Distributor Sales Volume | Must Read industry’s biggest companies to get a clearer picture of what those factors truly are. Some of them might prove to be specific to 2022. Others might have staying power. Examined together, rational expectations for 2023 may begin to emerge. The Flash-In-The-Pan Factors There isn’t an industry – or perhaps even an individual – who can realistically talk about 2022 without bringing up inflation. It may well have been the word of the year, and it is very much part of the conversation when it comes to the promo industry’s big year. Inflated prices mean inflated sales numbers, at least to some degree. “It’s conceivable that, while we may have experienced record top-line numbers for the industry, we may not yet have eclipsed the same unit sales as the industry experienced in 2019, due to higher prices for similar items,” says Kevin Walsh, CAS, president of Showdown Displays and PPAI board chair. Thus, inflation is the big caveat that the promo world will have to wrestle with when using 2022 as an indicator of the future. Promo companies were forced to sell products at a higher price because they were paying higher prices for nearly everything that went into their promo business. As Nancy Schmidt, CEO of AIA Corporation, says, “Inflationary prices drove higher total revenues.” Parsing out how much price inflation might have inflated sales totals is no easy task, considering that independent of inflation, many promo companies were very happy with the number of sales they achieved in the year. Furthermore, inflation began to show signs of letting up in the latter half of the year, meaning promo companies, like many industries, no longer had to constantly react to inflation’s whims. “Price fluctuation amongst various commodities started to level out, which thus made it easier to stabilize pricing for a longer period of time,” says CJ Schmidt, CEO of Hit Promotional Products. Another factor potentially specific to 2022 was that many clients might have stockpiled marketing budgets from more cautious spending in the two years prior. It wasn’t until a few months into 2022 that many brands went full throttle back into their marketing plans, likely with some amount of surplus carried over from a spending pause in 2020 and 2021. Promo likely saw the dividends in 2022. “I believe that most corporations had a larger budget piling up from the previous two years, which increased their promotional spending,” says CJ Schmidt. Calling this a flash in the pan would be presumptuous. Certainly, some of that spend on promo was used with surplus dollars, but if the strategy was effective, there’s no reason to think most clients will not continue to double down. “Distributors and end buyers are increasingly incorporating promotional products as part of their integrated marketing strategy, resulting in a higher share of their budgets being devoted to promo,” says Nancy Schmidt. A 13% increase over 2021 total sales suggests that the industry has fully rebounded from the unprecedented circumstances of the first year of the pandemic. PPAI • APRIL 2023 • 71
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