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Who is Buying Promotional Products ?
Top 100 Buyers
Of Promotional Products
The biggest Promotional Products / AD Specialty spenders tells you which firms account for more than $2
billion of the industry’s $15 billion in sales and what kinds of
companies use promotional products more often than others.
Granted, that’s not the most scientific trend to emerge from this year’s
inaugural list – although it’s certainly in the running for Most Bizarre
Coincidence. So just what do Pfizer, PepsiCo, P&G, Philip Morris and
Penney’s have in common besides their first letter? For one thing, they
each spent at least $39.8 million on promotional products last year –
nearly $275 million all told; roughly half of the $548 million spent by
the top 10 firms overall.
What kinds of companies are shelling out big bucks for ad specialties?
Of the top 25, seven are consumer-goods giants like Pepsico, Procter &
Gamble and Philip Morris. Another six are in the communications industry
(AT&T, Verizon, SBC, WorldCom, Viacom and Sprint), with the remainder
comprised of the odd assortment of automotive, high-tech and
Crunching The Numbers
Our calculations are based on total ad expenditures as reported in
Advertising Age magazine’s Leading National Advertiser’s Report, to
which we applied a system of weighted percentages that take into account
a firm’s spending in measured vs. unmeasured media (promotional products
– along with direct mail, promotions, co-op, couponing, catalogs,
special events and other such media – are part of the latter category).
Simply put, for companies that spent more heavily in unmeasured media –
about a quarter of the Top 100 – a larger share of total ad expenditures
were allocated to promotional products; for those that spent more in
traditional media, the percentage was slightly smaller.
Overall, firms that allocate more ad dollars to unmeasured media tend to
be grouped in the high-tech, pharmaceutical and hospitality industries,
while auto manufacturers and consumer goods companies generally spent
more heavily on measured media like print, TV, radio and outdoor.
In the following pages, we’ll take an in-depth look at the Top 10
companies on this year’s list, examining some of the ways they use
promotional products in their media mix, at trade shows and special
events, and for their “internal customers.”
Promotional Products Spending
General Motors Corp.
Procter & Gamble Co.
Roebuck & Co.
Philip Morris Cos.
||Walt Disney Co.
||Bristol Myers Squibb
||Ford Motor Co.
||Sara Lee Corp.
||Toyota Motor Corp.
||Estee Lauder Cos.
||Johnson & Johnson
||Merck & Co.
||General Electric Co.
||Eastman Kodak Co.
Honda Motor Co.
Witter & Co.
Nissan Motor Corp.
Adolph Coors Co.
Quaker Oats Co.
Hershey Foods Corp.
Dell Computer Corp.
S.C. Johnson & Son
Starwood Hotels &
May Dept. Stores
Circuit City Stores
Ralston Purina Co.
Charles Schwab &
Campbell Soup Co.
Best Buy Co.
POUR BUSINESS IS
PROMOTING YOUR BUSINESS
1. Pfizer – $85.7
For Pfizer, ad specialties aren’t an afterthought by any means. Of the
Top 100 end-buyers, this pharmaceutical firm ranks No. 1 – according to
our estimates, it spent approximately $86 million on promotional
products in 1999.
Whether it’s to introduce a new drug to the medical community, increase
market share for a particular product or thank buyers and supporters,
Pfizer uses a variety of promotional items.
For instance, to generate interest in the release of the antibiotic
Zithromax in a new grape-flavored oral suspension for children, Pfizer
developed a promotional campaign built around Max the Zithromax Zebra.
Logoed “Max” plush toys, puppets, stethoscope clip-ons, charts and
children’s books featuring the character were handed out to
pediatricians’ offices for use in examination and waiting rooms.
“As a buyer for Pfizer Premium in supporting our top sales force, we
strive for excellence in achieving the top- quality promotional items at
the best price,” says Marianne Giangreco, purchasing manager for Pfizer.
In 1999 alone, 39% of Pfizer’s $16 billion in revenues went to marketing
and administrative expenses.
With its three business segments – health care, animal health and
consumer health care – Pfizer has developed five of the world’s 20
top-selling medicines. Also, nine of Pfizer’s medicines are No. 1 in
their therapeutic class in the U.S. market, and eight will earn revenues
of more than $1 billion globally this year.
