Name that Industry...

OK, tell me if you've heard this one before:

Is it that bad out there? The rest of the nation is reeling from a severe economic downturn. Yet the conventional wisdom about the business is that it is recession-proof.

In times of economic difficulty throughout history — even during severe downturns — people still found the relatively small sums of money to pay for product and keep their spirits up.

This time in the industry, though, it may be different, partly because of the current conditions and partly because of the drift by customers toward new options.

“The industry is really seeing a change in their business model.”

So--guessed it yet? The above excerpt describes---wait for it---the porn business.

Wasn't what you thought it was, eh?

The Math is very different this time--economic downturn plus Pharma meltdown plus reduced spend plus oversaturated supplier market equals crappy near-term prospects. Yet the PPAI Expo was, by all accounts, a "good" if not "great" event, especially for the Brands.

It goes to underscore what the Air Force calls the "Big Sky Theory"--it's a big market out there and while there are pockets of depression and an overall mood of retraction it's still a big business and no one entity needs all of it to survive.

And now I leave you with these words of wisdom:

“There are some companies that are doing better now than they were three years ago, because they never let go of the quality aspect. They’re not just shipping wood."

This from that well-known Business Guru--Rob Rotten, Porn Producer. Sage advice...

Pete

Leaving Vegas as a Winner

PPAI's Expo is over--and the great "brand." experiment is over. And the verdict is--we're leaving with more than we came with, and that's not always the case in Vegas.

The Grand Experiment was a success in just about every sense of the word. The "brand." pavilion was well attended with distributors that "get it", or at least WANT to "get it", and the interactions I had with clients were more detailed and meaningful than at prior Promotional Products events.

There were fewer "drive-bys"--where I had to attempt to hit their badge with my scanner as they walked by me to get to the next mug vendor. There were fewer questions about "why are YOU here?" and more questions about "how can you help me sell Branded products?".

It was obvious that this was a different year early in the week--when I did three education sessions on how to sell incentives and work with Brands. No fewer than 40 people came to our booth during the show, told me they attended a session, and wanted to know more. IMRA gave out over 1000 copies of their Rep Directory (tying nicely to our stated position that the Rep was the distributor's best friend).

Perhaps the economic downturn has served us as a natural "filter" and eliminated the not-so-serious distributors. Maybe those that did attend wanted to learn more--to have more tools to fight the ongoing slump in the market. Regardless, it was refreshing to see distributors engaged in learning and asking how we can help them sell incentives and Brands more effectively.

Kudos to Steve Slagle, President of PPAI, and Darel Cook, Grand Poo-Bah of Expo for creating and executing this vision. Like all first efforts there were things that might have been better, but the list is short and I'm excited to see what 2010 brings.

Well done--now, let's see how much of this "greenfield" the Brands can cultivate...


Pete

Waiting to Exhale

This is the Week before the Week--a chance to shake off the eggnog hangovers and prepare for the PPAI Expo that begins in Vegas on 1/14. The uncertainty in the marketplace is thicker than Christmas Ham and I for one want to get a sense of the Zeitgeist before we get to the desert.

The list of Questions is much longer than the list of Answers, but here are some I'm asking:

• What's the mood in the Corporate community with regard to our business? Are we still on the radar? To what extent?
• Will we get another answer other than "I don't know" to just about every question we ask about the business?
• Will the Promotional Products Community (aka "The Savior") take to the new PPAI Branded Products pavillion? Will we indeed get to speak with those resellers that "get it"?
• Will any other suppliers decide "the view isn't worth the climb" and exit or re-position their effort in our market?

I for one believe in the viability of our value proposition and think that while we will most certainly be challenged this year we will also have ongoing opportunity. I've done some thinking on the market in general, and I've come to the opinion that everyone's business is comprised of three pieces:

1) The Service Award Business--stable, relatively predictable in a macro sense. While Service Award Provider X's business might go up or down it's mostly because they lose key End Users, and Service Award Provider Y's business increases as the business moves from X to Y.
2) The Attainment-based Incentive Business--less stable than Service Awards, more tied to overall economic conditions. We may be well placed in Incentive Program "A" but if the employees/customers of "A" don't hit their targets nothing gets selected.
3) The "One-Off" Business--highly volatile, subject to expectations of corporate well-being and the first things to get cut in a downturn. This business dried up in a material way in 4Q and there's nothing to suggest that it will return to 2008 levels any time soon.

Depending on the mix of the three pieces, 2009 may be challenging, very challenging, or Oh My God challenging. If your company sells a lot of Service Awards and not much else, 2009 might not be all that different from 2008. But if you sell lots of "One-Off" programs (like the casino incentives that we all sell) things may be very different this year.

But opportunity is there, and will continue to be there. While I don't subscribe to the old saw that our business is "recession-proof" I do believe it's "recession-resistant" and some markets that are contrary to overall economic conditions may do well enough to make up for some that aren't.

It's gonna take creativity and more awareness of trends in the market--"Knowledge is Power" will take on a profundity in the next 12-18 months it's never had before. And having some sense of when the business "turns" (and how much it "turns") may determine your 2009 success more than anything else.

So, engage yourself in the market, network with your peers, and get your heads up and see what's going on. PPAI will give us our first glimpse at the New Reality--but we can't take it as the be-all and end-all of indicators. We often speak about how convivial our business is--I propose that we be more convivial than ever and share the good news (and there WILL be good news) with the market as a whole so we can "clone" the success.

See you in Vegas...


Pete