Promotional labels can offer converters value-added at its best. The runs are generally long, the graphics usually high end and the constructions can be complex. It's a good recipe for high margins and, of course, substantial profit. In the late '90s, some converters' wallets were bulging thanks to this specialized niche.
But then something happened. It's called a recession.
"It's not atypical that when the economy starts to go down, we see the spending on promotional labeling go down as well," says Jeff Buchta, VP of strategic accounts for WS Packaging, headquartered in Algoma, WI. "Because we are climbing out of our recession, we are starting to see growth again in promotional labeling with some of our large customers. We have seen significant increases in promotional spending this year and we project that will continue for as long as the economy is strong."
While the entire industry has felt the effects of a sluggish economy, the promotional labeling sector was particularly hard hit. Slashed advertising budgets at large consumer product companies translated to slow sales for promotional labeling.
Today the promotional labeling market is staging a recovery, after significant downturn over the last few years and tremendous growth a few years prior to that. This isn't a new cycle for promotional labeling enthusiasts, however. It just comes with the territory.
"It's a very different philosophy when it comes to managing your business. It's very difficult to be solely in the promotional business, because when the promotional market dies, if you don't have other businesses to fill those presses it's a problem," says Tom Spina, president of Luminer Converting Group, located in Lakewood, NJ.
Other converters also recognize the value of diversification, especially when pursuing promotional labeling. "If someone went into the business specifically to run promotions, it would be difficult to survive," says Bob Nowak, national sales and marketing manager for Aladdin Label in Waukesha, WI. "You have to rely on your core businesses to help you through the peaks and valleys of the promotional business."
Despite the feast-or-famine nature of the market, promotional labeling as a niche is still a healthy business for label converters. One huge boost for the direct mail market — a big user of promotional labels — was the institution a year ago of the National Do Not Call Registry, which booted marketers off of the phones and back into the postal system.
When the economy is good, marketers are willing to open their wallets and dole out a little extra for the latest and greatest in promotional labeling technology. And because many of the campaigns are national in scope, the orders can be huge.
The reason marketers are laying aside their thriftiness when it comes to constructions and materials is because of competition. "That is the main reason for specialized products. It is particularly true in markets that are mature, or low-growth markets," says Terry Fowler, marketing services manager for NorthStar Print Group in Watertown, WI.
In many markets, competition can be fierce. Take toothpaste, for example: According to its web site, there are 18 lines of Crest alone, and many of these lines offer multiple SKUs. How does a consumer decide between Crest Dual Action Whitening, Crest Extra Whitening and Crest Whitening with Scope, not to mention the plethora of other brands? Many marketers bank on promotional labels to make the decision easier for consumers.
"They are all fighting for the consumer," says Buchta. "If they can provide a value-added feature that will encourage the consumer to purchase their product, it's well worth the incremental costs."
According to Bob Biava, president of Driscoll Label in Fairfield, NJ, the four functions of promotions and advertising are to: attract attention, generate interest, stimulate desire, and motivate to action. Promotional labels must try to accomplish at least one of those four goals.
|Photo courtesy of NorthStar Print Group|
Technologies to Watch
A number of technologies and products are available today that aim to offer converters and marketers the latest razzle-dazzle — from substrates to coatings to inks. Some of these are new; others have been around for awhile but have seen recent improvements or renewed interest.
One way to attract attention on promotional labels is using substrates with lenticular technology. Through the use of lenticular lenses, the image on a package can have a wide range of effects. Labels can appear three dimensional, flip between two different images, even offer a few frames of a movie or television show.
"In a motion piece you can have a video grab from a film or a custom video shot. You can grab about one and a half seconds and put it into a lenticular label," says Gary Jacobsen, president and founder of LentiClear Lenticular Lens and Animated Printing & Packaging, in Itasca, IL.
Lenticular technology has been around for some time, but recent computer software has enabled great advances in the field. Jacobsen also reports that thinner gauge lenticular films have increased the quality of the work. Most importantly, the labels can be created using standard printing presses.
Materials that play to senses other than sight are also receiving increased interest. "The primary label market is currently seeing a renewed interest in texturizing; more specifically, producing a selected textured or raised surface with varnish in the final phase of the printing process," says Rick Harris, market product manager, product branding business team for FLEXcon in Spencer, MA.
"This textured surface offers a tactile feel and gripper look to the label that end users are finding enhance their product appeal," he adds.
