Distributor Sales Rise 8.1% In Second Quarter (8/3/2010)
Building on a positive start to 2010, distributors posted an 8.1% increase in ad specialty sales in the second quarter, with total revenues up to $4 billion between April and June. The increase in revenues, according to the ASI Quarterly Sales Survey, is the second consecutive quarterly gain, following an 11.1% improvement in sales between January and March. For the first half of 2010, industry sales rose 9.4%, to a total of $7.8 billion. “We are seeing more activity and in talking with other companies, they are seeing the same thing,” says Pat Cavanaugh, president of Cavanaugh Marketing Network (asi/159262).
According to ASI survey data, 54% of respondents reported a year-over-year increase in sales during the second quarter, with larger distributors enjoying the greatest success. Distributors that generate more than $1 million annually in revenue reported a 7.4% rise in sales, following a 9.4% jump in the first quarter of 2010. “We were up 14% in the first half of 2010,” says Marc Simon, CEO of Counselor Top 40 distributor Halo/Lee Wayne (asi/356000). “July was up over 20%, so I am hopeful we'll have a strong second half.”
Ken Laffer, CEO of New York-based Motivators Inc. (asi/277780), also reports significant gains so far in 2010. “We are experiencing a sales increase well above the 9% level,” he says. “To be perfectly honest, for us it’s up 37% in 2010 versus 2009. I think the economy has bounced back, and we think we will continue to see an increase in sales somewhere in the 30% range.”
The majority of distributors share Laffer’s optimism. Data shows 56% of distributors expect their 2010 sales will be better than their 2009 sales. “Our clients felt the pain of having cut back on marketing in ’09 and because sales remain deflated they have started to open up budgets,” says Danny Rosin, president of Brand Fuel (asi/145025). “We believe the second half of 2010 will be better.”
While many companies are forecasting growth for the remainder of 2010, some executives believe the increases will eventually level off. “While I think the recovery in spend will gradually improve, I think the year-over-year growth as a percentage will be less than the first half of the year since the second half of last year was so much stronger than the first half of the year,” says Rich Witaszak, general manager of Top 40 distributor Staples Promotional Products (asi/120601). Still, the majority of distributors believe the upswing will continue for one simple reason. “Customers are willing to spend again,” Laffer says.