The mention of Australia does not necessarily conjure up images of high-end leather jackets, fancy writing instruments or ornate desk accessories. However, unbeknownst to many, the continent and the surrounding region is home to a robust ad specialty market. In PMNow!’s continuing coverage of the global promotional products industry, this week we sat down with William Kestin, CEO of the Australasian Promotional Products Association (APPA), representing Australia, New Zealand and the surrounding region. In addition to his appointment at APPA, Kestin, a native son of the United States who has been living in Australia for the past nine years, also serves as vice president of the International Federation of Promotional Products Associations (IFPPA). Kestin pointed out that because of Australia’s unique approach to business, the promotional products industry in the region, although very impressive, may never reach the numbers found in the United States, Canada and Europe.
PMNow: Can you provide an overview of the promotional products industry in the Australian/New Zealand region?
William Kestin: It’s changing like it is all over the world. One of the things that’s terrific about the IFPPA group is that we get a chance, at least once a year, to compare notes and see where we are in comparison to the rest of the world. In Australia/New Zealand, the industry is changing considerably. It is on a growth pattern at the moment, which is a good thing for our region. I think probably what’s changing the most is similar to what’s changing in the rest of the world, and that’s competing with Chinese factories that are marketing directly to large corporations with their goods. Promotional product distributors and suppliers are trying to redefine their relationships so that there could still be successful business between them, but that their businesses could continue to grow. We have similar issues to many of the promotional products industries around the world.
PMN: What is the size of the Australasian promotional products industry?
WK: Our market is still a small market. We conduct research every two to three years [to establish the growth of our industry]. The last research showed that the promotional products industry was $1.56 billion in Australia and $213 million in New Zealand. By Australian standards, that’s actually a descent size market. But, of course, in comparison to American, Canadian or even European figures, that’s quite a small drop in the bucket.
PMN: With Australia being so geographically close to Asia, why, in your opinion, is there such a fear of the Asian manufacturing market throughout the promotional products industry?
WK: I think it’s because within our industry we have failed to identify the most strategic ways to promote ourselves as creative entities. And I mean this in particular with the distributor model; but, suppliers [are guilty of this] as well. I think suppliers and distributors need to take a hard look at the way that they market their business externally—that means from a supplier marketing to a distributor and from a distributor marketing to the end-user.
I think one of the reasons we are so afraid of China’s looming presence is that we haven’t done a very good job of marketing ourselves as the creative agencies we need to be in order for our industry to survive. I think we’re afraid of the fact that our industry [might] continually become commoditized—we’ve become about product and best price. There is always going to be someone willing to offer a lower price. I think the biggest threat of China is that it can beat us on price many times. The industry has always tried to say there is a lot more than just buying a pen—it’s [about] creativity, it’s [about] quality, it’s [about having] assurances that you’re dealing with someone ethical—all the things we want to promote about ourselves. But, I think we are afraid because we haven’t really backed that up as much as we need to in order to stay successful.
PMN: What kinds of promotional products are people in your region most interested in?
WK: We have found an interesting trend in Australia where the market seems to be going for a higher quality of promotional product. Australians are relatively discerning shoppers. I suppose that because of our proximity to Asia, we have always been flooded with a lot of inexpensive Asian product. I’m not saying that’s not part of our industry, because by far, it’s still prevalent. But, I have to say that a lot of our suppliers are looking for a higher level of quality in the products they are providing. There are fewer suppliers who supply products in the lower end of the promotional spectrum, and there are more companies offering a middle to a higher range of products. In Australia, the promotional industry is looking toward a slightly higher quality of products, and they are willing to pay more to achieve that.
PMN: What is the No. 1 product category in Australia/New Zealand?
WK: I won’t say branded kangaroo meat or crocodile products that everyone expects. When you’re a small company working in your business, it’s very hard sometimes for people to remember that you’re part of a larger industry that has larger trends. You can look at the United States’ response to wearables and writing instruments and you can almost super-impose that onto the results in the promotional products industry in Australia. Wearables are still our strongest category, then writing instruments, then it goes into a smaller breakdown of desk accessories [and other product categories].
PMN: How is doing business in Australia different from other parts of the world?
WK: Australia has never had the full glut of promotional product invasion found elsewhere in the world. We get so many American [promotional products] companies that contact APPA wanting to open businesses in Australia. I have to say, as an American, speaking from personal experience of getting into the Australian business world, it is a very different country.
There are so many American companies that come to Australia and don’t succeed. The [Australian business] mentality is such that if you promote something too hard, too much or too overtly, it actually becomes unpopular. There’s a real subtly to Australian business, and I think because of that the promotional products industry has maintained a certain level. I don’t know that we will ever get to the point where we will have the full glut of promotional products like we have in the United States, because the Australians would be turned off by that. That is not something they would consider to be appropriate advertising. In Australia, there’s a term for this mentality called the Tall Poppy Syndrome. It’s almost a part of the convict mentality that exists as part of the fabric of the Australian culture. The Tall Poppy Syndrome is such that if somebody starts to talk about themselves too much, pump themselves up too much, or if they’re too out there, the Australians cut them down to size. It’s an even-level playing field. That’s something that’s inherent in the way that we do business. There’s a sense of equality across the board, which is actually a very refreshing thing.
PMN: How far back does the promotional products industry date in Australia/New Zealand?
WK: The promotional products industry has certainly been around our country for well over 50 years. It’s been very small, though. We experienced a real boom and somewhat of a professionalizing within the industry in the 1980s. Prior to the 80s, there were still plenty of promotional products that were in the marketplace and being provided by our members. In fact, this year at our awards ceremony, we inducted two life members who had been in the industry for well over 35 to 40 years. We also presented four members with our new a Industry Distinction Award. Collectively among all the award recipients, they had more than 110 years of industry experience. APPA was established in 1986, and was comprised of a collection of distributors and suppliers who decided that there was a need for an industry association. We incorporated in 1988.
PMN: What is unique about APPA and the Australasian promotional products industry? Are you doing anything differently from your international counterparts?
WK: Not to blow wind in our sails, as we say in Australia, but we have very unique opportunities in Australia/New Zealand that we have been able to utilize for the benefit of our members.
One of our better programs is one called the APPA Blue Book, a series of one-off discounts on products and services that our suppliers offer to every distributor in our database. It’s worth around $25,000 to our distributors. [In order to place a Blue Book offer], the suppliers pick products and services that they may not be well known for or that they may have a lot of stock in their warehouses. But, when they place a Blue Book offer, it has to be a substantial discount. I review every offer that’s put into the Blue Book. If it’s not substantial enough, I go back to the supplier and ask for a better offer. The suppliers can put in as many Blue Book offers they want, but they also have to redeem the vouchers themselves via the APPA Web site.
For example, let’s say a mug supplier might offer 20 percent off one mug order of any product from its range. The supplier has to honor that offer to every distributor on a one-off basis. Once the distributor calls and collects that offer, the supplier goes onto the APPA Web site and enters the details of the distributor that redeemed it. We have a system, through our Web site, that will not only show the distributor which vouchers they have redeemed, but will show the suppliers a list of who have redeemed those vouchers.
PMN: What are some of the emerging markets in the Australasian promotional products industry?
WK: The incentive and recognition markets are experiencing rapid growth. We will have our first trade show for this market next year. As far as product growth, electronics has shown the most promise.
PMN: What is your outlook for the promotional products industry within the Australia/New Zealand region?
WK: I am very positive about the industry in our region of the world. As the advertising becomes more expensive, more opportunities will open up for us and people will begin to take a vested interest in the promotional products industry.
By Cynthia T. Graham