Along a similar vein, Biava reports a rise in scratch-and-sniff promotional labels because they require customer involvement. "If you can attach a scratch and sniff fragrance, the customer can pick it up, bring it up to his nose and say 'I like it. I'll buy it.' How much more intimate can you get with a customer than to have your product right under his nose?" he asks.
|Label courtesy of Driscoll Label|
In addition to substrate developments, there have also been new developments in inks used in promotional labels. Some of these products were originally developed for the security industry, but have recently caught the eye of the promotional labeling market.
"Nothing happens in isolation," says Fowler. "With the concerns about counterfeiting, people are working on ways to make things more difficult to counterfeit or more easy to verify. They use a lot of advanced technologies and some of that technology is thermochromatic. There's been some development from that end." Thermochromatic inks, which change color depending upon the temperature, have been in use for awhile in the promotional market and continue to find fans.
Special effects inks have developed in other areas as well. One area is color shifting inks, "which provide an optical color change as the viewing angle is changed," says Ed Dedman, business manager, narrow web and energy curables group for SICPA North America in Brooklyn Park, MN. Color shifting inks were also originally developed for the security industry but can now be found in the promotional labeling marketplace.
Using inks to create a metallic effect can also be an effective technology for promotional labels. MetalFX technology is a new design tool that has recently been introduced to the label industry. It allows converters to print labels with interesting metallic effects.
"MetalFX is a means to take any given piece of artwork and to metalize it with CMYK plus a fifth channel of metallic silver," says Oliver Crowhurst, director of business development for Eckart in Painesville, OH. "It's a new way to create interesting decorative effects."
The tool comes with software and a book with hundreds of metallic colors. The colors from the book can be duplicated using a five-color press, the software, CMYK and specialized silver ink.
Newer technologies on the market are gaining ground, but some consumer companies choose to go back to the oldies. "The old tried and true is readily understandable by the consumer," says Nowak. "If you've got some measurements on past performance, and an advertiser wants to duplicate those, it's better to give it a shot [with a known technology] than going after an unknown technology with an unknown return."
|Promotional labels should do at least one of four things:
a. attract attention;
b. Generate interest;
c. Stimulate desire;
d. Motivate to action.
Labels courtesy of Driscoll Label
"As far as constructions, I see them getting more complicated. There's demands by the market for a piece that does more than just become a label," says Jacobsen of LentiClear Lenticular Lens. "They want a more interactive label so that people get more out of it."
One sophisticated construction on the rise is extended text. Longford International, located in Toronto, sells a booklet-affixing feeder that is an add-on to printing presses. Graydon Latam, the company's national sales manager, sees a growing trend toward using booklet labels for promotions:
"When we first started getting into this business 20 years ago, extended text labels were used primarily for pharmaceutical. Shortly thereafter, agricultural and chemical products started to become very popular. In the last five to seven years, consumer companies such as Kellogg's and Kraft started using [extended text] for promotions."
Companies are using extended text in promotions for a variety of reasons, such as for games, rebates and coupons. Another popular use is to share recipes. "For example, we worked on a project that involved chutney [an Indian savory]. They had a very good chutney but they wanted to broaden the appeal and they realized certain people may not know how to use it. They wanted to have recipes and suggested uses," says Fowler.
Other interesting constructions have been developed to appeal to promotional labeling customers. NorthStar Print Group, for example, has worked with its customers to help them use their prime labels as promotional labels.
"We have a line of products called StarPeel. For example, Miller Brewing Company has used peelable neck labels on glass bottles for various contests and promotions," says Fowler. "In a StarPeel neck label, you have a regular looking neck label with a promotional indicator, and then you peel off the neck label and it's printed on the reverse."
The advantage of utilizing the prime label in promotions should not be overlooked. It enables companies to apply labels using their "regular labeling machinery without having to make extensive modifications,: adds Fowler.
Innovative narrow web constructions are not limited to labels. NAStar has introduced a product line termed NewsNotes. The supplier is working with various converters to deliver these products to local newspapers. NewsNotes feature temporary adhesives that were created to stick on the front page of newspapers.
"It is a front page advertising note. We are one of a consortium of 10 different label companies in the US that offer NewsNotes," says Nowak.
This is a mere sampling of the different type of constructions available to consumer companies. In the quest to offer new and exciting products to marketers, there has been tremendous work in creating unusual products. This leads to an important consideration: Converters would be wise to stay away from patent infringement.
"One thing that converters always need to be aware of are existing patents from companies, making sure they are not violating those patents. With promotional constructions, there are a number of patents held by different companies," says Buchta.