Record Rate Cuts

The 1.25% drop in the target Federal Funds rate over the last eight days is historic in nature.  At no time in history has the rate been cut so aggressively in such a short period of time.  With the Federal Reserve normally being averse to such moves it’s clear the economy is in dire straits.  News today that the economy barely moved forward in the 4th quarter of 2007 is no surprise to us or the vast majority of American businesses.  It became evident in October the economy was slowing and that consumer spending was at least showing signs of a serious slowdown.  

 Overall the US economy grew by a meager 2.2% in 2007 which is the weakest performance in five years.  Spending by businesses on equipment and software also registered the lowest growth rate since 2002 at an anemic 1.2%.   Coupled with the collapse of the US Housing Market and the already horrific performance of most domestic automobile manufacturers it is abundantly clear our economy faces pressure from all sides.  Not helping the situation is the demand for oil overseas which continues to maintain oil prices at near record highs.  News released earlier in the week indicates we’re in the weakest home market ever recorded dating back possibly to the Great Depression.  This leaves no sector of the US Economy untouched and resulted in the Federal Reserve really having no choice from a financial, economic an psychological perspective.   The rate cuts of the past week are significant enough to result in a noticeable drop in some ARMs, a meaningful drop in credit card payments and an overall lower available interest rate for everything from cars to computer financing.  In short these substantial and historic rate cuts should assist the economy rapidly.  

Assisting the economy and turning it around are two different things however.   We’re on the 2nd leg down of a major housing fiasco and have another 5-15% to shed off home values in many markets.  Until home prices rebounded later in 2009 or 2010 homeowners will still be upside down in many cases meaning refinancing is not available to them.  For these unfortunate folks the lower rates are meaningless.  It should however begin to stimulate some interest in rental and investment properties.  As interest rates on credit cards drop in response to the lower Federal Rate, consumers will have more money in their pockets to spend.   With some luck this will not be offset by higher oil prices and associated increases in costs. As Americans receive their tax rebates later in the spring the culmination of all these efforts should put the worst behind us by June 2008.   Let’s face it though, it’s been a tough few months for the economy and we’re probably just entering the worst of it now.  The next few months are going to be very rough with a turnaround beginning with the longer days of spring.

 Speaking of spring; we’re continuing to expand our offering by introducing a logo t shirtcategory.  We’ll continue to add the most popular t shirts over the next few days in time for the spring buying season.  In addition we’re expanding our online selection of portfolios .  We do anticipate introducing some new products this week with an extensive review including photos but have not yet had the time to do so.   We’re hoping by the end of the week to have the first few reviews up and online.

Cape Cod Gets Buried

We woke up this morning to forecasts for major snows of up to 12 inches.  By 3pm that was dropped to 3 inches.  By 7pm disaster was upon us as a total blizzard descended on Plymouth.  Cars became stuck on the approach to the Sagamore Bridge and at times State Police had the road shut down to clear vehicles.  What was a 3″ storm at 6pm will end shortly with close to 15″ making it one of the largest storms of the last 5 years. 

 In this mess I had the chance to wear a few of our products.  We had winds blowing 50 mph with temperatures around 29.  Wind chills were down into the low teens.  I first tried the Port Authority Storm Jacket and instantly found it to be warm and dry but it was clearly over-matched in this bonafide blizzard.   I switched over quickly to the Port Authority Legacy Jacket which fit the bill when I had a nice Columbia Steen’s Mountain Full Zip Fleece on underneath.  This was essentially the perfect combination as the dual layers cut down on the wind intrusion, and also kept me dry.   After a brief interlude to play in the snow we were back to shoveling.   After shoveling it was time to see how well the jackets performed on the primitive water intrusion tests.

 The Legacy remained perfectly dry on the inside which was extremely impressive.  The outer shell was damp as would be expected but dried in under ten minutes in the dryer.  The Steen’s Mountain also kept me dry and warm.   The Steen’s also does a great job at outright repelling of water, little to known penetrates the shell.  Keep in mind once you embroider any waterproof jacket you are punching holes in the jacket and the potential for some water intrusion exists.  The Steen’s is a very comfortable piece of clothing.  I’d give them both a 9 out of 10 in terms of comfort and wear-ability.   I’d have liked a hood on the jacket but that’s not what it is intended for so we moved the next stage of the test to hooded jackets.

The Port Authority Competitor Jacket was the next contestant.  The Teklon material kept all water away from my body which is quite the feat in 50 mph winds.  The light thermal lining kept me from sweating and when the job was done the jacket was dry and back on the  hangar in under 10 minutes.  It’s an excellent all season jacket which is sufficient in a raging snowstorm with modest temperatures.   The Competitor was paired with the Cornerstone Hooded Work Jacket with both performing as we expected.  The Cornerstone did get a little wet in the driving snow but it’s main purposes is to keep your staff or clients warm and it does this admirably.  Overall we were very satisfied with these jackets and are happy to report as expected that the promotional products we choose perform to the highest of standards. 

