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Companies Put Billions into Promo 'Freebies'

Timothy Andrews, ASI's president and chief executive, credits increased competition for the rise in school-centric giveaways. Traditional colleges are in a recruitment battle with for-profit and online universities such as those owned by Apollo Group (APOL), ITT Educational Services (ESI) and Corinthian Colleges (COCO).

"You've also got a lot of veterans coming back home, and there is a really big push to get them to pick your school because there are benefits to that," he says.

More people are also considering a return to school, particularly among those who are unemployed and want to take advantage of the time on their hands and government programs that encourage and defray the cost.

Fierce competition makes businesses susceptible to the data in ASI's survey of 3,332 businesses and businesspeople, in which 83% in the U.S. say they can identify the advertiser on a promotional item they own. An imprinted pen is used an average of 18.2 times per month, partly due to the "pass-along rate" of those "borrowed" items that never actually get returned.

Others who are convinced: financial and insurance companies, which were responsible for 9.6% of spending, or nearly $1.7 billion last year. Government agencies, which accounted for 3.8% of the spending, spent $661 million.

Climbing for the first time in years was promotional spending of this type by auto companies and dealerships. The GMs (GM) and Fords (F) of the sector represented 6.6% of the tchotchke and swag market, shelling out $1.1 billion to plaster their logos far and wide.

"We do tend to be a leading indicator," Andrews says. As companies get their post-recession bearings, the low cost of these promotional items offers an affordable way to once again ramp up promotional efforts.

"Because of the price point they will buy these items sooner than they might more expensive things, like radio, TV or billboards," he says.

The key to a successful freebie, Andrews says, is to give people something useful, "something that they would otherwise have to buy for themselves." For example, when flu fears ran rampant in 2009, logoed bottles of hand sanitizer surpassed pens as the most popular item.

While anyone could and did slap their name on sanitizer, that approach helped the health care sector, including doctors and hospitals, spend $1.8 billion for 10.4% of the market. Pharmaceutical company freebies, itemized separately, commanded 1.1% of the market, spending slightly more than $191.4 million to draw attention to products that are, in turn, marked up to account for promotional expenses.

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