SOI 2012 - Geographic Analysis: Canada Leads the Way

Nearly Two-Thirds Of Canadian Distributors Reported Better Sales In 2011

Geographic Analysis: Canada Leads the WayPrivately, many ad specialty salespeople and executives will tell you that "eco-friendly" and "sustainable" make good buzzwords, but they don't make them any money. If there was a "green" trend, they say, it's over.

But not in the mind of Canadian entrepreneur Denise Taschereau. From her Vancouver office, she hears the industry chatter and rather enjoys it. After all, it allows for more market share she can steal away. "For us, green products isn't a category, it's what we do," she says. "We're one step ahead."

Over the last three years, in fact, Taschereau's firm, Fairware Promotional Products (asi/191452), has increased sales by 117%, joining the multi-million dollar revenue club in 2011. The fastest-growing in Canada and the ninth fastest-growing distributor in the entire ad specialty industry (according to Counselor's Fastest-Growing Distributors ranking), Fairware focuses on transparency, ethical sourcing and reusable product campaigns, targeting North America's leaders in corporate responsibility. "We're not trying to bring the horse to water," Taschereau says. "Our clients are deeply engaged, and the products we offer align with their stated values."

Those clients, by the way, include Johnson & Johnson, Aveda, Patagonia and Ben & Jerry's – not exactly obscure start-ups nestled in the mountains of British Columbia. "Distributors all sell the same types of products, but we focus on materials and inks," she says. "We're researching all the time."

It also helps that Taschereau can speak from experience. Before she founded Fairware in 2005 with two other business partners, Taschereau worked as a sustainability manager at a nonprofit. She also holds a master's degree in environmental research management. In other words, she understands the difference between a truly eco-friendly product and one that's just labeled that way. "We know what the FTC guidelines for green marketing are," she says. "We can have meaningful conversations with companies because we fully understand sustainability."

Data Points

A Numbers Game
While Fairware's success story may be the best among Canada's distributors in 2012, it's far from the only one. In fact, the State of the Industry report shows that last year more than 60% of Canadian distributors increased their sales and 56% boosted profits, easily besting the average year-over-year changes of U.S.-based industry firms. And when asked how they'd rate the health of the industry, Canadian distributors returned the highest marks of any geographic region surveyed by ASI over the past three years. So what is it about The Great White North that has so many distributors in the black?

"Canada had a better recession than the U.S.," says economist and McGill University professor Chris Ragan. "We had no bank failures here, while U.S. banks had serious problems. The output paths of the two countries look similar, but employment is much different. We've recovered all the jobs that were lost. The U.S. is nowhere near that."

An even closer look shows there are also differences in the trajectory of ad spending between the neighboring countries. In the post-recession year of 2010, U.S. ad spending rose 6.5%, while ad spending among Canadian companies jumped 14%, according to firms Kantar Media and Group M. Even with a softer global economy in 2012, researchers are still projecting ad spending in Canada will increase by 4.4%, with U.S. ad spending likely to improve by 2.7%.

Another critical data point, researchers say, is the amount of money spent by companies on Internet marketing. "On a local level, Canadian businesses only spent 12.6% of ad budgets last year on Web marketing, versus 20% in the U.S.," says Gordon Borrell, CEO of Borrell Associates. "Canada is a bit behind."

While in the long term Borrell believes Canada's ad spending will tail off, in the short term he argues more non-digital ad dollars have been available for Canadian agencies, like distributors, to tap into. So what's next?

"What you're going to see," Borrell says, "is more money spent on promotions, incentives, rebates and contests."

More to Consider

Before attributing all the 2011 success of Canadian firms to a better economy, listen to Mark Freed, president of Toronto-based Counselor Top 40 distributor Genumark (asi/204588). "We didn't have the carnage in 2008 and 2009 like the U.S., but our economy here is not percolating, it's more plodding along," he says. "It's still a very tough market."

Within that "tough market," to try to win more business, Freed has put an emphasis on two areas: talent acquisition and developing technology to reach customers. "We look for the best people in the industry, and that's how we grow our sales," he says. "Over the last 16 months, we've also really increased our efforts with social media."

Genumark's efforts are easy to spot. By one measure, the popular analytics tool TweetReach, Genumark earned a high of 44,000 impressions with just 33 tweets in late May of this year. Even more impactful is the company's continuity across several platforms, meaning a single themed product or campaign can be infinitely shared on Facebook, pinned on Pinterest and linked from Genumark's blog, capturing customer views and heightened authority on search engines.

"We've hired a director of social media and we're continuing to invest," says Freed, whose firm was named by the National Post in February one of the 50 best privately-managed companies in all of Canada. "Overall, our sales are up again this year, and so is market share."

Of course, not every company has the resources of a Top 40 distributor like Genumark. Still, Canadian firms that are a little smaller, like Image Group (asi/230059), have learned to play bigger. Under the label Cielo, Image Group recently began offering an in-house apparel brand that allows for made-to-order clothing. "This makes us a bit more unique," says Laura Hansen, president of Image Group. "The clothes are locally made and we can provide a large variety of colors. Customers can also make late tweaks to orders."

While Hansen doesn't mind customers making tweaks, she has actually strongly encouraged her staff to make a few of their own. Following the recession, Image Group brought in a consultant to help employees further improve their approach to sales and service. "We went back to the basics and we figured out who our ideal client is," she says. "We had been doing too much order-taking, but now we know how to prospect better."

And better prospecting has led to 10% growth for Image Group so far in 2012. Not exactly the numbers posted by Fairware, but in this environment, Hansen's not complaining. She does note a reality, though, about the Canadian business environment that all distributors north of the border notice: the impact that the U.S. economy has on Canada overall. Indeed, while Canada's banks and employment markets haven't been hit as hard as those in the U.S., most sectors in Canada often feel the effects of anything that's happening in the U.S. The economies are linked, and it's a reality that distributors know they have to acknowledge and plan for.

"Our economy is so tied to the U.S.," she says. "We think customers are going to be cautious, but we're optimistic."

Data Points