The promotional products year 2020: Suddenly haphazard

The promotional products industry has a year behind it that many people would simply like to forget, but which indeed will never be forgotten. Corona took the market off guard and threw a thriving industry off track. After the shock in the spring, months of adjusting to a “new normality” followed. What is the status of the industry at the end of the Corona year, in the midst of the second wave?

When media plan a review at the end of the year, they are faced with the task of finding particularly incisive events that have characterised the past twelve months. It isn’t always possible to summarise a year in headlines – and it is extremely rare that one word dominates over everything else as unquestionably as in 2020, which will go down in history as the Corona year. The coronavirus hit the international promotional products industry with an unknown force and catapulted it into a hitherto unparalleled exceptional situation. Whereby 2020 actually began very promisingly – the industry events at the start of the year were characterised by optimism, many Europeans reported about a good start to the year and forecasted a stable to promising development of the business for the next months. Many people considered the outbreak of Sars-CoV-2 to be an Asiatic problem and were at the most concerned about the import business – only to find out within just a few weeks that they had been terribly mistaken: Already at the beginning of April, the same players were talking about the most difficult times they had ever experienced, about a crisis that was overshadowing the downturn experienced in 2008/2009 by far. “All of a sudden, the economy didn’t seem to have a vision for the future any longer” (Luca Bortoletto, Maikii).

In the wake of the first lockdowns in several countries, the economy buckled in record time, the consequences for the promotional products industry were immediately and drastically tangible: “The pandemic had an immediate and significant impact on our business and many others in the promotions industry, with 80% of our sales disappearing overnight“ (Duncan Gilmour, Screenworks). “We went from a 50% increase in the first quarter to minus 70% in the second quarter“ (Andre Noordwijk, BeGlobal). “Over the initial lockdown period in March and April 2020, our general business dropped by 90%“ (Miles Lovegrove, Fluid Branding). “There were losses in turnover of between 50% and 60%. Real personal dramas have occurred in some companies“ (Cristina González, Clipy).

Masks en masse

After the initial shock and a phase of reorganisation – work processes had to be rethought, infection protection measures implemented, teams divided up, digital structures created for home office and remote working – the industry reacted as so often in the past fast, flexibly and creatively. A totally new line of business arose in the form of infection protection products and many industry players started procuring masks, visors, disinfectant products or other hygiene items. “The agility of the promotion industry was among other things recognisable by how quickly some providers developed products within the scope of the suddenly necessary safety concepts“ (Ralf Oster, PF Concept). A shift took place – away from traditional promotional products, the demand for which had slumped drastically, towards personal medical protective equipment that was suddenly in high demand. According to a survey of the British service provider Sourcing City, the number of protective and hygiene items offered via the sourcing portal has increased by 252% since March 2020, at the same time these products generated 16% of the enquiries over the past seven months, whereas the demand for “normal” products has hitherto only attained 35% of the previous year level.

Not all companies had the best of luck in their attempts to procure the new product groups, some were unfortunate enough to import deficient, falsely declared masks. “We have heard horror stories of products being rejected due to poor quality and non-compliance or being stopped at customs, redirected to other clients and even stolen“ (Miles Lovegrove, Fluid Branding). Others misjudged the demand for disposable masks or virucides and sensing big business ordered far too large quantities at excessive prices and once the supply chains had stabilised made huge losses.

Creativity to combat the crisis

The efforts to manufacture protective products oneself or offer them as individualised items and consequently close the haptic advertising circle proved to be more sustainable – also in the ecological sense. “These products definitely helped us through the crisis – and beyond, as antiviral products are gaining more traction“ (Duncan Gilmour, Screenworks). In this way, the year 2020 brought a host of new trend products with it: Branded masks in a wide range of executions are without doubt the product of the year, closely followed by items such as disinfectant dispensers and sprays, divider screens, products with an antibacterial surface, door openers, mask holders or soap. Furthermore, in the wake of the pandemic, smart home office kits or ideas for motivation and team building in connection with teleworking, tools for video conferences or mailable items, as well as DIY products, sports accessories or healthy food for staying fit during the lockdown together with camping items for the travel-restricted Corona summer also proved highly popular. Creative campaigns centering on haptic advertising went hand in hand with the new product ideas – in the attempt to stay visible and generate touchpoints in times of far-reaching contact restrictions and communication difficulties. “Particularly in times of social distancing, we are observing the longing for physical contact, for haptic experiences“ (Kathrin Haupt-Schneider, VÖW, The Five Elements). The wave of solidarity with the heroes of the Corona crisis, who were working on the front lines in the health care and basic supply sectors also reached the promotional products industry and many companies not only developed appropriate products and concepts to say “thank you”, but also initiated active awareness and aid campaigns themselves.

