Engaging with AI | Must Read • Other goals for AI implementation amongst suppliers are cost reduction (58%), revenue growth (42%) and innovating new products or services (22%). According to Chris Alfano, chief digital officer at Vantage Apparel – PPAI 100’s No. 12 supplier – AI’s biggest impact may have less to do with output and more about information gathering. “The real potential lies in AI’s ability to provide powerful insights—whether it’s analyzing distributor behavior, understanding end-customer needs or identifying product and seasonal trends that can drive smarter decision-making,” says Alfano. “By not adopting AI-driven strategies, suppliers may fall behind competitors who are using these tools to enhance efficiency and customer understanding, which could eventually impact long-term profitability and market positioning.” Whatever the use, an intentional approach must be taken for such a broad technology, according to Gergen. “Each team will use AI differently,” Gergen says. “The first step in integrating it into current systems is to consider practical problems that need fixing and then determine if AI is one of the tools that will allow for innovation and solutions to those challenges.” More than three quarters (76%) of suppliers say AI has had no significant change in their workforce structure and nearly a quarter (24%) say they’re still assessing its long-term impact. Furthermore, while AI is starting to improve personalization, most suppliers (59%) have yet to see significant benefits. Alfano was surprised to see that more than three-quarters of suppliers claimed the technology had not changed their workforce. “It’s concerning that 75.7% of promotional product suppliers report no significant change in their workforce due to AI,” Alfano says. “This suggests a missed opportunity to leverage a tool that can transform efficiency and decision-making at every level.” Still, Gergen does not see it as a tool to cut down on the workforce. “I don’t see AI reducing the number of employees in our organizations,” Gergen says. “I believe it can create a more agile workforce that will expand our capabilities and offerings to our customers.” BoxUp, PPAI 100’s No. 84 supplier, is part of the roughly 8% of supplier respondents who said AI isn’t currently a focus. “We don’t use AI for anything and don’t have a plan to in the near future,” says Jake Kitchell, enterprise sales manager at BoxUp. “We may potentially in 2025, but it would be a huge learning curve for us as a fairly small company.” California’s AI Legislation: What It Means For Promo California recently enacted a series of laws designed to safeguard consumers, promote transparency and set standards for ethical AI usage. This unprecedented package addresses everything from data privacy and deepfake misuse to AI’s role in healthcare and political advertising. As AI continues to influence how businesses operate, these laws set new benchmarks that could impact the promotional products industry. With AI’s transformative potential for digital content and marketing, suppliers and distributors need to understand how California’s rules may shape compliance standards, transparency practices and data management strategies. “California’s new AI laws set a crucial standard for transparency and data ethics,” Bhat says. “For the promotional products industry, aligning with these rules is key to building trust and staying ahead as AI regulations expand nationwide.” For promo firms using AI tools to generate content or to gain customer insights, California’s laws could require new disclosures about AI content origins and data practices – making transparency a priority in client engagement – and highlight the need for rigorous data protection practices, especially as data use regulations tighten. AI tools using likeness or identity data must be designed to respect user privacy and avoid unauthorized use, making responsible digital identity management critical for promo firms. Furthermore, the move toward AI literacy and a clear regulatory framework underscores the importance of AI education within companies. Firms that invest in training employees on ethical AI use will be better positioned to meet future regulatory tandards. As California pioneers AI regulation, other states are expected to follow, potentially resulting in a patchwork of AI laws across the U.S. Firms working across state lines may need to adjust their AI practices and privacy policies to meet a diverse set of requirements, preparing for potential federal standards. As similar standards emerge nationwide, firms in the promotional products industry can benefit by adopting these best practices, enhancing consumer trust and staying ahead in a complex regulatory environment. Chris Alfano PPAI • DECEMBER 2024 • 35
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