Also in this report:

– What’s hot in promotional products p.24

– New variations on a familiar theme p.26

– Personalization worth the price: Even veterans of the promotional products business admit they’ll sit up and take notice when an item bears their own name p.28

– PPAC’s plans for the Net should benefit P&I seekers p.32

Colin Fell has learned the hard way that the offer of a perpetual calendar desk clock is not sufficiently enticing to persuade Canadians to subscribe to a magazine.

Fell, president of Oakville, Ont.-based promotional products distributor Target Marketing, has a bunch of these items collecting dust in one of the company’s two Toronto-area warehouses.

It is, he says, a rare example of an error in judgment on Target’s part. Like most players in the promotional products game today, Fell makes caution his watchword. After all, with clients keeping an eagle eye on the bottom line, scrutinizing every expenditure, companies like Target must make it their business to avoid costly mistakes.

Target imports ‘hard premiums’ – the perceived high-ticket items such as stereos, portfolios and watches that are offered with subscriptions to the likes of Maclean’s and The Financial Post (both Target clients for 15 years now).

Making the right product choice at the outset is key to keeping costs down, Fell says, because there are so many other things – most of them much harder to control – that can go wrong.

Indeed, the logistics of shipping product from Southeast Asia – mainly through China into Taiwan or Hong Kong and onwards – can be daunting. There’s usually a third party involved, and paperwork must be completed at every step along the way.

With the volume of product the company sources – often as much as 30,000 units – Target typically requires a three-month window to see the process through to fulfilment. If the client allows sufficient time for a project, then it’s possible to keep expenses down by shipping products by sea, thereby avoiding air freight costs.

Fell says he has also come to rely heavily on the fax machine, and makes a point of staying on top of the continual product price fluctuations. ‘It’s like the stock market,’ he says.

Technological change, he predicts, will ultimately enable promotional products companies to deliver their services to clients much more quickly and cost-effectively. Target, for one, plans to launch a restricted Web site, containing catalogue and pricing information, in the near future.

Paul Iggulden, president of P.I. Incentives in Toronto, says his firm also plans to have a Web site operating soon, which will enable it to maintain a continuously updated product and pricing list on-line, and alert clients to close-out deals.

P.I. Incentives works with 34 North American manufacturers to sell products – ranging from sporting goods to crystal to toys – to promotion houses, agencies, marketing firms and sometimes directly to clients. (Most notably, the company sourced 5,000 gas barbecues for Tim Horton’s ‘Roll up the Rim to Win’ promotion.)

Iggulden says the Web could eliminate the need for mass mailings, and speed up the processing of information – an important advantage in the distribution business.

Ian Knight, president of L. I. K. E. Business Group, a promotional products supplier based in Newmarket, Ont., says he now uses e-mail religiously, and has plans to launch a Web site by the end of the year.

‘It’s a matter of raising the level of service,’ he says. ‘My distributors can contact me at midnight by e-mail, tap into the site and find out what’s new in our company without having to worry whether I’ll be in the office to receive the call.’

Knight says that on-line communications spell cost savings for both his company and its clients. There are, from his point of view, other business advantages as well. ‘If [a distributor] and I do not connect in time to make the customer’s deadline, then we lose that sale,’ he explains. ‘That’s a major cost that’s going to be eliminated by a more state-of-the-art communications system.’

Mark Cashin, president of Bent Promotional Supply in Mississauga, Ont., a distributor sourcing product from North America and the Orient, agrees that communication via e-mail is becoming vital to the business. However, having had a site for three years now (www.bent. com), he says he’s not convinced the Web is everything it’s cracked up to be.

While Bent invested heavily in the site at first, it cut back after discovering, through an on-line contest, that the majority of visitors were students. ‘That’s great if you’re selling books or Victoria’s Secret,’ he says. Unfortunately, it d’esn’t mean much to his business.

Clients, he adds, often lack the time or technological capacity to check out a site. ‘We still do [business] the good old-fashioned way.’

Peggy Irvine, president of Vancouver-based Aspen Promotions, a distributor dealing with North American manufacturers of everything from pens to mugs to golfing baubles, says she has noticed that methods of transferring information are changing rapidly in the industry.

As little as six months ago, Irvine says, she was still getting most of her custom artwork in the form of negatives, rather than on disk. That’s no longer the case.

Irvine sees the biggest change when dealing with ad agencies and other large organizations, usually Toronto-based. Their access to current technology generally means projects that unfold more quickly, and cost less. Sending artwork via modem, for example, eliminates the cost and delay involved in using couriers.

When a client is looking for a turnaround of three to five days, that can make a big difference, she says. ‘When we’re doing programs, things have to be done yesterday.’