Enormous turnover losses

It was possible to cushion part of the turnover losses from the spring with such strategies and ideas. After the first shock, the market picked up again slightly in the summer, the easing of the pandemic situation also got business moving again. “We have seen from the summer onwards that business is adjusting somewhat and fortunately the effects of the second wave have not been as serious as the first“ (Andre Noordwijk, BeGlobal). Moreover, a few countries – such as Sweden for instance, where no lockdown was enforced – have, financially speaking, got through the crisis better so far. “We didn’t impose a lockdown and I think this was a clever decision because it helped the economy pick up and return to normal more quickly“ (Thomas Davidsson, Wackes).

Overall, however, many European promotional products companies will record a huge loss in turnover at the end of the year. Associations and individual firms from all over Europe are recording declines in the mid double-digit region: “I am expecting our turnover to drop by between 40% and 50% this year compared to the previous year“ (Marcin Pawłowski, badge4u). “The classic promotional products business is under extreme pressure throughout the entire industry, clear two-digit figure losses in turnover are the order of the day“ (Daniel Jeschonowski, Senator). The export business, which generates a large percentage of the turnover for many promotional products players, partly more or less came grounded to a halt – because in the meantime the restrictions impeded the movement of goods, but above all because the demand in many export markets decreased sharply. “In many countries the export business has virtually come to a standstill” (Daniel Jeschonowski, Senator). Sectors like the travel, aviation and gastronomy industries – all of which are traditionally large buyers of promotional products – are still struggling desperately with the recession. The crisis has hit the event sector especially hard and long-term due to the ongoing bans and restrictions. “Corona is without doubt hitting the event industry the hardest and thus also the related areas of application for promotional products“ (Thibaut Fontaine, mcs Kick&Rush). “All of our customers have reduced events, trade shows and conferences and the direct customer contact down to a minimum – and thus ultimately also the implementation of haptic advertising in these areas“ (Stephen Baumgärtner, cyber-Wear).

Lacking contact

The masses of cancellations of large public events on the one hand and trade shows on the other hand, hit the industry twofold, it lost one of its most important sales markets overnight and at the same time an elementary sales and marketing tool. “We have had to cope with a significant decline in our incoming orders, particularly due to the cancellation of most trade fairs and events“ (Ralf Oster, PF Concept). “Personal encounters and events are of existential importance for the industry. In spite of Corona, human beings are and will continue to be haptic and emotional creatures“ (Michael Mätzener, diewerbeartikel gmbh). The fact that industry shows were allowed to take place in many European countries in the late summer and early autumn thanks to the relaxation of the imposed measures and strict hygiene concepts proved to be a ray of hope. Events like the Premium Sourcing in France, the Leveranciersdagen in the Netherlands, the HAPTICA® live in Germany or the marke|ding| in Switzerland and Austria brought momentum into the business, provided urgently needed impulses and demonstrated that live events work in spite of social distancing and masks.

The delight of the visitors and exhibitors at being able to meet up again was partly emotionally tangible – but unfortunately only short-lived: The spring 2021 trade show season is once again overshadowed by uncertainty and chaos due to the second Corona wave and the related restrictions. The PSI Show and Merchandise World have been postponed, the CTCO cancelled, the future of numerous further events is unsure – nothing is plannable any more, not for the trade show organisers themselves, nor for their target groups: The cycle for the presentation of novelties and orders is severely disrupted, budget planning has been thrown into disarray. The marketeers are suffering from a lack of innovations, the haptic advertising suppliers and distributors are being forced to tread new paths.

“So many Zoom meetings”

In the current situation, communications, sales and marketing are have gone digital. Newsletters, webinars or zoom calls conveniently made from the desk at home have replaced trade fairs and customer calls that involve hundreds of kilometres being covered. “We totally reinvented our communications in terms of our customers and colleagues“ (Luca Bortoletto, Maikii). The first digital add-ons to physical trade shows arose, international sales meetings, conferences, judging sessions and award ceremonies were staged online. All of this in a situation in which the entire everyday work routine completely revolved around the monitor (“So many Zoom meetings“ – Duncan Gilmour, Screenworks), which led to considerable wear and tear for many people, but also to learning effects: After the Corona crisis some people will reconsider the odd trip here and there and the time they spend stuck in traffic or waiting at the airport and invest it more wisely.

