Who can forget the final scene in Martin Scorsese’s The Wolf of Wall Street when Jordan Belfort asks a room full of salesmen at a seminar to sell him a pen?

He hands the pen to one salesman, who begins his pitch with “It’s an amazing pen…” Then he hands it to another salesman who describes the pen’s features. Neither man satisfies Belfort. Why? The answer Belfort was looking for was actually revealed earlier in the film when Belfort asked the same question to some friends he just hired. One of the friends takes Belfort’s pen and then asks him to write his name down. When Belfort says he doesn’t have a pen to write with anymore, the man reveals the best way to sell a pen: “supply and demand.”

In the promotional products industry, pens are never in short supply. They’ve always been a staple of the market – they’re inexpensive, useful and relatively small. Companies have been putting their name on pens and handing them out to employees and customers for decades, pretty much guaranteeing their brand’s visibility will carry on until the ink runs out.

However, in recent years, the demand for pens has decreased. Writing instruments fell just outside of the top five promotional products categories last year, in terms of distributor sales, according to 2018 State of the Industry data. Market share has been cut nearly in half over the past five years, dropping from 10.4% of total distributor revenues in 2013 to 6.1% in 2017.

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Counselor's Editor-in-Chief Dave Vagnoni dishes on writing instruments, down each of the last five years.

The downward trend is certainly a symptom of the digital age. “People don’t write as much – the world is more paperless,” says Craig Nadel, president of Top 40 distributor Jack Nadel International (asi/279600). With texting, email and social media at our fingertips, letters and postcards have become antiquated methods of communication. Typing has replaced writing; it’s easier and quicker to jot down notes in our phones, tablets and laptops.

Nadel believes another factor in the decline was the pharma ban in 2009, when the pharmaceutical industry’s trade association officially banned the distribution of “non-educational items” to healthcare professionals. Millions of standard branded items like pens, mugs, notepads and countless other promotional staples were no longer allowed in doctors’ offices. As a result, pharma plummeted from the number-one market for promotional products, accounting for $1.9 billion of overall industry revenue in 2006, to now being the 18th largest market for promo items, making up just 1.6% of total industry revenue. “It really hurt writing instruments,” Nadel says. “The drug companies were great buyers in that area.”

Pens used to be a common order at Seattle-based Gifts By Design (asi/205947), but company president Jamie Stone now says that customers only order them for special events these days. Because they’ve been a popular part of the industry for so long, Stone says, the market is flooded with inexpensive pens, leading some consumers to perceive them as disposable. “A lot of people don’t care if they lose an inexpensive pen, as they can easily get another one,” Stone says. “Clients may not think they have the same longevity that other product options may have.”

Innovative Strategies
Suppliers are fighting the perception that pens are cheap and disposable with updated features and approaches. Instead of quarterly product launches, Top 40 supplier BIC Graphic (asi/40480) has moved toward introducing new writing instrument styles into its existing line on a monthly basis. “This keeps our variety fresh and ahead of trends so distributors always have interesting options for their clients,” says David Klatt, CEO of BIC Graphic.

“A lot of people don’t care if they lose an inexpensive pen, as they can easily get another one.” Jamie Stone, Gifts By Design

Earlier this year, the company released InstaGlide, an ink stream that provides a “smooth, consistent write-out” for no additional charge. Later this year, the company is launching its Souvenir pens product line, which has “elevated features, advanced ink technology, distinctive details” and prominent branding opportunities, according to the company. “We’ve designed the Souvenir line to tell modern stories with a fresh and imaginative twist,” Klatt says. “The combination of upgraded ink and unique design is sure to make these writing instruments a souvenir you’ll want to keep.”

Inks are important, but they have to be married to the right tip, according to Joe Fleming, president of Top 40 supplier HUB Promotional Group (asi/61966). A second-generation business owner, Fleming grew up in the writing instruments market, cultivating his father’s longstanding relationships with the largest ink and tip providers in the world. Over the past year, he’s been building his own business relationships, as Hub Pen acquired Beacon Promotions (asi/39250), Best Promotions USA (asi/40344) and Cooler Graphics (asi/80345).

Thanks to a combination of factors – including improving product services, as well as outlasting competitors – he says that Hub Pen has experienced a small increase in pen sales. “We’re still gaining market share, our business is still growing and we’re still developing new writing experiences,” Fleming says.

Meanwhile, BIC Graphic has been looking to join forces with promo and retail partners. “We’re working on an upcoming partnership that will bring upscale gift pens to our assortment,” Klatt says. “We’re excited to bring their European style and dedication to combining the finest materials with innovative skills to this industry.”

Another innovation that’s led to industry-wide sales growth is multifunctional, light-up writing instruments. Top 40 supplier ADG Promotional Products (asi/97270) introduced its illuminated pen line about a year and a half ago, and it continues to be a top performer, the firm says. The pens can be laser-engraved with text or imagery, and when you click it, a light inside the pen shines through the imprint. The illuminated line has since expanded to include a variety of styles, barrel colors, stylus colors, Magna Imprint size for decoration and multiple light-up logo options.

“That’s really driven a lot of our growth and epitomizes what you’re thinking about from a promotional products standpoint,” says Bill Mahre, president of ADG. “It gets your message out and says look at me, here’s my brand. We’re adding value to what’s traditionally been a lower priced item, and we’re doing it very efficiently.”

