Adjusting to the Downturn

The economy has definitely taken a downward turn. The feeling is palpable in our industry and across the economy. But smart businesses will conserve, will be frugal and will cut costs while finding ways to grow. American Promotions is actually growing even this year when the economic headwinds against growth seem to be so strong. There are a lot of reasons we are growing - many of which we consider to be proprietary and secrect.

The main issue is that we are seeking to be adaptable, and to constantly adjust based on the best data we can get. Another reason is that we are not real large anyway, and so there is a lot of room to take market share from competitors even if the pie is not growing.

The official position of ASI is that the pie of promotional products sales is growing. According to ASI, the industry sales for the 2nd quarter of 2008 grew at 3.7% over the same quarter in 2007. I can't link to this because it is industry protected data. I find these numbers to be suspect, but I have no idea how ASI collects there data, so I don't have grounds to criticize them. From our experience, most prices across the industry have gone up 5% to 15% (in some cases much more). If ASI's data only represents the nominal value of all goods sold, then it is very likely that the industry is actually moving less product, but still eeking out sales gains. I also think there is a generalized trend of money flow from traditional advertising such as radio and television to nontraditional outlets such as promotions and web advertising.

In any case, a lot of distributors are struggling, and I imagine that some suppliers are too. I hope the government does not interfere with the market too much and that we can innovate our way out of this.