Rules of Thumb (Drives): The Changing Nature of Ad Specialties

Reach into your cup of writing instruments and pull out a pen at random. The chances are quite good that it will have a logo on it—a logo, that is, for a business other than the manufacturer of the pen. Indeed, those of us who travel frequently tend to have an array of pens with hotel brands emblazoned on them.

Pens are perhaps the most obvious example of a unique niche in the printing industry: ad specialties. A glance around your office or home will turn up many more examples: thumb drives, coffee mugs, refrigerator magnets, golf balls, T-shirts and other garments, and infinitely more.

The Ad Specialties Institute (ASI; www.asicentral.com) defines these items as “low-cost, high-return promotional products, or ad specialties, are usually given away for free by companies, schools, hospitals, sports teams, organizations and more to advertise a brand or event or to thank employees or clients.” We sometimes call these promotional merchandise, or perhaps widgets or doodads, or even tschotchkes. If you walk any trade show floor, you’ll find yourself accumulating many of these objects, and even wearing them: lanyards are also a popular ad specialty item. And at the SGIA Expo, you’ll also come across companies that specialize in the printing of these items—and companies that make equipment for printing them.

The ad specialties industry has had a traditional manufacturing and distribution supply chain structure, but digital printing technology, as in so many other corners of the printing industry, is disrupting that structure.

The Layers of the Golf Ball

Golf balls are a popular specialty print product, so this metaphor is apt. If you were to slice a golf ball in half, you’d see several distinct layers. A cross section of the ad specialties distribution model also shows several distinct layers:

• Manufacturer—the company that manufactures the physical item, such as a pen.
• Supplier—the company (B2B) that orders a quantity of specialty-printed items from the manufacturer, such as 500 pens with, say, the Quick Printing logo on them.
• Distributor—the company (also B2B) that carries a number of different specialty product lines and liaises with the ultimate end user to acquire those 500 custom-printed pens.
• End User—the individual or the company that wants the 500 printed pens to distribute.

It works like this. “Coca-Cola has a big event and they have some branded products they want to give away,” said C.J. Mittica, editor of Wearables magazine, an ASI publication.  “They contact their distributor who they work with and they then figure out the items they think would be most effective. The distributor contacts the supplier who is essentially the manufacturer of the product. If it’s a T-shirt, the distributor gets in touch with a  T-shirt supplier.” The T-shirt supplier is the one who does the customized printing, and may also be ordering blank products from their own supplier—the manufacturer in the list above.

Distributors also provide promotional product consultants who work with the end user (a business or organization, for example) to develop an effective ad specialties campaign, using their knowledge and experience of what products tend to be effective and which don’t. It’s not far removed from planning an ad campaign; indeed, ad specialties are often included as part of a much larger marketing and promotion program. They are one channel in the overall media mix.

This is really the value that the distributor brings to the model. The role of the distributor is not just to find a product at the cheapest price and handle the logistics. In this traditional model, the distributor plays a much more consultative role for the end user.

For a long time, there was kind of a gentlemen’s agreement that suppliers would not “cut in line.” “If suppliers tried to pull an end run and try to sell to the end user directly, that would be a black mark on them,” said Mittica. Although that has been a moderate problem for decades, the advent of the Web has exacerbated the problem. “Suppliers can be much more visible,” he said. “Anyone can do a Google search for a product. It is a concern.”

Then there is the technology. If you have seen any of the Roland or Mimaki desktop flatbed UV printers in action, you know that the killer app for these machines is, in fact, doing things like printing specialty items like pens, golf balls, or—today’s super-hot specialty printed items—smartphone cases.

Companies such as 4Over4, Zoo Printing, and even Vistaprint offer business-to-business specialty item printing. Sites such as CafePress and Zazzle also offer short-run specialty items direct to consumers. “They are on the fringe of things in terms of promotional products used for business and marketing,” said Mittica. “The are geared toward the dabbler, not necessarily someone who has a business and is trying to initiate a marketing campaign. Those [companies] aren’t so much threat.”

Commercial printers seeking an entrée into this area, take note.

Then, however, there is Alibaba, which links distributors to manufacturers in the Far East and elsewhere.

“It’s very simple for customers to go on Alibaba and find a supplier who will probably print the products in the Far East at a fraction of the cost,” said Rob Hayes, director of Snap Products (http://www.snapproducts.co.uk), a supplier of ad specialty items based in Aldershot, Hampshire, England. “They access the same suppliers that we spent 15 years building up relationships with.” Snap Products does four-color digital UV printing and only sells through distributors.

There other reasons why ad specialties folks are not entirely sanguine about that kind of “going direct.”

“That’s a different instance of ‘going direct’—distributors going directly to the factories in China to purchase promotional items and circumventing the supplier in the process,” said Mittica. “This is also problematic because while distributors may get a better price, they have a very hard time guaranteeing quality and open themselves up to a whole host of product safety liability.”

