Call it a comeback.

According to the just-released Distributor Quarterly Sales Survey from ASI Research, promotional products distributors collectively increased sales, on average, by 4.2% in the third quarter of 2024 compared to the same three-month period in 2023.

It was the biggest annual-basis quarterly revenue rise in more than a year – since sales leapt 5.6% in Q2 2023.

Notably, Q3’s growth rate more than tripled the year-over-year sales uptick of 1.3% experienced in Q2 2024. Industry sales had declined 0.9% in Q1 and were essentially flat (0.1% increase) in last year’s Q4.

Industry executives share that during the first half of the year, high interest rates, recession fears, marketplace uncertainty and even questions over who would be running for president served to inhibit spending on promo.

But during Q3, inflation finally waned, the Fed dropped interest rates, the field of presidential candidates was finalized and there was broad agreement among economists that, at least for the remainder of 2024, the U.S. would avoid a GDP downturn.

Such factors helped catalyze investment in branded merchandise and grew promo industry sales in Q3. So did the fact that certain end-buyers were getting an early jump on holiday season gifting and that many promo purchasers were nearing the point of the year in which they had to spend their budgets or risk facing smaller purse allotments next year.

“End-clients in greater numbers began to get off the fence in Q3, and for many distributors, business that had been on hold started to come to fruition,” says Nate Kucsma, ASI’s senior executive director of research.

Kucsma, who spearheads the quarterly sales report, adds: “The latter half of the quarter was stronger than the earlier part, and there’s good reason to believe promo will end the year with a solid fourth quarter.”

Success for Distributors of All Sizes

Overall, 45% of distributors increased sales in Q3 – the highest percentage since the third quarter of last year. Especially notable? Distributors across all annual revenue categories tallied positive results.

Large distributors – those with annual revenue between $1 million and $5 million – fared the best, posting a 7.2% year-over-year sales jump in Q3. An impressive 55% of such distributors increased sales in the third quarter – the highest percentage among all distributor revenue classes. It was a welcome rebound for the revenue class, which were the only firms in Q2 to experience a sales decline (-5.9%).

Steve Flaughers and his team at Ohio-headquartered Proforma 3rd Degree Marketing (asi/490897) were among the large distributors that scored substantial success in Q3.

The affiliate of Counselor Top 40 distributor Proforma (asi/300094) increased sales more than 22% in the quarter, spurred by a concerted effort to provide clients with e-commerce solutions that make merch purchasing easier. Flaughers says business was especially strong with customers in the behavioral healthcare and convenience store spaces.

Meanwhile, the firm also hosted its first-ever end-user show with upward of 15 preferred suppliers spotlighting products. The initiative stoked new business. “It was wildly successful,” Flaughers told ASI Media.

Other large distributors also increased profitability. Utica, NY-based A&P Master Images’ (asi/102019) net profit sprang 185% year over year thanks to error reductions, better team communication, staff cross-training and strategic bulk-buying of essential supplies. “We’re heading in the right direction,” says CEO Howard Potter.

After large distributors, the industry’s smallest firms – those with $250,000 or below in annual revenue – recorded the highest percentage growth in Q3. The average quarterly sales gain for them was 4%, with 44% of small distributors increasing sales.

New Jersey-based Kraml Design (asi/245602), a distributorship with under $250,000 in annual revenue, executed a Q3 sales increase in the industry-average single-digit percentage range.

The increase continued a trend for the company that’s mirrored the industrywide sales journey this year – a slower start to 2024 followed by better sales on the back half of the calendar. The firm served clients across a variety of markets.

“We work with customers that range from government, townships and police to lobby groups, medical entities, breweries, resorts and restaurants,” says Owner/Creative Director Paul Kraml.

Speaking of markets: Education reclaimed the top spot in terms of markets that distributors felt were the most robust for sales in Q3, ASI Research shows. While education typically places in pole position, it fell to third in Q2, but rose back to the top in this most recent quarter as the school year and the sports season kicked off. Healthcare, construction, associations/clubs and manufacturing/distribution rounded out the top five markets for promo sales.

Certainly, promo’s biggest distributorships were notching wins selling into those markets and others. Distributors that produce more than $5 million in revenue annually – termed “extra-large” by ASI Research – increased sales on an annual basis by 3.1% in Q3 compared to the same period in 2023. Some 44% of such distributors drove gains in 2024’s third quarter.