Many industry insiders are assuming that the crisis will accelerate the digitalisation within the promotional products industry. Of course, companies that are digitally fit have an advantage. For example, those who specialise in eCommerce, have a positive Corona balance similar to that of many B2C shopping portals. “We manage more than 90 web shops for our clients and the number of orders is increasing month after month. This part of our business is currently booming“ (Thibaut Fontaine, mcs Kick&Rush). At the same time, it has become painfully clear over the past months that the industry is still lagging behind in terms of digitalisation. Yet, companies that think expanding one’s own digital competitivity is all that is needed to pave the way to a successful future after Corona are mistaken, because the challenges and key themes of the market that were relevant prior to COVID-19, are still essential. Hence, it is still important to position oneself as a competent consultant instead of as a pure supplier and service provider. “The crisis has shown that consulting competence plays a decisive role. Many industry customers choose their distributors as the first point of contact instead of looking for products on unknown portals” (Daniel Jeschonowski, Senator).

“Sustainability is here to stay”

Competent consulting also involves doing justice to the needs of the advertising industry – above all the demand for products that are as sustainable as possible. “Sustainability is the topic of the era and Corona won’t change that. Companies that believe they can fall back to the year 2000 regarding sustainability due to the coronavirus, are very mistaken“ (Armin Halfar, Halfar). “No company can afford to ignore the theme sustainability any longer, not even Corona will change that” (Thomas Davidsson, Wackes). Corona was so dominant that the mega trend sustainability, which with Fridays for Future and co. characterised the year 2019 more than almost any other topic, ultimately seemed to have faded into the background. All of a sudden, there were piles of rubbish caused by discarded masks and to-go packaging, plastic that has become so ill-reputed over the past years, was en vogue again all at once – as hygienic material and as a low-germ surface, also for haptic promotional products. The latter is not a regression per se, but on the contrary perhaps even contributes towards a more differentiated discussion.

Health and sustainability actually go hand in hand with each other and many promotional products distributors are indeed realising in the year 2020 with its great upheavals that their customers are intensely occupying themselves with the sense of purpose of the products they implement. “Promotional products with a sustainable advertising value – i.e. exceptional everyday companions of good quality, with outstanding design, made in Europe from environmentally-friendly materials – are increasingly in demand” (Kathrin Haupt- Schneider, VÖW, The Five Elements). “In the coming years the promoting companies will examine more closely how and via which channels – and above all with what budget – they can reach their customers” (Michael Mätzener, diewerbeartikel gmbh). A development that brings both risks as well as big opportunities with it – depending on how the industry reacts to the question of meaning the market poses.

Too early for optimism

Unfortunately, many promotional products players are themselves currently tending to ask whether and how they are going to survive the coming months. The easing of the measures in the summer and the Christmas business has brought a certain amount of relief in many cases. However, this cannot distract from the fact that the final assessment of the damage will only then be possible, when the aid funds and credit lines run out. “I think we will only see the impact over a longer period of time, because for now the support from the government is blurring a lot“ (Andre Noordwijk, BeGlobal). It will take a long time for the haptic advertising market to reach anywhere near the pre-crisis level again – there is no doubt about that. “I do not expect a full business recovery before two years“ (Ralf Oster, PF Concept). “It will take a year for the promotional products market to recover“ (Marcin Pawłowski, badge4u). Hence, many people don’t see the end of year 2020 as a conclusion, but more as a prelude for a further period full of challenges.

In this situation it is motivating that the industry has overcome many obstacles over the past months with its creativity, ability to improvise and resilience – one only has to think about how fast many realigned their product ranges, but also about the many great examples of creative ideas, of solidarity, aid and donation campaigns and of unity. Not to forget the good news that 2020 also brought with it and which significantly brightened the outlook for 2021 – above all the change of government in the USA and the breakthroughs in the search for vaccines. It would be naïve to break out in unbridled optimism in the light of this news. However, hope remains that 2021 will at least be a little more plannable.

// Till Barth

Photos: Archive, © WA Media