A Blog by Jonathan Low

 

Oct 11, 2019

How Swag Became A Multi-Billion Dollar Business

The psychological benefit of giving back, however unequal. JL

Aaron Elstein reports in Crain's New York Business:

Knickknacks formally called promotional products (are) better known as swag. The given-away pens, notepads, phone chargers, flash drives and water bottles clutter office desks everywhere. The swag industry generates nearly $25 billion in annual sales and employs more than 130,000 salespeople.In the 1970s swag got a lift when companies started using T-shirts as billboards. (Today apparel makes up 40% of all swag.) Another comes from the proliferation of business conferences that last year grew 50% faster than the U.S. gross domestic product.
The National Rifle Association once sent a former federal financial-crimes investigator a gift to thank him for renewing his membership: an inert Browning machine gun cartridge bearing the organization's initials and a bottle-opener notch.
"I have used it for many years and many beers," said the investigator, who asked to keep his name confidential.
Tom Berger, an executive at Midtown tech consultancy AKA Enterprise Solutions, also got a bullet turned bottle opener last summer, when he visited First Command, a Texas-based financial-services organization that assists members of the military and their families. 
"Needless to say, I put it in my checked bag at the airport," Berger said. "A colleague who didn't got taken aside by security."
Cannabis-industry consultant Chris Jones was pleased when he was given a Hanu Stone vaporizer at a recent conference. Jones described the gift, which retails for around $50, as "one of the more advanced vape devices on the market." The website Engadget approvingly said it "hits like a ton of bricks."
All three were recipients of knickknacks formally called promotional products but better known as swag. The given-away pens, notepads, phone chargers, flash drives and water bottles clutter office desks everywhere. No conference or trade show is free of tote bags filled with stuff bearing company logos. The swag industry generates nearly $25 billion in annual sales and employs more than 130,000 salespeople.
"Swag is the only kind of advertising people thank you for," said Tim Andrews, chief executive of the Advertising Specialty Institute, the swag world's trade group.
Sensing opportunities that could make you feel like swaggering, Jeremy Parker and Josh Orbach teamed up almost four years ago to launch Swag.com. Today their Garment District–based company employs more than a dozen people and generates more than $6 million in annual revenue, which Parker projects will double next year. The firm has raised $2.8 million from investors, and its latest round was led by New York venture capital firm Uncommon Denominator.
"Every year swag grows," Parker said. "Even when the economy declines and marketing spending falls, companies still spend on swag. I think that's because they know their employees are nervous, so to make them feel better, they give them an $11 pair of socks."
Part of Swag.com's success is due to its sophisticated website, which Parker said makes it easy for customers to quickly pick the exact color and composition of whatever they're shopping for. The firm works with 30 "core vendors," including Liberty Print Co. of Beacon Falls, Conn., a certified woman- and LGBT-owned business that makes T-shirts in a former brass mill dating back to 1888.
"We definitely don't produce as many imprints as a lot of shops, because attention to detail is important to us," said co-owner Monica Maglaris.
Another reason Swag.com has caught on is its name, which somehow hadn't been claimed by anyone else in the swag space. The founders bought the handle from a domain squatter for $200,000.
"He wanted millions," Orbach said. "Negotiations took months."
Swag.com's first client was Facebook after Parker vowed his firm would undercut any competitor to win a $3,405 order for some T-shirts. Next the duo approached WeWork, whose executives asked whom else they had worked with.
"We said Facebook, and I guess they assumed we had other customers," Parker recalled. "They ordered $19,548 worth of T-shirts, each of which has Swag.com on the label."
Katherine Mayo, office manager at Blockchain in SoHo, said Swag.com's stuff helps build staff camaraderie, which is especially helpful for a company whose business of holding and trading cryptocurrencies for clients exists mainly as blips and bytes.
The hardest part with freebies is coming up with items that are cool but not so cool that someone would run off with them.
"If someone sees a backpack with our name, they might steal it, get the computer inside and unlock the crypto," said Mayo, who recently placed an order for duffel bags with Blockchain's logo fading into the background.
Swag onslaught
The word "swag" appears to date back to the 17th century to describe stylish confidence, but it didn't enter the popular lexicon until the 1990s. A 2003 Jay-Z song informed listeners "My self-esteem went through the roof, man. I got my swag." Last year the word was added to the Oxford English Dictionary.
Andrews said swag is an acronym for "stuff we all get" and reckons we all have been getting it since at least the 1880s, when enterprising barbers began handing out combs.
In the 1970s swag got a lift when companies started using T-shirts as billboards. (Today apparel makes up 40% of all swag.) Another tailwind comes from the proliferation of business conferences, an arena that last year grew nearly 50% faster than the U.S. gross domestic product, according to data from the Center for Exhibition Industry Research.
Finally, swag has gotten a boost from the push to legalize marijuana and the 2020 presidential campaign. With cannabis, dispensaries can't advertise their wares on billboards or in other media, but there's no problem with handing out complimentary branded lighters, vapes and paraphernalia. Meanwhile, ASI estimates next year's election cycle will generate $1 billion worth of bumper stickers, pins and other campaign tchotchkes.
That's game-changing money for the many small swag suppliers that occupy this niche. In 2015 Donald Trump's presidential campaign awarded a $20 million contract to Louisiana firm Ace Specialties for Make America Great Again hats and other merchandise.
Some firms are experimenting with swag that boldly goes where no branded giveaway items have gone before. Marketers are touting self-heating apparel that could soon be worn by construction crews and others who work outside, Andrews said. LED-powered wristbands and necklaces are lighting up the trade-show circuit.
Still, the swag onslaught has some folks fed up. In the aftermath of the financial crisis, President Barack Obama signed an executive order directing federal agencies to stop buying swag as part of a broader effort to save money.
Even some trade groups have had enough with the deluge.
"We have dramatically reduced the amount of swag we offer," said Barbara Kemmis, executive director of the Cremation Association of North America, "since so much goes to waste."
Nonetheless, two years ago, at the association's innovation convention in Midtown's Grand Hyatt hotel, an exhibitor gave away When Someone Dies: A Child-Caregiver Activity Book, which at least one attendee found valuable.
"I wished someone had given me a book like this a long time ago," said Amy Schindler, a Washington Heights resident who lost a sister at a young age. "Apart from all the hand sanitizers and notebooks and all the other junk at the convention, it was nice that there was something actually quite useful."

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