Promotional Products Market Rebound

Promotional Products Spending: 2020-2021

Halfway through 2020, the Advertising Specialty Institute (ASI) released their annual State of the Industry report which examines promotional products sales in top markets – such as manufacturing/distribution and technology – and predicts which markets will increase or decrease their spending on promo products that year.

35% Decrease on Promotional Products Spending in 2020

With U.S. promotional products spending significantly impacted by the Covid-19 pandemic (anticipated to decrease to $16.8 billion by the end of 2020, from a record high of $25.8 billion in 2019), it was no surprise that ASI predicted that most U.S. markets would decrease promo product spending in 2020.

According to IBISWorld, an industry research company, the decline in promotional product spending in 2020 is “mainly due to the adverse effect the COVID-19 (coronavirus) pandemic has had on advertising expenditure and corporate profit.”

Healthcare Takes Top Spot from Education

Healthcare was the only industry sector anticipated to increase their spending on promotional products in 2020. Promotional products sales in the health/medical market are anticipated to exceed $3.24 billion by the end of 2020. Other markets – including education and hospitality – suffered notable losses in revenue, resulting in decreased promo sales, compared to previous years. ASI expected healthcare to surpass education for the top U.S. promo sales market spot in 2020.

The key reason that health and safety promotional product spending rose so high in 2020 is because of the urgent need for personal protective equipment (PPE) by hospitals and other business in the healthcare/medical sector. Using their supply chain and procurement expertise, companies like Metron Branding helped healthcare businesses impacted by the COVID-19 pandemic obtain the branded PPE they needed to keep their employees and customers safe in 2020.

ASI anticipates that healthcare promotional product spending will remain strong in 2021: “There’s broad agreement that healthcare will continue to be a hot market in 2021. Many health and safety initiatives across end-markets will also bear fruit for promo.”

Construction Industry Surpasses Financial Services & Insurance

Looking ahead at U.S. promotional sales in 2021, construction will also be a key industry sector to watch. Construction was expected to surpass financial services/insurance for the number 4 spot in leading promo sales by market by the end of 2020. ASI anticipated that construction’s promotional spending would only decrease by 4 percent in 2020 whereas financial services/insurance promo spending was expected to decrease by 9.7 percent.

With industry research indicating that total U.S. construction starts will increase 4% in 2021, there is no reason to believe construction is at any immediate risk of losing its top four position in leading promo sales.

Record low mortgage rates helped drive the surge in U.S. privately owned housing starts in the summer and fall of 2020. In an article released near the end of 2020, Reuters reported that: “This segment of the market is being boosted by the pandemic, which has seen at least 21% of the labor force working from home. That has led to a migration from city centers to suburbs and other low-density areas as Americans seek out spacious accommodation for home offices and schools.”

Indication of a Return to “Normal”

With U.S. health officials now predicting herd immunity by spring or summer 2021, and with that a resurgence of in-person events such as trade shows, many businesses and organizations in the promotional products industry are optimistic that traditionally strong promo sales markets such as education, technology and manufacturing should begin to recover in 2021.

In fact, ASI already noted a significant increase in searches for traditional promotional products in their supplier database starting back in August 2020. And the Promotional Products Association International (PPAI) organization recently reported that almost two-thirds of surveyed promotional product suppliers and distributors anticipated their sales levels would either stay the same or increase in Q4 2020.

Promotional Products – Cost-Effective and High-Impact

Regardless of industry sector, businesses that can afford to increase or even just maintain their spending on promotional products in 2021, should do so to remain competitive. Promotional products are a consistently cost-effective and high-impact advertising medium, particularly effective at building brand loyalty. And the advantages of increasing marketing budgets during a recession have been noted by Forbes and countless others in several studies conducted in the past century.

In the immortal words of Henry Ford: “A man who stops advertising to save money is like a man who stops a clock to save time.

Set a course for growth in these uncertain times – contact us today.