The business behind the giveaways

Pens and pencils can't be beat. The two writing instruments are by far the most used promotional items in Germany. Alone 87 percent of the companies that give out small gifts for customers and business partners rely on pens and pencils with their own company name and/or logo.

This is shown by the current Promotional Items Monitor of the General Association of the Promotional Items Industry (GWW). This is followed by other classics such as notepads and notebooks, calendars and USB sticks or mugs and T-shirts.

Overall, the market ranges from inexpensive giveaways and gimmicks to high-quality branded items. The companies are currently still comparatively cautious. The GWW reports a slight recovery in the promotional products business. Because with the largely end of the Corona measures, trade fairs and events were able to take place again, where the giveaways are gladly distributed.

The turnover of the approximately 3,500 providers increased by almost six percent to 2.8 billion euros last year. However, the industry is still a long way from the pre-pandemic numbers - specifically a good 23 percent or the equivalent of 850 million euros.

"The goal now is to get back to the old level as quickly as possible and then to go beyond that," says Steven Baumgaertner, CEO of the GWW. Because for a number of companies, the ongoing dry spell is now becoming a question of existence.

Baumgaertner is therefore appealing to politicians to improve the general conditions for the promotional products market. Because the industry is being slowed down not only by the pandemic, war, inflation and economic crises, but also increasingly by bureaucratic hurdles.

Among other things, the entrepreneur mentions the so-called obligation to record. Depending on the finance department, it stipulates that the name of each recipient for promotional items above a value of ten euros must be documented. "A bureaucratic monster" complains Baumgaertner, which also ensures that some companies shy away from using higher-quality promotional items.

This applies, for example, to the porcelain manufacturer Kahla from Thuringia. "It is unacceptable that politicians set incentives for a sustainable economy, but marketing is slowed down by current tax legislation," criticizes Managing Director Daniel Jeschonowski. According to GWW estimates, the industry loses several hundred million euros every year, especially German manufacturers who have recently invested heavily in sustainable production and operational management.

The second issue of concern for the industry is the value limit of EUR 35 up to which promotional items can be claimed as business expenses per year and recipient. This limit does not apply to other, competing advertising media such as TV spots, online ads or outdoor advertising. Johanna Hey, head of the Institute for Tax Law at the University of Cologne, sees this unequal treatment as a violation of the general principle of equality.

The scientist therefore advises the industry to file a lawsuit against the regulation that has existed since 1960 - and sees good chances of success. "I can't think of a good justification anymore," says Hey.

At that time, the intention was to prevent expensive gifts and thus bribery. "Today, however, there are strict compliance rules everywhere, so that the topic of gifts is superfluous." Politics and tax legislation have thus remained in the past.

The GWW is now advising on how to proceed. No lawsuit is currently planned, says Baumgaertner, head of the association. Instead, they seek dialogue with politicians. But that could still change.

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