Today, Pfizer’s Global Research and Development continues to build from
a foundation of remarkable success. In 1998, Forbes magazine named it
“Company of the Year,” and Pfizer made this year’s Fortune list of the
Best Companies to Work For (No. 20 overall and best in the
And while Viagra has been one of its most successful drugs – in the
first quarter of 2000, worldwide sales increased 73% to $333 million –
some of Pfizer’s greatest discoveries are yet to come. Sources say
Pfizer is developing new treatments designed to control and/or eliminate
illnesses such as heart disease, schizophrenia and even some of the most
fatal types of
cancer – colon, breast and pancreas. If this is true, just think of the
major role promotional products will play in Pfizer’s future marketing
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2. General Motors –
General Motors Corp. (GM) is the world’s top producer of cars and trucks
and ranks number one in the Fortune 500. Its 1999 sales exceeded $176
billion, resulting in a net income of $6 billion.
Its car brands include: Buick, Cadillac, Chevrolet, GMC, Oldsmobile,
Pontiac, Saab, and Saturn.
The company also manufactures cars through its Holden & Opel and
Vauxhall units, and has affiliations with Isuzu and Suzuki. Besides
cars, GM has several other divisions and subsidiaries, including Hughes
Electronics, Allison Transmission, GM Locomotive, Delphi Automotive
Systems, AMI Instruments Inc., Delco Defense Systems Operations, Delphi
Delco Electronics Systems, Delphi Harrison Thermal Systems, General
Motors Corp./Powertrain, HRL Laboratories, L.L.C., Hughes Network
Systems, Hughes Space & Communications Co., Lexel Imaging Systems, Inc.,
Packard Hughes Interconnect, Rockwell Collins Passenger Systems and
Spectrolab, Inc. and GMAC financing.
The company, which employs nearly 400,000, ranked second on The
Counselor’s list of the Top 100 End-Buyers. Our calculations put GM’s
promotional products spending at nearly $81 million in 1999.
GM uses promotional products for a variety of purposes, both internally
and in campaigns aimed at consumers. For example, it recently conducted
a joint-venture promotion with MP3, the online
Music purveyor. Free CDs were given to people who test-drove a new
Buick. The specially-created disc featured 15 artists who regularly post
their music on the MP3 Web site.
The company has also created a separate division that focuses primarily
on promotions. GM R*Works is GM’s in-house promotions, events and
sponsorship marketing company. In 1999, the company conducted over 1,000
events. GM R*Works uses a variety of vendor sources for a number of
sales- and marketing-related tasks, including direct mail, display
services, incentive programs, premiums, promotional products and
Partnerships and joint ventures are just some of the other activities
for which the company uses promotional products. For example, it
recently teamed with Warner Bros. to promote child safety for owners of
its minivans. Specifically, Chevy Venture minivans and Warner Bros. held
a “VentureTainment” program where premium packets were given to owners.
The packets included headphones (the vans are equipped with a video
system), keytags and activity books for children, among other items.
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|3. AT&T – $58.5 million
As almost everyone past pre-school age knows, AT&T is one of the world’s
largest telecommunications and data-processing firms, servicing
businesses, consumers and government. Founded in 1885, it employs
160,000 internationally and has annual revenues of approximately $62
billion. The former parent company of the Bell Telephone System, AT&T
was – as a result of an antitrust suit by the U.S. Government – ordered
to divest itself of all Bell
AT&T today consists of numerous divisions, including, but not limited
to, AT&T Labs, AT&T Broadband LLC, AT&T Latin America, GRC
International, Net2Phone and AT&T Wireless Group. In addition to
telephone communication (it handled 88.5 billion calls in 1999; an
average of 280 million every day), AT&T’s other services include digital
wireless networks, Internet access/technology, data services,
outsourcing, consulting and network integration.
The firm has used imprinted products for years in a variety of ways. It
now does so on a global scale, with different products being used for
varied purposes in its many divisions. These include consumer and
business mailings (not done as frequently today as in the past);
employee incentives/rewards; gifts to key clients and/or prospectives;
trade and consumer-oriented show giveaways (remember those plastic
Princess phone key chains? It was a “key” part of the marketing mix even
all those years ago); wearables and other items for events it sponsors
either fully or partially; and company stores.
Its most recent major foray was a selection of specially-imprinted
products tying into its support of the 2000 Summer Olympic Games in
Sydney, Australia. The items bore both the AT&T logo and Olympics logo,
and were made available to AT&T employees worldwide.
“It’s difficult to realize what the company receives in return for our
use of promotional products,” says AT&T spokesperson Burke Stinson. “But
when you’re known as well as we are, when you’re in the Top 10 of the
Fortune 500, there are certain expectations. If we didn’t use an
assortment of promotional items, people would wonder why.
“At minimum, they absolutely serve to place a reminder in the hand of
the recipient and to expose countless other people to our name and logo
when they see others wearing the T-shirt, drinking from the mug or
handing over their car keys to a parking attendant.”
