Should I include promotional merchandise in my marketing mix?
Do promotional products generate a positive return on investment?
These are common thoughts for a first-time purchaser of promotional merchandise. You want to know what works and what doesn’t so you can make informed marketing decisions.
Read on to learn calculating ROI and why it might not be the best metric for looking at the entire benefits to your brand.
How do you calculate return on investment?
The calculation for return on investment is a simple one:
(Sales Growth – Marketing Cost) / Marketing Cost = Marketing ROI (expressed as a percentage)
So if you attribute a sales growth of $5000 after giving away $2000 in merchandise your ROI is ($5000 – $2000) / $2000 = 150%.
Easy right? Well not so fast, the complex part is working out the attribution of sales growth to the merchandise you have given.
One of the strengths of promotional products is generating brand awareness (which is very difficult to measure).
Corporate gifting can also reduce costs by reducing turnover and increasing productivity because of employee happiness.
It’s for that reason that we highly recommend looking at Costs Per Impression as a better metric for calculating the benefits to your brand.
How to attribute sales to promotional products?
Here are some methods you can use to track short term sales increases:
- Print a unique phone number on your products for analytic tracking
- A specific call to action on the products that directs to a specific landing page
- Using a QR code track the number of scans
- Gate the recipient receiving the merchandise behind a form that allows for further marketing
- Capture that information in feedback surveys from customers/clients
Cost Per Impression
The cost per impression (CPI) of a product can be as low as 1/10 of a cent and ranks better than nearly any other advertising channel according to a study conducted by the Advertising Speciality Institute.
Cost per impression of a branded product is simply Cost Of Product / Number Of Impressions.
So if you have a $10 promotional drink bottle that generates 1000 views over its lifetime that’s a CPI of just one cent ($10/1000) = $0.01
The same study found that in Sydney the estimated impressions of the following category was:
- Bags – 5881 impressions
- Pens – 3233 impressions
- Outerwear – 3179 impressions
- Caps – 2034 impressions
- T-shirts – 1755 impressions
Tips For Maximising Promo ROI
Even though the benefits may be hard to measure here are some tips to help you maximise your next campaign:
- Consider gating your merchandise behind a form or demo (trading contact details for a freebie)
- Have a plan in place for following up with recipients (e.g. call from a sales rep or tailored marketing content)
- Test, test, test and ask for feedback
- Understand what products your target audience will love
- Cheaper is not always better (remember this is a tangible representation of your brand)
Speak to a promotional merchandise specialist to ensure you are getting the most value out of your budget. Providing help with ordering, artwork and product selection.
Summing Up
While it may hard to come up with an exact number for ROI it’s no secret that promotional products are an effective way to build your brand and achieve marketing goals.
Want to get started?
Speak with a promotional branding expert to have your questions answered or tailored recommendations for your situation.