,000 3% $1,000,001 – 10,000,000 2% $10,000,000 + 1%

  44. US Industry trends 75% of suppliers report less than $1 million in annual promotional products sales revenue Supplier member size breakdown (2019): Less than $250,000 53% $250,000 – $1,000,000 22% $1,000,001 – 10,000,000 19% $10,000,000 + 6%

  45. Drinkware Travel 34% 9% 8% 6% 6% Wearables Writing Technology By Product Category

  46. 12% 9% 8% 7% Business Gifts Trade shows Employee recognition Distribution Services Brand Awareness 16% By Program Category

  47. Buyer trends 55% Create brand and product awareness 42% Retention and appreciation 41% Generate conversation and referrals 25% Drive traffic Why buyers (marketers) use them

  48. Buyer trends How buyers (marketers) use them. 79% In stand-alone campaigns 69% In conjunction with other media 72% With social media 60% With email 58% With internet 54% With sales promotions

  49. Buyer trends Powerful Results 96% say promotional products are effective 88% moderately / extremely effective

  50. Consumer findings Travel Date & Time Technology

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