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|4. PepsiCo – $52.6
PepsiCo Inc. is one of the most successful consumer products companies
in the world, with over $20 billion in net sales during 1999. The brands
that come out of its divisions – Pepsi-Cola Company, Frito-Lay Company
and Tropicana Products Inc. – are household names. Such success in sales
and recognition is in no small part due to the aggressive promotion the
In 1996, Pepsi-Cola put large-scale, reward programs on the map with its
historically unmatched “Pepsi Stuff” campaign. In 2000, it’s revisiting
the theme with a new version, PepsiStuff.com – an online/offline
promotion developed in conjunction with Yahoo! Inc.
Launched in August, the Web site registered one million users in the
first month, and the promotion is scheduled to run through the end of
December. The program enables consumers to earn points via an
under-the-cap promotion appearing on 1.5 billion single-serve bottles of
Points can be redeemed for awards such a digital music files and video
games, discounts from promotional partners such as Foot Locker,
GoJane.com and Global Sports, and Pepsi-logoed merchandise.
“PepiStuff.com enables consumers everywhere to experience a familiar
program in a new and innovative way,” says Anil Singh, chief sales and
marketing officer, Yahoo! Inc.
Pepsi spokesperson Dave Cheeco agrees, pointing to the way the campaign
has evolved to incorporate a new range of incentive products – such as
the digital music files and video games. “More products are becoming
available and are geared toward many types of audiences,” he says,
adding that there’s also a place for imprinted products. “Even though we
think the trend is in premium items, moving away from [logoed]
promotional items, there is still an important
supporting role. Promotional products are good for us as far as getting
our logo out there. The
visibility is important.”
A few other recent campaigns/sponsorships that keep PepsiCo one of the
Top 10 buyers of promotional products include a five-year agreement
signed with NASCAR driver Jeff Gordon and Hendrick Motorsports; a
Pepsi/Frito-Lay “Halloween Party” promotion involving Scooby-Doo plush
toys; Frito-Lay’s Cracker Jack “Nothing But Nuts” series of baseball
prizes; a Pepsi World Series Sweepstakes for Major League Baseball gear;
and a new online Pepsi-Cola store of logoed merchandise.
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5. Procter & Gamble –
Long considered a marketing powerhouse and the world’s leading
manufacturer of consumer products, Procter & Gamble should be as
familiar as sorting clothes on laundry day, changing your kid’s diaper
or powdering your nose. Using an array of advertising, P&G markets over
300 products in categories like laundry and cleaning, paper goods,
beauty care, food/beverages and health care to nearly 5 billion
Though it has many firmly entrenched brands like Tide, Bounty and
Pampers, Cincinnati-based P&G prides itself on product innovation. It’s
had several successful product introductions in the last year, including
the Reflect.com beauty care Web site, Swiffer cleaning aids, Febreze
odor elimination products and Dryel at-home dry cleaning system. The
company’s recent acquisition of pet food manufacturer The Iams Co. is
expected to add approximately 2% sales growth in the fiscal year 2000.
Promotional change is in the air at P&G: Industry experts say the
company’s focus seems to be shifting from expensive mass advertising,
like TV commercials, to more targeted consumer communication approaches
and in-store advertising. New advertising strategies will no doubt
involve increased use of promotional merchandise.
For instance, P&G’s push of its new Physique hair-care products
earmarked a higher percentage of its advertising budget for promotions
than for television or print ads. “We still think that there’s something
important about mass advertising, but there’s also something to be
learned from a more targeted approach,” says Tracey Long, spokesperson
for P&G. “Our full compliment of brands are looking to find the right
balance. Physique has focused better than 50% of its marketing plan on
non-traditional avenues like our ‘Hurricane’ parties, leveraging our
Internet site and getting the word out to encourage people to sign up
for Club Physique.”
Physique used direct mail and a Web-based “viral” e-mail promotion to
create brand awareness and generate trial of the product. At parties
held in four cities, free samples and Physique logoed promotional
products like T-shirts, beach towels, beach balls and cosmetic cases
were awarded during interactive contests.
“For Physique as a brand it’s very helpful to have fun items that are
interactive for our target group,” says Long. “How do we reach them in
different ways that are provocative, that are interactive? Promotional
items certainly provide us with that opportunity.”
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– $45.2 million
As part of a multi-faceted corporate strategy to revamp its image to one
that’s hip, haute and techno-savvy, Hoffman Estates, IL-based Sears,
Roebuck & Co. has plugged into the power of promotional products,
spending just over $45 million in this industry.
