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January 14, 2002 - Strategy Magazine
Premiums & Incentives

Trend Watch
The year ahead
As the champagne headaches fade, leaders in the premiums and incentives field are looking to the coming year with a mix of optimism and trepidation. You can't blame them: the experts agree that 2002 could bring riches to those who grasp the larger trends - such as the move to loyalty programs and better premiums - and disaster to those who don't.

by Susan Bourette
page 20

Talk about a wobbly year: Many who ply their trade in the premiums and incentives industry saw their business shrivel up in tandem with the 2001 downdraft in the Canadian economy. For others, it seems last year was a licence to print money.

"It was a very unsteady year," laments John Turner, president of Toronto-based C.T. Associates. "Even before Sept. 11, everybody was nervous. Now, they've climbed into a hole. They are saying we're going to hold back [then] make a big splash this year. We can only hope that it's true. But I worry that it could be a lot like last year. I think some companies will continue to do well, while others will be forced to shed staff."

He's not alone in his thinking. Indeed, if the soothsayers prove correct, 2002 holds many of the same promises - and pitfalls - that industry players saw in 2001.

Aaron Moscoe, president of The Promotional Specialists in Toronto, believes the industry may well undergo some consolidation this year. Less nimble players will fall by the wayside, he says, while those with innovative ideas will flourish despite tight marketing budgets.

"Certainly some clients have cut back. But the mind-set for many brand-oriented companies is that when competitors are cutting back on marketing, it is a great time for them to invest in capturing market share," Moscoe says.

Death of the in-pack?

In this tepid economy, many marketers are sharpening their pencils and rethinking strategies in a bid to get the biggest bang for their buck. Among the emerging trends, according to the experts: Many marketers are beginning to overlook in- or on-pack premiums in favour of cross-promotions, sweeps and self-liquidating offers (SLOs).

Steve Smith, director of national merchandising at Molson Canada, says that pack-outs are extremely expensive to execute and may not necessarily be strong brand-builders. The same value can be realized through sweeps-style promotions at a drastically reduced cost, Smith argues.

It's a shift that Andrew Bruce, EVP and chief operating officer of Publicis Canada, is also eyeing carefully.

"We're looking a lot more at strategic partnerships," he says. "I think we'll see partnerships come to the forefront in a much bigger way in 2002."

However, those who are more on the supply side believe that premiums aren't dead yet.

Capital C Communications president Tony Chapman, for one, says that 2001 was a banner year for his company, and he expects business to remain brisk well into the next 12 months - and beyond.

"As products get more and more similar, premiums are often the tie-breakers," Chapman says.

Moscoe is also a believer. He says that premiums are being seen more as a legitimate and effective part of the strategic marketing mix. Premiums are typically low-cost and offer unrivalled one-on-one direct opportunities, he argues, ensuring that they will continue to grow as a percentage of the total marketing dollars spent.

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