 In a previous blog we’d discussed getting the word out for your business.  There are many ways to do this but one we missed was blogging through a dedicated business blog.  This is a great way to introduce yourself to current and potential customers and also to introduce products and services.  As we are finding many will comment and provide valuable insight.  We’ve all heard of guilt by association but in web 2.0 speak it’s innocence by association.   Get your name out there through associations or other industry groups.  These help to increase your overall exposure and just may yield some customers over the long term.

 We’ll be firing off daily blogs this week and introducing a total of 20 new products.  Feel free to comment, let us know what you think and whether you’d like to see us run more sophisticated tests on these promotional products with the first two being the Leeds Dimensions Writing Pad and the Spin Doctor Writing Pad which is new from Bic and Atchison.   Have a great week!

Getting the Word Out

One of the biggest challenges facing businesses today is getting the word out about their products or services.  There are many schools of thought regarding the best ways of doing this in the web 2.0.   We’ll run through the choices below and our general experiences with each mode of advertising.

Press releases are expensive in relation to return for the majority of users.  Although effective for some industries the majority of all press releases put out on the wire via paid services end up in the Internet version of purgatory within a short period of time.   For the cost of these press releases the return is questionable.  If you are lucky enough – and it really does come down to luck in most instances, your press release may get picked up by a local editor and have longer legs.   In most cases however the press release will stay on the wires for a few weeks to a month before vanishing into the abyss.

Newspaper ads can be effective for those offering local products and services.  There are thousands of choices from local papers, regional papers and of course the obligatory magazine classifieds such as the Want Advertiser.  These modes of advertising and their effectiveness will vary wildly depending on your industry.  Someone selling turbines won’t have much luck running a classified ad but someone selling local tree service will do very well.   Likewise the tree service business won’t get much out of a press release but the turbine company may do very well.

 Online ads are becoming an increasingly dominant advertising channel but is frought with potential problems.  Chief of course is click fraud in which a competitor or someone with extra time clicks relentlessly on your ads exhausting your budget and wallet.  The Business Week article is stunning in scope and in reality there is absolutely no way Google could determine who was, and who wasn’t clicking legitimately.  There is no central database of IP addresses they can refer to and there likely never will be in our lifetimes.   All Google can really do is look for click patterns – presumably they do this by tracing the clicks someone makes on a particular set of ads and the time they spend on each site, and adjust accordingly.   Recently Google seems to be doing a much better job at detecting true fraud and automatically credits your account or you never get charged in the first place.  They also have implemented an IP exclusion list mechanism but haven’t done a great job publicizing it as of yet.   By blocking troublesome IPs they won’t see your ad and therefore can’t click on it.   Beyond that Google really should get better about offering partial refunds on suspect clicks.  The word on the street is that they are still stubborn even when fraud is blatantly obvious such as a user clicking on the same advertisement 5 times in one day, bouncing 100% of the time and spending less than a few seconds each time.  Right now most indicate unless they detect it automatically you aren’t going to get the credit.   Another issue with this form of advertising is cost.   Highly competitive keywords may run $5-$10 per click and for many businesses the profit potential just doesn’t exist.  Paying $200 in a day for 20 clicks and one order is great if you are selling $500 products but for most businesses the gross sale from such clicks is lower making the entire campaign a huge loss leader.

 Next up is Internet directories both free and paid.   Some directories have been around for years like yahoo while other business directoriesare newer.  The amount of traffic you get from these business directories will vary markedly.  If the directory is actually useful to users you’ll likely drive a decent amount of business to your site.  True business listings that serve to provide real information to users will list key facts about the business as part of the directory entry.   Local business directories can be helpful in driving business for those that want to do business with a nearby entity.  For national businesses they provide some point of reference for local customers but overall their appeal will be limited.  Also don’t forget your local yellow pages.  So long as you have a business line you can often get listed for free in the yellow books distributed to your home or in the online yellow pages.