Paramus, NJ-based Einson Freeman is one of the lead sales promotions
agencies that works with Sears, and certainly one of the largest,
handling between 50 to 100 promotions of varying size and scope each
year. Senior project manager Jeff Shapiro says that Einson Freeman is
responsible for conceptualizing and implementing the retailer’s
sweepstakes, games, gift-with-purchase and overall marketing strategies.
Ogilvy and Mather, Einson Freeman’s sister company, handles Sears’
radio, TV and print advertising.
“We just worked with Sears for their local sponsorship in the ‘Taste of
Chicago,’ and we’ll also do promotions targeting the Black and Hispanic
communities in certain geographic areas,” says Shapiro. “Then there are
the full-blown national campaigns, which involve structuring programs
around different Sears departments.”
A lot of the company’s marketing and promotion success lies in joint
ventures with such corporate powerhouses as Disney, AOL and Levi’s.
Sears had its hand in such fruitful promotions as this year’s
sponsorship of pop sensation Christina Aguilera’s 35-city tour.
Designed to make Sears and Levi’s, the tour’s co-sponsors, the epitome
of back-to-school cool and the ultimate teen shopping destination, the
marketing campaign offered Aguilera’s fans an exclusive,
available-with-purchase CD featuring previously unreleased and
newly-remixed material – a new disc each week for three weeks. In
addition, “Christina Boutiques” were heavily promoted and set up in
stores to carry T-shirts, back-to-school supplies and accessories
bearing the singer’s image and tour logo.
Shapiro recounts another immensely successful gift-with-purchase
promotion in which imprinted hammocks were given to customers who bought
certain products in Sears’ Lawn & Garden departments. He also notes that
holidays such as Mother’s Day and Father’s Day are the perfect anchor
for a gift-with-purchase program. “We pick products that relate to the
theme of the holiday and are specific to the consumer group we’re
targeting,” he explains.
Based on his 12-year tenure with Einson Freeman, and his six years
working with the Sears account, Shapiro says he’s a firm believer in the
effectiveness of promotional products and acknowledges their role in the
many successful Sears promotions he’s been involved with that have
surpassed expectations. “It’s pretty simple,” Shapiro says. “I use
promotional products because they definitely work.”
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– $45.1 million
Talk about power. On October 18, the Dow Jones Industrial Average dipped
below 10,000, and analysts blamed IBM. The company earnings report –
released the day before – showed third quarter revenues down more than
had been previously predicted.
Investors feared this was a poor bellweather for tech companies. When
IBM software revenues fell in September, the company still reported that
earnings met expectations. This time, however, the lower-than-expected
sales did them in. The Dow finished the day at 9,975.02, and shares for
IBM closed at $95.50 – down $17.50 from that morning’s opening price.
Yet IBM’s resilience and ability to move forward has proven successful
throughout its nearly 90 years in business. It builds new and different
business products and usually purchases products to promote them.
Example: When The Counselor profiled IBM in a recent issue, Jeff Hales,
then marketing communications representative at IBM PC Direct, noted,
“We use promotional items to create excitement and make less tangible
products appear tangible.”
When IBM teamed up with software developer J.D. Edwards to provide
computer programs for the petroleum industry, it targeted a promotion at
CEOs who needed reassurance that the technology would be installed
without affecting overall efficiency.
Key execs were sent a set of three imprinted juggling balls. They came
packed in a box that opened to reveal two flaps. On one flap the copy
read, “With the IBM and J.D. Edwards complete petroleum solution,
juggling everything you have to do is easier than ever.” On the other
flap the thought continued with, “Wouldn't you like to have a system
that guarantees no one drops the ball?”
Each ball bore the IBM and J.D. Edwards names on one side, and a
different slogan on the reverse. One read, “Work smarter,” another,
“Respond faster” and the third, “Be more competitive.”
Many CEOs displayed the balls on their desks. And more importantly, the
sales force scheduled a record number of interviews to talk about and
sell the software.
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– $44.7 million
The world of semiconductors is ruled with a silicon fist by Intel,
supplier of 80% of the PC market, easily making it the No. 1 chip maker
in the world with $29 billion in sales in 1999. Forbes magazine has
called it the greatest manufacturer since the U.S. Government during
Wold War II, “throwing up billion-dollar fabricating plants the way
McDonald’s opens restaurants.”
Intel’s primary products are the Pentium and Celeron microprocessors
that have powered PCs since the early 1980s and whose largest customers
are Compaq and Dell. Its latest chip, XScale, is touted as the first of
a future generation used to power hand-held devices such as computers
and mobile phones with but a single AA battery. Intel is also expanding
outside of the semiconductor market into network services and the
Intel relies heavily on advertising to help keep itself in the public
eye. A vital role in that effort is played by our industry, as the
firm’s 8th-place finish (at $44.7 million) on this year’s inaugural list
would suggest. “Intel’s use of high quality promotional merchandise is
one way we broaden the awareness and image of the Intel brand,” says
John Travis, Intel’s worldwide consumer promotions director.
