2003: Business - Corporate market prepares for rebound
Wednesday, October 12, 2011
You’ve seen the golf balls before, and probably even have some buried in the bottom of your golf bag. They bear logos for every type of business from Bank of America and General Electric to local plumbing companies and car dealerships. They might even have come in clever packages, such as the sleeves of Hershey’s-logoed balls made to look like faux candy bar boxes.
Companies of all sizes and industries promote goods and services by putting their appellations on everything from golf shirts and gloves to tees and divot tools. In the process they generate a significant – and many times overlooked – piece of business for golf manufacturers known as “corporate custom.”
It also is a business, however, that has been suffering in recent years. Revenues for some types of promotional golf products have fallen off as much as 30 percent as corporations have cut costs in the wake of the recession and the fallout from Sept. 11, 2001.
Those numbers mimic what is happening in the broader corporate custom market. According to the Promotional Products Association, an Irving, Texas, trade group, sales of corporate-logoed merchandise more than tripled during the 1990s and peaked at $17.85 billion in 2000. But by 2002, the market had dropped 12.8 percent, to $15.6 billion.
Gene Bozzo, a partner at B to B Promotions, a South Plainfield, N.J., corporate marketing firm, says that reflects the strategy of business executives during difficult times.
“They cut back advertising and promotions first and then go to reduced staff,” he says.
Bozzo adds that corporate promotional spending “usually comes back three to six months ahead of the
economic recovery. Some of the corporations finally relax spending. They feel secure that they’ve already impacted their bottom line and that things have stabilized.”
He says he has not yet seen signs of a rebound in the corporate custom market, but a number of golf industry executives say things have bottomed out and that companies will beef up this portion of their promotional budgets as the economy improves.
The largest and most prevalent piece of golf’s corporate custom sector is balls. It accounts, by some observers’ estimates, for $120 million in annual domestic sales. That number is down from roughly $140 million in 1999, which is said to be the high-water mark for the category. But corporate orders still account for roughly 8 million dozen balls per year – about 15 percent of all domestic ball sales
projected for 2003 – and as much as 25 percent of some equipment makers’ total ball businesses.
“Corporate custom is an extremely important revenue stream for us,” says Brian Lucas, director
of special markets for Acushnet Co., the Fairhaven, Mass.-based parent of Titleist, FootJoy and Cobra.
The equipment maker, which is the segment leader with more than half of the corporate ball market, probably realizes $70 million in revenues from corporate-logoed balls, which translates into a
quarter of its domestic ball business.
Though Top-Flite Golf, formerly known as Spalding Sports Worldwide, is probably a quarter
of that size in corporate custom, it reaps – and recognizes – the benefits of being in that market as well.
“We have found it to be a terrific way of getting consumers to sample our products because corporate custom balls are point-of-play giveaways,” says Ed Several, Top-Flite’s vice president of marketing services and custom products. “And we see it as a vehicle to create larger and effective marketing
partnerships with major companies.”
But a weak economy and other factors have limited corporate custom sales.
“The logoed golf ball was being looked at in some circles more as a mainstream promotional item and not the hot property it was for so long,” says Lucas. “And then the number of golf rounds being played fell off.”
Acushnet, for one, responded by taking a more direct approach to marketing its corporate business.
“We started doing whatever we could to promote corporate custom and the strength of our brands through the running of ads in in-flight magazines, for example, and business publications like Fortune,” says Lucas. “We also developed a custom packaging program and have been working to enhance awareness of corporate custom in both the green-grass and off-course channels.”
While those moves will likely help, the big boost the segment needs will only come from an improved economy.
“Promotional budgets will slowly get better as the economy does, and the money will come back in because people understand that it works,” Several says. “Putting your logo on things such as golf balls is still a great way to build a brand.”