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TheStreet Open House

Companies Put Billions into Promo 'Freebies'

BOSTON ( TheStreet) -- If you are a doctor, or ever worked for one, odds are you haven't bought a pen in years.

As part of the marketing blitz waged by pharmaceutical companies and medical device makers, pens imprinted with the logo of their wares are ubiquitous and, until recently, were doled out like Halloween candy.

The education sector spent $2.2 billion for branded merchandise last year, topping the spending list for the first time and hinting at the sector's new competitiveness.

The items may be small, but there is big business as companies, large and small, buy and pass along freebies -- all those pens, mugs, caps and T-shirts intended to build or reinforce name recognition.

The Advertising Specialty Institute estimates that companies spent $17.4 billion on logoed business giveaways last year, an average of $56.13 for each person in the U.S. Although the cost isn't shared equally, of course consumers are on the hook for paying back, item by item by item, what companies and institutions spend on promo products.

The industry grew by 9.1% last year, with businesses and organizations in the South leading the nation in terms of money spent on logoed promotional products by region -- $5.9 billion last year.

Northeast distributors and suppliers sold $3.1 billion in specialty, logoed merchandise, much of it to companies in the health care, insurance, banking and education industries. Distributors of promotional products based in the Midwest sold $4.3 billion worth of imprinted items; their counterparts in western states sold $4 billion.

For the latter region, the West is home to four of last year's top five promotional product suppliers: American Apparel (APP), Tri-Mountain/Mountain Gear, Sweda and Sunscope. With tech heavyweights such as Apple (AAPL), Microsoft (MSFT), Google (GOOG), Twitter and Facebook based in California and Washington, many promo product companies in the West focus on that sector. Among seven major metro markets, more people in Los Angeles own promotion products, an average of 12.7 items, ASI says.

But last year, the education sector -- schools and universities -- topped the list for the first time, bypassing health and medical companies and hospitals. Educational institutions commanded 12.4% of the total market, generating $2.2 billion in revenue for the 3,200 manufacturers and 23,000 distributors of logoed items throughout the nation.

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