Like many of today’s top companies, Intel has campaigned to brand its
name, even going a step further than most with the creation of its now
familiar “Intel Inside” five-note sound logo. A 1997 TV spot used “The
Bunny People” – characters in the shiny technician suits – to promote
the release of its Pentium II chip. Currently it’s unveiling a series of
commercials featuring the performance art organization Blue Man Group to
showcase the innovative ways to explore the Internet with its Pentium
While most PC makers’ profit margins reach only 25%, Intel’s fourth
quarter results from last year were an amazing 61%. A contributing
factor is its success over the Internet, where it sells $1 billion worth
of chips each month, making it the largest e-commerce company in the
9. Philip Morris – $44.0
Not many companies have the problems spending their advertising dollars
that Philip Morris does. In addition to having its cigarette pitches
banned from the airwaves for the past three decades, the firm is
forbidden from using promotional products for that purpose as well,
starting a little more than a year ago.
So with $2.2 billion to spend – including $843 million in “unmeasured”
non-traditional media – you might think Philip Morris would be throwing
up its promotional hands.
But just when the tobacco/food products conglomerate should be at its
most defensive, it has attacked instead. Realizing it has a
controversial product, Philip Morris is using its promotional dime to
tell its side of the story. Its various cigarette brands – which include
Marlboro, Benson & Hedges and Virginia Slims – are for adults who want
to smoke, the company insists in its advertising. It doesn’t target kids
and is fully committed to the recent settlement with the various state
governments where tobacco companies agreed to forgo sports sponsorships,
large billboards and promotional products for its cigarette brands.
However, Philip Morris is using promotional products to help tell
another part of its story. Example: The company has been distributing
packets of material and promotional products in the “We Card” campaign
that encourages stores to check IDs. “When we talk about those programs,
it’s a different way of communicating,” says Tom Ryan, spokesman for
Philip Morris USA. “We have undertaken those projects to communicate
more about who we are.”
Of course, there’s a lot that Philip Morris has no need to apologize
for. The conglomerate owns Kraft brand foods, Miller beers, Post
cereals, Maxwell House coffees, Altoids mints and many other household
names. Each brand is supported by an assortment of promotions, many of
which naturally feature promotional products, given the company’s long
and successful history with imprinted merchandise.
For example, the Philip Morris Gateway program to improve adult literacy
used logoed freezer mugs, AM-FM radios and watches as rewards for
program participants who generated referrals of potential learners. The
number of referrals increased six-fold during the promotion, and the
benchmark cost-per-learner dropped from $100 to $10.
When it’s all tallied up, The Counselor estimates that Philip Morris
spent $44 million on promotional products in 1999. Not bad for a company
so well-known in the profession for the ways it’s not allowed to
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10. J.C. Penney – $39.8
Founded almost a century ago by James Cash Penney, his namesake company
ranks 10th on our Top 100 list of end-buyers of promotional products,
spending roughly $40 million on imprinted merchandise in 1999. Penney,
the $33 billion, No. 5 U.S. retailer, has long provided fashion and
basic apparel, accessories and home furnishings through its retail
catalogs, but these days the Internet is where it seems to be having the
most success. J.C. Penney estimates the company’s Web sales to be about
$300 million this year.
The firm views its target customers mainly as “modern spenders” (mostly
dual-earner households with up to two children) and “starting outs”
(single or a young family with up to one child). Target customers have a
median household income of $48,000. The company now sees multi-channel
sales as the key to its growth, calling the approach “three-tailing” –
equally promoting the company’s physical stores, catalogs and online
Promotional products factor into the marketing mix in building both
customer and employee relations. Throughout the Penney establishment,
different promotional awards are used in the many internal programs used
to recognize associates for their efforts. Making – and leaving – an
impression is important to the organization, according to Stephanie
Brown, senior public relations coordinator.
“We go to many conferences throughout the year, and along with our
catalog … we always have
promotional products to give away at our booth,” Brown says. “Whether
it’s a T-shirt, pens, notepads or other items people can use in their
home or office, it gets our name out there. It’s all about building
customer relations. It leaves an impression of J.C. Penney.
“Of course, we want them to come into our booth and see our
merchandise,” she continues. “But when we give them something, they’ll
come across that item with our name and logo on it in the course of
cleaning out their bag after the conference. That might trigger their
thinking, ‘Oh yeah, I liked what I saw and I want to check that out’ –
whether they do so through our stores, catalog, or Web site.”
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