The traditional ad specialties supply chain model has existed because the barriers to entry have traditionally been pretty high. It wasn’t just the equipment—screen or pad printing was the usual method used to print many of these items—but also warehousing, distribution, and the basic knowledge of how to choose and produce effective ad specialty items. The advent of digital flatbed UV printing has removed many of these barriers to entry.

“It has opened up promotional merchandise to absolutely any organization,” said Hayes. “We still see value in the distributor supply-chain model, but this is the way the world is now. We’ve got to reinvent our business so we still have relevance and a part to play in the model. It’s inevitable.”

Part of that reinvention was creating a company called Digital Blanks (http://www.digitalblanks.com), which supplies blank products and jigs for flatbed UV printers. (Jig is the term for the tray or frame that holds the products in place during printing.) “We set up the Digital Blanks business as a little bit of an insurance policy,” he said, “so if any of our customers who were previously buying products from us decided to buy their own digital UV flatbed printer, we could supply them with the jigs and the [blank] products.”

The changing model is also in evidence at ad specialties trade shows, said Hayes. “You would traditionally have your trade suppliers exhibiting there with their products on display and the distributors would walk around getting new product ideas and building new relationships.” Now, UV flatbed printer resellers attend these shows and give distributors ideas about buying a machine for $20,000 or 25,000, printing products themselves, and making much higher margins because they are removing a few layers of the golf ball.

It’s a bit of a disruptive technology, but for the high quantities in which many of these items are printed, the old model is still quite viable. For very small quantities, the digital model can be more effective, and is where the opportunity lies for newcomers to the market.

Joanie Loves Tschotchkes

There is a reason that ad specialties is a hot are:. These sorts of products work very well at imparting brand awareness. A fact sheet published by the Promotional Products Association International (www.ppai.org) says that, "Adding a promotional product to the media mix generated favorable attitudes toward a print ad in all cases. The use of a promotional product as the advertising medium alone achieved maximum impact, up to 69 percent increasing brand interest and 84 percent in creating a good impression of the brand."

A PPAI study (Effectiveness of Promotional Products as an Advertising Medium) found that "58 percent of respondents keep a promotional product anywhere from one year to more than four years. Even if the recipient uses the item only once per week, that’s a minimum of 52 impressions made over the course of a year with the possibility of more than 208 during a five-year window."

There is a caveat here, and that is that not all promotional products are created equal. Indeed, to be effective, said Rob Hayes, “it has to have a use for the end user.”

This is why pens are toward the top of the promotional popularity chart: everyone can use a pen. Likewise, smartphone cases, styli (especially pen/stylus combos), thumb drives, coffee mugs, calendars—these are all things most of us would buy anyway, but if a branded version is given to us for free? We’ll probably have that brand top of mind every time we use a particular item.

“Stylus pens sell very well,” said Hayes. “Screen cleaners, mobile phone cases, anything that has an association with touchscreens seems to be flying.”

Another big trend is personalizing these items beyond simply adding a company logo. “People will pay a premium for a personalized product,” said Hayes. “Upload a family photo to an iPhone case, and they’ll pay a serious premium.”

These types of items also have a good deal of repeat business. Every new iPhone version is a slightly different size which means a new phone case. And with each new version, Hayes said, “people are buying secondhand phones. They have a lot of longevity.” This means new phone cases for new customers of older iPhones.

Web-to-Print Changes Everything

Getting into the ad specialties business is not as easy as buying a Roland or a Mimaki UV flatbed and getting on with it. Hayes stresses that a Web-to-print portal and a high degree of workflow automation is what can make or break the endeavor.

“The development of web-to-print and ecommerce, the kind of model that Vistaprint is operating, has opened promotional merchandise,” he said. “The traditional route of someone picking up the phone, asking for the price of a product, sending in their artwork, having an artwork team qualifying that artwork, verifying it…that sales channel changed because of the implementation of Web-to-print.

“Without a Web-to-print function to be able to handle these small orders and automate the qualification and verification of artwork, and process the order online,” Hayes stressed, “there is simply no way to sell promotional merchandise at these low quantities.”

That said, the opportunities are certainly there. “Commercial printers are going to have a an existing customer base already,” said Hayes. “That’s a ideal place to start fishing. They might be buying one set of prints, now they’ve got an open conversation; ‘Do you know we also supply plastic pens or acrylic awards? We can also do mobile phone cases.’”

And don’t forget customization. “I’m selling a plastic mobile phone case, 250 units, through a distributor to HSBC or High Street Bank,” said Hayes, “and we’re charging around $1.50 a case. With Web-to-print, there really is no difference if you’re printing 100 phone cases with the same logo or 100 with a personalized logo. The only difference is that when you sell a personalized case, you can charge up to $20, $25 a case rather than $1.50.”

This Year’s Model

The old model still has a lot of value for businesses and other organizations serious about implementing ad specialties into a marketing campaign. For smaller companies only looking to do limited runs of promotional items, or for consumers, there is plenty of opportunity for the commercial printer.

As they say, the pen is mightier than the sword—and even mightier if it’s printed.