Last but not least, promotional items can be used to increase your business footprint.  Corporate apparel is always popular and the options and quality of those options continues to grow each year.  Now for around $20 with embroidery you can put your full color logo on an Outer banks Men’s 100% Egyptian Diamond Knit Pique Sport Shirt.   Golf shirts are already coming into season with the PGA Tour heading into full swing.   Stepping up the price chart a bit the Antigua Mens Excellence delivers superlative quality and a brand name people recognize from their local college bookstore.  Antigua is huge now in collegiate wear which sometimes muddies their corporate offerings.  Their a fantastic company that consistently delivers high end products.  If you want to spend a little less or have a larger audience to target try promotional drinkware.  They carry your message well and of all the promotional products on the market see the longest useful life.  Everyone keeps their mugs and tumblers until they are lost or destroyed.  There is always a place for an imprinted mug or etched thermos.   Spending even less?  Try a promotional tote bag for around $2.   There are thousands of choices including organic and recycled versions which arrived late last year.  Be aware that these products are hot as a pistol and are selling out as quickly as we can get them back in stock.

 There are literally hundreds of ways you can spend your money advertising your business.  Ultimately the only way to tell which medium is best in your circumstance is through trial and error.  Set a budget for each channel and be diligent about tracking your results.  Don’t bet the farm on any one channel and be very careful to make sure you don’t spend more than you can afford particularly online.   PPC advertising can get very expensive very quickly and before you know it you may have spent thousands of dollars learning a painful lesson.   Take your time and consider all options but more importantly take the time and put forth the effort to track your results and conversions.

The Psychology of Price Guarantees

For quite a few years every retail store in the country heavily advertised their low price guarantees.   Here in the Northeast the grudge matches between Best Buy, Circuit City, the now defunct Lechmere, Fretter and Highland were often fought directly along the low price guarantee line.   At one point in time stores were offering up to 125% guarantees but a funny thing happened.  Eventually customers stopped paying attention to low price retail guarantees and realized if they had to keep using it a much easier and more efficient shopping strategy was to shop at the lower priced store.  

 Essentially consumers smartened up and realized the Sharp TV they could buy at Circuit City for $399 was identical to the TV Lechmere had at $425 and the time they spent running back and forth trying to get a price guarantee honored made no sense.   Within a year Lechmere was gone, Fretter was gone, and Highland was out of business.   Nobody Beats the Wiz moved in and moved out just as quickly as customers purchased from the lowest priced store on the block.  At that time Circuit City was truly “State of the Art” with rigorous and efficient price checking and analysis.  Customers grew to trust that they had the lowest price and their business boomed.   Circuit City couldn’t find enough good people and at one point I read one study indicating their price guarantees were rarely ever used.  People were satisfied that most of the time they were getting the best deal.  

 Another funny thing happened and it changed the face of retailing.  Best Buy moved into the region and almost immediately lowered the pricing bar.   They consistently undercut Circuit City on major items and eventually drove Circuit City out of the appliance business nationally.   At first Best Buy was notorious for having stock related issues but it became clear that customers were willing to deal with inventory difficulties in favor of lower prices.  Worse the aggressive price guarantees backfired for Circuit City resulting in more intense price checking after the sale.  This consumer behavior was later verified in several studies of post purchase consumer behavior.  Essentially the higher the refund the greater the chance a customer will search actively for a lower price post sale.   Additional studies have shown customers perceive prices are lower even if they are not if the store has a low price guarantee.

 How does this play out in the promotional products market?  Not very well it seems.  At first glance many of the larger retailers with low price guarantees are 10-30% higher priced on identical items when compared to other national online retailers.   Some of these sites like Branders are promoting a 20% “lower price on average” by highlighting 5 products out of 20,000.  Going to the first category on their site and the first 10 products lower prices can be found easily on the Internet on all 10 items.  A simple comparison of the Dockers Classic Zippered Padfolio shows our price at $24.99, the next closest site is $34.03 from Quality Logo Products.  Even underbid is over $25.  Looking closer though there is an even larger gap when free setup and free shipping are considered.  Other sites offer similar guarantees but read the fine print carefully.  Most state explicitly that they have the ultimate discretion on whether or not to honor the guarantee.  Many state that they will only honor the price if they can verify it as a regular price and not a mistake but they do not disclose how they intend to vary prices.  Others use the terms “reputable” in describing the price matched site while they themselves are often not BBB Accredited.   In short don’t count on getting the price matched.

 Over time it should be expected that Internet consumers will follow the trends set by their brick and mortar counterparts.  They may go through the hoops to get a price match processed the first time or two, but after a couple incidents of having been overcharged they will look elsewhere.  Just like Best Buy, Circuit City, Lechmere and Highland savvy consumers eventually figure out they are buying the identical products from the identical factories.  If the only difference is price most of the time consumers will buy from the less expensive source.  At one time the saying was “buyer beware” but in the price competitive world of the Internet the phrase is gradually changing to “seller be aware” of your competitors prices.

What Company am I dealing with again?

