What do the United States, Canada, Mexico, Australia, New Zealand and Europe all have in common? Try combined global assets of approximately $32 billion in promotional product sales and a fierce commitment to raising the bar in the promotional products industry across the globe.
It began approximately five years ago when, after having met informally for a number of years, six not-for-profit promotional products associations joined forces and formally established the International Federation of Promotional Products Associations (IFPPA). However, while IFPPA has been in existence for years, the organization has remained largely obscure.
As the world’s residents continue to fuse at lightning speeds in the proverbial melting pot, PMNow! took an in-depth look at how promotional products are playing out on the world’s stage.
The Federation, whose primary purpose is to “foster the development of business and trade among the constituencies of its association members,” consists of the Asociacion Mexicana Profesionales de la Promocion, (AMPPRO), representing Mexico; the Australasian Promotional Products Association (APPA), representing Australia and New Zealand; the European Promotional Products Association (EPPA), representing several European national associations; the Promotional Merchandise Trade Association (PROMOTO), representing the United Kingdom; the Promotional Products Association of Canada (PPAC), representing Canada; and the Promotional Products Association International (PPAI), representing primarily the United States.
Of all its efforts, helping association members meet the challenge of Asian manufacturing and its impact on the industry has been the Federation’s immediate focus.
“We’ve embarked on a number of initiatives, including making connections with various organizations in Hong Kong and China to have discussions on how we can be of value in educating Asian manufacturers on the way we do business around the world,” said Steve Slagle, president of Irving, Texas-based IFPPA and PPAI.
Undoubtedly, the business model Slagle speaks of is the supplier/distributor/end-user channel that Federation members have adopted and enjoyed for a long time. “It’s a pretty big problem [in Asia] because there are so many manufacturers throughout that region that it is impossible to reach them all at once,” he said. “They’re not designed on the same model that we are. There is not a network of distributors and suppliers working together; it’s pretty much associations of suppliers or manufacturers representing different product lines or product categories. Their interests are pretty one-directional, which is to export their products for consumption around the globe.”
To that end, Federation members have attended meetings with Asian manufacturers, and have even presented education sessions at several Asian trade shows, namely the Hong Kong Premium & Gift Show and the Canton Fair. “Hong Kong manufacturers are very good business people, but they had no understanding as to what our business structure was,” explained Kurt Reckziegel, president and COO of Quebec-based PPACanada and secretary of IFPPA. “We were quite successful, and had most of the major organizations attend our seminars.”
When asked if IFPPA’s ongoing efforts to educate the Asian market on its business model have proven successful, Slagle said, “Organizations in Hong Kong and China have been very responsive in wanting to be helpful and realize that what we are saying about our channel of distribution and supply fits most of the companies there who really want to do business the right way.”
He continued, “They want to get engaged appropriately, and they know for them there is more money to be made if they would accept it and not view it as a threat.”
IFPPA is also committed to the sharing of resource information among its members in order to decide what is being done well in another part of the world that members may adopt for their own purposes. An example of this, according to Slagle, is the successful education and awards programs utilized by the Federation’s members.
Like A Good Neighbor
Naturally, the geographical location of both the United States and Canada allows for the countries’ respective promotional products associations to closely resemble each other in structure and scope. “We have the same education programs that lead to CAS and MAS designations, a large expo in Toronto at the beginning of February, complete with an awards ceremony, a gala and two-and-a-half days of trade show,” noted Reckziegel. He also said North American associations offer a combined education academy, most recently convening in Montreal, where members of both PPAI and PPAC took courses that counted toward the continuing education component of their respective associations.
Furthermore, Reckziegel noted a number of growth areas that PPAC has experienced within the last 12 years. In 1994, the association reported an impressive $800 million in sales, but now reports approximately $2.5 billion. The association has also grown from 600 companies to 1,600; and while it formally hosted just one trade show, it now hosts 11. “As the industry has grown, so has the association, and the people have become more professional,” he said. “Probably, the business done in Canada is equivalent to the business done in California or New York, rather than nationwide.”
In 2005, the 7,000+ member PPAI reported $18.1 billion in promotional products sales in the United States, and Slagle anticipates the number increasing for 2006.