For instance, Counselor Top 40 distributor Kaeser & Blair (asi/238600) hustled its way to a 9.5% Q3 sales jump.

Co-CEO Mitch Kaeser, a member of Counselor’s Power 50 list of promo’s most influential people, says growth from sales pros that affiliate with the Ohio-based firm and the full integration of a company it acquired, Promotional Concepts Inc. of Red Oak, helped bolster business.

“Over 60% of our top sales leaders have seen some sort of advancement in the past year in their sales figures,” Kaeser notes.

Finally, medium-sized distributors – those doing over $250,000 but less than $1 million in yearly sales – increased revenue by an average of 1.4% in Q3. It was the weakest gain among the distributor revenue classes but followed a 4.9% rise in Q2 (then the strongest among distributors), suggesting some firms of this size may have been front-loaded into the earlier quarter.

Unforgettable Goods (asi/348200), a New York City-based medium-sized distributorship, outpaced the industry average by registering a more than 40% year-over-year rise. Adding and enhancing services like storage and fulfillment sparked the advance, as did buyer loyalty. To wit, as some clients changed jobs and companies, they continued to work with Unforgettable Goods.

“They took me with them, and that added new clients to my roster,” says CEO/Owner Aimee Zeidman, who is optimistic about what lies ahead.

“There seems to already be more interest in holiday gifting than usual for my clients,” Zeidman adds. “My full-year sales will beat last year’s. I’m already seeing that increase.”

This chart shows words distributors most frequently used to characterize Q3. “Good,” “Steady,” “Robust” and “Exciting” appear noticeably along with terms like “Challenging,” “Stagnant,” “Volatile” and “Uncertain.” The disparity speaks to a marketplace in which challenges remained, despite growing opportunity and notable industry growth.

Full-Year Outlook: An Annual Record Within Reach?

Zeidman’s not the only promo pro forecasting an annual sales rise.

While final full-year numbers still must be achieved, ASI’s Kucsma notes that promo distributors’ gains in Q2 and Q3 have put the industry on track to notch another record-breaking full-year revenue tally.

Last year’s $26.1 billion distributor sales total is the historic high-water mark for the branded-merchandise space, according to ASI Research. (The 2023 and 2024 top-line sales numbers have been helped by inflation – higher prices charged to end-buyers based on promo’s steeper costs of doing business.)

“I think we will set a new industry sales record,” Kucsma says. “The question, at least as of today, is by how much.”

When it comes to annual forecasts, distributors are fairly upbeat.

While the Counselor Confidence Index, which measures distributor financial health and business optimism, registered a reading of 96 for the quarter (the same as the previous quarter and below the baseline of 100), the index is projected to be at 102 for the full year.

Executives at Counselor Top 40 distributor HALO Branded Solutions (asi/356000) believe the company is on track for a revenue rise in 2024. The Illinois-based firm increased sales 10% year over year in Q3. The gain continued what’s been a bounce-back year after revenue dipped in 2023 following a billion-dollar, company record-breaking performance in 2022.

“Our tech industry customers have rebounded significantly, and we’ve begun recognizing revenue on several large new accounts,” shares HALO CEO Marc Simon, a Counselor Power 50 member. “We expect to beat full-year 2023 in 2024, due principally to that tech client rebound and new business.”

Counselor Top 40 distributor Fully Promoted (asi/384000) also anticipates that 2024 business will finish elevated above 2023’s levels. Sales rose more than 5% in Q3. While better than the industry average, that was actually a slight deceleration from Q1 and Q2 for Fully Promoted. Still, CEO Andrew Titus, a Power 50 member, says the Florida-headquartered franchiser is on track to hit its growth target.

“Our goal is to finish the year up 10%, and I believe we will,” states Titus. “We’ve launched new franchise locations that are helping increase sales. We’re also focusing on bigger orders. The strategy is working.”

“I think we will set a new industry sales record. The question, at least as of today, is by how much.” Nate Kucsma, ASI Research

The early word from distributors on Q4 business is that sales momentum is ramping up, and if that continues, a corresponding jump in confidence could ensue.

“We’re projecting yearly sales growth of around 5% to 7%,” says Kaeser. “We’re hungry for business and ready to take on new projects.”

Adds Flaughers of Proforma 3rd Degree Marketing: “We’re already outperforming 2023. Our focus is on reaching $10 million in sales in the next two to three years. The sky is the limit.”