What to Include in a Promotional Products Budget

If your product marketing budget isn’t part of your larger marketing budget, you’re likely to run into problems when the time comes to buy promotional items. Given the limited nature of most marketing budgets, you risk running out of cash before you’ve completed your promotional product campaigns, which in turn negatively affects your brand awareness and customer satisfaction. Your swag budget is important and needs to reflect your promotional strategy.

How much do companies spend on promotional products?

According to Entrepreneur, companies who have been in business five years or less should spend 12 to 20 percent of projected revenue on marketing as they increase their market share, build customer loyalty, and develop brand recognition. Established businesses, which have secured some market share and brand equity tend to have marketing budgets between 6 and 12 percent of their projected revenue. 

As for how companies spend on promotional items, that varies based on a company’s marketing goals for the year. As a general rule, your swag budget should be less than twenty percent of your total marketing budget. 

Types of promotional budgets

Swag budgets are typically generated in the same way as a company’s larger marketing budget. Types of promotional budgets include:

• The affordable budget: The promotional marketing budget is based on how much the company can probably afford to spend on swag. This method is highly subjective and makes it difficult to make long-range year-to-year plans.
• The percentage of sales budget: The swag budget is expressed as a percentage of sales, making it easy to calculate and afford. If competitors are using this method, your promotional spending should allow you to keep pace with them.
• The Competitive method: The promotional budget is based on what competitors spend on swag. This works if competitors are spending the industry standard but can backfire if they’re over or under-budgeting for promotional marketing.
• The Task-Specific method: Marketers define objectives for the year and estimate the cost needed to meet these goals successfully. This method offers the most stability as long as you have a clear and reasonable schedule of events planned for the year.

Creating your swag budget

Begin your swag budget by calculating how much of your marketing budget can be used to purchase promotional items, and assign an amount to each month and event, so you don’t overspend and exhaust the budget before the end of the year. Steps to take include:

• Define your goals, so you know where and when you will need promotional items. Swag should reflect your marketing goals and be an integral part of your overall marketing strategy. Don’t hand out swag for the sake of handing out swag — always have a reason.
• Consider how much promotional items for similar events cost in the past and add a ten percent buffer to cover increased costs.
• Estimate how many people will receive promotional items and of what kind. For instance, will every prospect get a high-value gift at a trade show or just those who show the most promise? How many leads do you plan to reach out to this year? How many attendees can you expect at events?
• Consider your demographics: What does your audience want? A promotional item is of no use unless it is used.
• Research the price of promotional items well in advance. Will you need high-value gifts for certain prospects? Can you save money by purchasing budget promotional items in bulk? Do you want to personalize gifts for your employees?

Once you have your swag budget, add ten percent to both your promotional spending and the amount of swag you plan on purchasing. You can always find a use for surplus swag, while not having swag when you need it can lose you a critical sale or prospect.

Types of Promotional Swag

Depending on your product marketing budget, you may need all or only some of these types of swag. Remember, promotional products often have more than one use for your company: Pens, calendars, and coffee cups make great inexpensive giveaways, but can also be used as office supplies, so a percentage of their cost might be allocated to your office supply budget. 

Types of swag include:

• Trade show giveaways: Used to increase booth traffic and increase brand recognition, trade show swag includes minor gifts like pens, calendars, and tote bags alongside higher value items like outerwear for serious prospects or for use as prizes raffled off to booth visitors.
• In-the-moment giveaways: These are small, inexpensive gifts used as attention-getters or small rewards. Pens, water bottles, magnets, and calendars all fall into this category and are ideal budget promotional items if your promotional spending budget is limited in scope.
• Corporate wear: This category includes customized work uniforms and branded lifestyle gear. Generally speaking, use polo shirts, collared shirts, and collared jackets for work uniforms and trade show giveaways, and lifestyle gear like hoodies and T-shirts for casual rewards and gifts.
• Employee appreciation rewards: Be sure to leave room for employee gifts and rewards in your swag budget. Employee gifts recognize hard work and show you value your workforce.

 Your swag budget is an essential part of your marketing campaign. Plan carefully, plan ahead, and order bulk promotional items to stay on top of your annual promotional product giveaways.