How much should I spend on merchandise?
Have you ever felt that you’ve squandered your marketing budget on ineffective activities? We know that you need to invest your resources in the right strategies to drive good business results. Being careful about how you allocate your marketing budget is crucial to growing your brand and your company.
Why spend my marketing budget on merch?
Marketers in Australia spend more than $1.34billion dollars each year on promotional products because they work!
To drill down further into the numbers, the Australasian Promotional Products Association (APPA) conducted research that indicates 50% of receivers use promotional products daily, for longer than a year. Additionally, 52% of consumers say their impression of a company is more positive after receiving a promotional product. 76% recall the brand on the product and 76.4% said they kept their promotional product because it was useful.
It’s easy to see that relevant promotional products generate solid return on investment (ROI). Consequently, you now have a reason to factor them into your marketing budget. And in doing so, you achieve more for less while reminding your audience of the benefit of doing business with your brand.
How much of my marketing budget should I allocate?
Most companies have a “rule of thumb” as to how much they allocate to marketing. However, how they ultimately allocate those marketing funds across the marketing mix is driven by several factors:
- The nature of the business
- The competitive marketplace
- How target customers behave through the buying funnel.
Using giveaways to promote your brand is a very specific tactic. For most companies, promotional products fall under the budget set aside for events, trade shows or external branding. Generally, this consumes approximately 20% of the total marketing budget.
Your organisation may also have a specific budget for employee acquisition, retention, and engagement. Promotional products could be part of this budget as well. A 2018 study by the Promotional Product Association International (PPAI) revealed that 57% of employees are more likely to stay with companies that provide promotional products. Evidently, a promotional product-based strategy drives your internal brand and ensures employees are effective brand ambassadors.
Read more about internal marketing as a strategy in our other articles.
How do I determine the spend?
Assess Your Strategy
Before doing anything, revisit your marketing strategy. What outcomes do you want from your marketing spend? What has worked well in the past and what campaigns and events do you have planned for the year ahead? How important is retention of current customers, acquisition of new ones or sponsoring events to grow your brand?
It is vital that you decide on the maximum amount you can afford to spend on merchandise. This will be based on your strategy and desired results.
Plan Ahead
Planning your promotional products budget will give you the reassurance you need when you’re faced with an important project to set your brand apart.
Firstly, decide which of the 8 Key Must-Win Moments are most important to bring your brand to life.
- Events and Trade Shows – Making lasting impressions at scale
- Campaigns and Promotions – Adding real world dimension to above-the-line campaigns
- Point-of-Sale Presence – Ensuring that you’re seen when it really matters
- Gifts with Purchase – Increasing conversion and brand engagement
- Educational Campaigns – Gaining and holding the attention to inspire action
- Onboarding – Making the right first impression for members and employees
- Rewards and Recognition – Celebrating key moments and milestones for members and employees
- Calendar-based Events –Making an impact at relevant calendar celebrations
These should be the instances when your brand best connects with your customers. Once you have chosen at least three key moments, the next thing to do it to create a quarterly calendar. Enter your specific Must-Win Moment campaigns, events, launches and gift periods that occur throughout the year.
Next, reflect on past experiences and base your budget allocation across these moments on previous success. Evaluate whether the spending on a specific campaign had the desired ROI and then decide if that spending should be increased or decreased.
Now that you have your calendar and budget to deliver the best ROI, start brainstorming the products that will help you achieve the results. Global PPAI research has found that 88% of consumers can recall the advertiser of a promotional product they had received in the last two years. It’s likely that your audience will remember your brand based on the products you choose to give away, so look for items that stand out and complement your brand values.
Build an On-Brand Experience
Impact’s MerchMatcher™ is a great place to start when selecting the right products. Ask yourself and your team these questions.
- Who is the audience? What are their demographics and psychographics?
- What do you want them to think, feel or do after receiving your product?
- On a scale of 1 – 6, with 1 being ‘Safe & Familiar’ and 6 being way ‘Out There’ and never seen before, how impactful would you like your solution to be?
- In a word or two, what is your brand’s style? Eg. Funny, clever, conservative, etc
- Does your company ESG require the products to be ethically sourced, Australia made, ecological or anything else?
- How many products will be required for each moment you have identified and what is the budget for that specific moment?
Finally, with these questions answered you can invest in intentional and meaningful products that truly make a difference, connect with your customers, and deliver results.
Smart merch comes down to smart intentions. Stay ahead of the curve by learning from experience, mapping out your promotional product strategy ahead of time and matching your merch to your brand and customers’ needs. With the right amount of investment, you can provide gifts that activate your brand in a bold way.
Comment(01)