Personalization and customization of writing instruments has boosted business, putting a new spin on an old standby category. Mahre says it’s an economically beneficial feature for suppliers and consumers alike. “If it only costs you an extra 40 cents to personalize a $2 pen, that’s a very good deal and added value for customers,” he says. “We can also turn it around in 48 hours, so people can get a personalized pen very quickly.”

In addition, suppliers are developing pens with multiple uses, combining them with flash drives or fidget spinners, or having them glow in the dark. Even fountain pens have made a comeback in recent years, as consumers have become infatuated with vintage in pop culture, fashion and design.

Down But Not Out

Writing instrument sales represent a smaller percentage of total distributor revenues than they used to, but the category still remains the industry’s sixth largest, in terms of market share.

Daisy Holland, senior merchandising manager at Georgia-based Pinnacle Promotions (asi/295986), believes the illumination style has revolutionized how end-users are viewing pens, and they’re responding with frequent orders. “While sales of standard pens have lagged recently, the pen market has seen some interesting upward trends,” Holland says. “We’ve seen great success with pens that incorporate a multipurpose tech element, like a screen cleaner attachment or stylus, as well as pens that manage to stand out just by having unusual features.”

Authoring the Future
While times have changed and overall sales have slipped, writing instruments still remain a top category in promo and retail. ASI studies show 50% of consumers own logoed writing instruments, with the cost per impression being less than 1/10th of a cent. On the retail side, writing instrument sales grew 6% in 2016, led by a 5% gain in traditional pens, according to NPD Group’s retail tracking service.

Although many processes have become digitized and automated in the business world, there are still professionals who rely on fresh ink. Retail data shows the big four purchasers of writing instruments are the financial, real estate, insurance and education markets, along with police, waiters and waitresses, and doctors. As the second-biggest shopping period of the year, back-to-school season has 29 million households across the U.S. planning to spend a total of $27.6 billion in 2018, according to Deloitte. Writing instruments like pens, pencils, highlighters and markers account for a massive chunk of those purchases.

“We anticipate the decline, but it’s going to happen very, very slowly.”Joe Fleming, HUB Promotional Group

Because the demand is still there, albeit in weaker form than in the past, distributors consider writing instruments a viable business opportunity. While suppliers have updated their product lines, distributors have had to freshen up their selling strategies.

“Clients still see the usefulness in pens, but there are many neater, inexpensive swag options on the market now,” says Missy Mann, national sales account manager at Republic Promos (asi/307316). “I usually only see clients add pens on to other swag orders, or for extremely low-budget projects. Pens are necessary to offer, but not to focus on.”

Gifts By Design has taken a different approach, focusing on selling more expensive pens rather than treating them as a commodity. “We try to explain the value of purchasing nicer, high-quality pens, so that the perceived value is there,” Stone says. “There’s a place for inexpensive pens, but it depends on the use. If you want someone to value and hold on to your product, it needs to have value to the recipient and not feel disposable. It may cost your client a little more, but if their recipient values the pen and doesn’t want to lose it, then isn’t it worth it?”

Chris Faris, president and CEO at MA-based Boost Promotions (asi/142942), sees another opportunity for writing instruments to thrive. “In the current economic climate, companies are having a difficult time filling open positions,” Faris says. Indeed, despite worries over potential trade tariff impacts, federal data shows that the U.S. economy continues to add hundreds of thousands of jobs. However, there are fewer candidates to fill those positions as the unemployment rate decreases, hitting an 18-year low of 3.8% in May.

Small businesses are also struggling to hire. The share of U.S. firms with open positions rose to 36% in June, matching November 2000 as the highest in monthly records dating back to 1973, the National Federation of Independent Business (NFIB) reported. More than 20% of small-business owners said that finding qualified workers was their biggest problem, according to the group’s survey.

“The availability of qualified workers is impeding the growth in employment,” says NFIB Chief Economist William Dunkelberg. “Owners will increasingly be pirating workers from other firms rather than new entrants in the labor force. There will also be compromises in qualifications and more resources invested in training both new employees and existing workers.”

So, where do promo pens fit in? Well, in order to lure skilled workers, companies are doubling their investment in recruiting. They’re offering increased compensation and benefits, as well as promoting themselves through all forms of advertising, especially promotional products. “There’s a big emphasis on employee acquisition and college/job fairs are a major part of that,” Faris says. Companies are ordering more branded apparel, USB drives, sunglasses and lots of pens to give away to interested students and prospects at these recruiting fairs.

Despite the decreasing market share in the industry, Mahre maintains that writing instruments aren’t going anywhere anytime soon. After all, pens are probably the one promotional product you use every day in some form or fashion. “We don’t drive behavior in the marketplace,” Mahre says. “Our focus is on how to help deliver a message for an organization. Despite the changes with technology, the pen is still a viable tool for spreading the message of your brand.”

Fleming has been asked about the decline of writing instruments for at least five years now. No matter what technological advances, consumer trends or latest fads hit the market, he says his answer hasn’t changed. “Writing instruments are a melting ice cube,” Fleming says. “We anticipate the decline, but it’s going to happen very, very slowly.”

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