At one time it was easy for consumers to discern who they were dealing with on the other end of the phone.  Now it’s practically impossible in some industries and the promotional products industry is now becoming a quaqmire of dilluted offerings.   A simple check will show there are literally dozens of sites in some cases all owned by the same entities offering the same products under dozens of site banners.  The goal is to trick the search engines into thinking they are unique sites and in turn to capture as many online customers as possible.

 There are a few reputable exceptions including two of the largest in the industry, and an upstart from down south that all play by the rules.   Others, apparently in an attempt to either deceive their existing customers or prevent cannibalization of the existing customer base price point are offering many sites under the same umbrella.  In some cases they may offer lower prices on one site than the other but in many cases it’s merely duplicate content on multiple sites.   Ask yourself how many times you’ve shopped from Target,  Walmart, or Circuit City and found them offering the same product under three of four different names and prices on the site or worse have you ever seen Target or Walmart run secondary sites just to drive more traffic?  The answer is no, no reputable business looking out for the best interest of their customers does this type of thing yet it’s becoming rampant in the promotional products business.

 The problem becomes worse when the search engines fail to penalize those trying to play the system to their advantage.  It ends up forcing all competitors to cheat in order to compete and in the end damages the consumer.   It’s  high time the Advertising Specialties Institute and the Promotional Products Associations International require all member companies to list all sites they own and operate and maintain a list publicly available on their sites.   This will gives consumers the capability to find out who they are dealing with and make rational judgments after reviewing available information.  In the end Google and the other search engines can put an end to it pretty quickly by removing any advantage these sites are gaining.

 We look at it this way, all customers get our best prices all the time.  We don’t have the time, and more importantly our customers don’t have the time to spend hours surfing what turn out to be identical sites mirrored to confuse the search engines.  After all, all businesses should operate in a manner that is best for both the company, and the customer.  Customers use the web because they want choices, businesses that put up multiple websites without disclosing the relationship and reasons are starting a new potential relationship by being dishonest with their customers.  

Out with the Old, in with the New

January is a busy time of year in the promotional products business.  Vendor catalogs turnover at the end of the year and by January  many of the old items are on closeout.  Closeout items are sought after by many promotional products providers but we’re not one of them.  People often ask us why that is and the sole reason is clearance means clearance.  Too many times in the past we’ve heard horror stories of customers placing orders for large quantities only to get partial shipments or no shipments at all as stock runs out.   It’s not worth the risk and we’d rather provide newer products and forego the closeouts.   Either way with the catalogs turning over we’re busy updating our promotional products site with the new products for 2008.

 The economic news is not great and word around the big promotional products show in Las Vegas is that vendors are reporting it is slow.   I should say the honest vendors are reporting it’s slow, the ones that always say business is great will continue to do so.   The economic news was horrible Wednesday with Citibank reporting horrific losses and the potential for mass layoffs and inflation at levels not seen in almost twenty years.   The last time it was this high the country was fresh off the oil embargo and hours long lines at the gas station.  The odds of a recession are supposedly over 50% now but talking amongst those in manufacturing many feel the recession is already upon us.   The Fed meets at the end of the month and although it’s a dangerous game of lower rates to the point of stagflation they will hopefully cut rates a full 1/2 point.

This Promotional Item Could Save A Life

It’s pretty rare that we come across a promotional product that is not only unique but that just might save a life.  The numbers are plain and uncompromising; according to the NHTSA approximately 25,000 people a year are killed in automobile crashes and another 2.6 million are injured.   The numbers are staggering when you consider all the improvements that have been made to our cars and the systems that have been incorporated.

Despite the numbers a very small percentage of car owners have safety kits in their cars and those that do often have only a basic first aid kit.  Experts have recommended for years that drivers carry an auto safety kit that includes first aid supplies, signaling devices and an easy to reach seatbelt cutter and window punch.   Each year there are dozens of headline news stories of drivers and occupants trapped in their cars after an accident.  We’ve all seen the Dateline special and Mythbusters episodes where a driver is submerged and we see first hand how disorienting it is and how it is almost impossible to break a window as the car is sinking.   New to many promotional lines this year are multi-function escape tools including the Leeds 9-in-1 Escape Tool which includes both the seatbelt cutter and window punch.  It’s small and easily stored in the glove-box or center console and reasonably priced.   The tool also includes a siren and flashing LED lights to draw attention in case of emergency.  Combined with the Leeds StaySafe Emergency Bottle which includes the basics such as an emergency blanket, flashlight, first aid kit, compass and signal mirror for about $22 you’re giving your customer or coworker a promotional gift that carries your name but also demonstrates to them that you care about their safety.   Include a pocket knife and package the entire gift bundle in a High Sierra BackBeat Compu-Backpack and you’ve given a gift everyone will remember.