As far as differences in the associations, Reckziegel said PPAC’s Traveling Optimum Promotional Show (TOPS) provides a different flavor to that of its North American counterparts. “We take the show on the road in the spring to about seven cities across Canada,” he said. “In the fall, we take the TOPS Plus show to three other cities, where in some cases, it is a two-day show, and we generally have more eduction sessions in major cities, including Toronto, Montreal, and either Calgary, Edmonton or Vancouver. We allow added-fee, non-member distributors to attend our traveling shows, which we don’t allow in our national show. We also allow distributors to bring their clients on a strictly invitational basis.”
On a much broader scale, Slagle said while the Federation’s respective members essentially follow the same business structure, there are some notable differences in the way business is conducted in some parts of the world. For instance, he said there is a tendency for many European distributors, particularly larger ones, to perform most of the decorating services on their products. “They would purchase a lot of blank goods and warehouse them, and sell them throughout the year,” he said. “This is not unheard of in the United States, but it is not as common.”
Slagle also said that because Australia has a smaller association with a significantly smaller number of members than its Federation counterparts, by APPA estimates, the country imports a larger percentage of its products than anywhere else in the world. “There’s not nearly as much manufacturing going on there,” noted Slagle. “I think that’s because they’re so much closer to the source of where a lot of the products are made, which is Asia and India.”
Reckziegel agreed, saying that because the continent is so close to the Asian market, there is less of a division of the supplier/distributor/end-user distribution channel. “A lot of the distributors are also importers,” he said. “They would like to keep the two groups separate, but there is a crossover and there always has been. It is a trend that is affecting the United States because of the aggressive selling habits of the Chinese.”
In addition to discrepancies in the selling habits of some promotional products companies around the world, Reckziegel said there is a notable difference in the items that are sold.
“In Europe, in Germany for instance, a lot of the products are based on quite expensive business gifts,” he said. “In France, a lot of the promotional products are food-based, such as wines and packaged-food products. But in North America, besides having upgraded our products to [higher-end products, such as] leather jackets and great electronic gadgets, like MP3s and MP4s, we still sell a lot more than the Europeans of the more inexpensive items, such as pens and keychains.”
However, he said the North American promotional products industry is more aware of the importance of higher-end promotional products than ever before. “Nowadays, people are moving up the ladder in quality and prices,” he said. “If you are a company that has a wonderful high-end image, you’re probably going to give a higher-end product to a limited amount of people you want to target, rather than sending out millions of inexpensive items.”
Speaking specifically to the Canadian promotional products industry, Reckziegel said it now encompasses most of the premium and incentives companies. “A lot of the service awards, recognition awards, and premium and incentives companies are finding a home in our association,” he said. We are trying to put more order in the structure we have [as they come in].”
Furthermore, Reckziegel said the industry has been accepted by the Canadian advertising industry as one of the pillars of advertising. “It used to be the printed media, electronic media, radio and billboards, but now promotional products have been accepted as a sort of fifth group,” he said. “We participate in the Cassies awards, which is the premiere awards event for the Canadian industry. The main winners of these awards have been television advertising campaigns, but we have been able to convince the group that runs the Cassies that behind a lot of the television spots and newspaper ads, are promotional products. They now present a promotional products award to those companies for using the items in their campaigns.”
World View
When asked if the IFPPA has addressed major international issues, such as global warming and conservation, Slagle said it hadn’t. “This is not because we don’t believe it is a worthy cause; it’s simply because of a lack of time, and more than anything else, the fact that we don’t get together frequently,” he said. The Federation currently meets once per year at the PPAI Expo in Las Vegas, which Slagle says, is its biggest challenge. “Keeping us all together, in touch and focused is [a big job] because we are so spread out,” he said. “We’ve done reasonably well in getting information shared with each other, but we haven’t tackled any big international issues or challenges, other than Asian manufacturing.”
Judging from feedback from his international colleagues, Slagle said the promotional products industry appears to be on a healthy upswing worldwide. “We think it’s very healthy to think that there are a lot more companies beginning to look for ways to work with each other to import and export,” he said. “That barriers in those areas will begin to fall slowly but surely as people become more accustomed to the business customs in those respective countries.”
Stay tuned for next week’s interview with executives at Asociacion Mexicana Profesionales de la Promocion (AMPPRO), representing Mexico; and the Australasian Promotional Products Association (APPA), representing Australia and New Zealand.
By Cynthia T. Graham
