The promo industry is on the upswing again.

North America distributor sales grew 5% in the third quarter compared to the same three-month period last year, according to data from the just-released Distributor Quarterly Sales Survey from ASI Research. The increase marks the largest year-over-year quarterly sales jump for the industry in more than two years – a sharp contrast to the two consecutive quarters of declines that kicked off 2025.

5%

The increase in promo distributors’ sales in the third quarter of 2025 compared to the same quarter last year

The third quarter brought some level of economic stability after a dizzying array of tariff announcements rocked the industry during Q2.

Q3 did open with a new lineup of reciprocal tariffs, going into effect in August, but it lacked the back-and-forth uncertainty that marked April and May – a trend that may have led to end-buyers being more likely to pursue promo projects they’d been putting off. The Q3 survey was fielded before President Donald Trump threatened another round of skyrocketing tariffs on Chinese goods, but the industry, in large part, seems like it is more optimistic.

“It’s encouraging to see a substantial rebound this quarter after a challenging few months for promo back in the spring and early summer,” said Nate Kucsma, ASI senior executive director of research. “Hopefully, it’s an indicator of broader stability that will lead to continued growth in the fourth quarter and a strong finish for 2025.”

Another sign of recovery? Unlike the previous quarter, more distributors reported sales increases than decreases in Q3 – 47% noting higher sales, compared to 32% who suffered declines. The percentage of distributors with increases was the highest in nearly two years.

Smyrna, GA-based distributor FireSign Inc. (asi/522741) reported Q3 as one of the best quarters in the company’s 20-year history, says co-founder Jen Lyles, thanks to her continued push fostering potential client relationships and building email and SEO marketing campaigns. That’s brought her a steady stream of business throughout 2025 despite the uncertainties, she says.

For Cole Stark, president of Wisconsin-based Gator Garb (asi/202667), a Counselor Best Place to Work, the distributor’s growth this quarter was almost unexpected. He had productive conversations with customers about pricing – and didn’t face the inventory challenges he was anticipating based on expectations that suppliers had delayed their shipments when high tariffs were in place.

“In my mind, I expected inventory to be gone because suppliers weren’t replenishing – they were holding on shipments,” Stark says. “So that fact that people were deep in inventory was great and made business a lot easier to do.”

For many, though, growth in promotional products industry sales for Q3 2025 was all about timing. Sherry Foutz, president of Advertising Ideas (asi/111325), almost always has a strong Q3, thanks to several tribal events within her niche of serving the Native American population near her base in New Mexico.

Mike Holm, who operates a Mankato, MN-based affiliate of Counselor Top 40 distributor Fully Promoted (asi/384000), attributes his more than 30% Q3 sales increase to closing projects much later than expected. It’s not that clients weren’t willing to spend eventually this year, he says – it’s that they waited to pull the trigger on projects until, say, July, rather than April or May as originally planned.

That was largely due to economic uncertainty, Holm heard from clients, but he also sees the effects from having “more hands in the cookie jar” – in other words, more approvals and voices involved in the promo ordering process than in the past.

“When it comes to higher prices on some things, limited budgets and just the economy as a whole,” Holm says, “there are probably more people watching what’s being spent and where it’s being spent.”

Not Out of the Woods

Consumer spending hesitation is a trend that could continue into the fourth quarter, with some distributors already noting a slow October. Jeanie Brown, an account executive at Counselor Top 40 distributor American Solutions for Business (ASB, asi/120075), has had a year of highs and lows – including both a “through-the-roof” July and a very slow season of clients that seem to be holding off on holiday orders.

She’s hopeful that November is going to be insanely busy with last-minute holiday orders, but she has spent the past few months leaning more heavily into prospecting new clients than she has in years.

“It’s like a rubber band,” says Robert Ewald, president of marketing agency Fresh Horizons Group (asi/198716) in Beloit, WI, who noted several clients pushing holiday projects later into Q4, and even into 2026. “It’s not gone – it’s just stretching.”

That continued hesitation, in turn, could explain lingering lower scores on the Counselor Confidence Index despite the sales increase this quarter. The index, Counselor’s measure of distributor financial health and business optimism, remained at 85 for the third quarter, with a projection of 87 for the remainder of the year. (The baseline for the index is 100.) Both figures were nearly identical to metrics in Q2, and much lower than the 2025 projection of 105 that was measured at the end of 2024.

Those concerns weren’t entirely unwarranted – just days after ASI Research completed its Q3 surveying of members, President Trump announced another potential round of heightened tariffs on China. The new levies, which are currently set to go into effect on or before Nov. 1, would increase rates to 130% from their current 30% rate as settled during recent trade negotiations.

However, the deviation between a lower confidence score and higher sales is a bit unusual – typically, the rise and fall of the Counselor Confidence mirrors that of industry sales growth and declines.

It’s a sign that distributors harbor lingering concerns. Nine in 10 distributors have hiked prices to some degree since December 2024, either due to tariff-specific costs or general inflation, though the majority of increases were less than 10%.

But more so than direct impacts on pricing, some distributors are finding that promo gets pushed to the wayside amid rising costs and lower profit margins for their clients – in other words, marketing dollars being taken away to account for higher costs in other areas. That can be particularly true in verticals like manufacturing that rely heavily on extensive imports of equipment or parts to operate.

One of President Richard Louise’s manufacturing clients at Mark Promotional Products (asi/261500), for example, reported $3 billion in additional costs in the third quarter alone – and it doesn’t make him optimistic for the remainder of the year.

“The uncertainty in the increased expenses on their production and manufacturing sides is affecting their ability to buy from us,” Louise says.

Even so, all size classifications of promo companies did experience growth in the third quarter, with the most substantial sales increases attributable to the largest promo firms, with annual sales of at least $1 million (3.6% increase) – and especially those distributors with over $5 million (7.9% increase in the quarter).

Brent Belles, president of Ohio-based distributor B-Squared (asi/129577), reported nearly 30% growth in the third quarter, thanks partially to a slew of companies marking major anniversaries in 2025. He recognizes the uncertainties of the current economic climate, but in his view, it’s not as uncertain as the end of 2024 because of the lack of a major election in November.

“I’m not a ‘Negative Nancy’ when it comes to the economy and markets being down meaning that people ‘aren’t buying,’” he says. “I mean, we’ve got 1,800 customers. Some of them won’t buy, sure; but most will.”

Looking Ahead

Regardless of where their Q3 sales fell, many distributors reported broader shifts in how clients were spending.

ASB’s Brown, for example, noted that she has started to spend more time working with HR departments, rather than marketing teams – an indicator that end-buyers could be shifting promo spend toward employee retention and appreciation initiatives instead of their own customers.

“They’re still putting a focus on their customers,” Brown says. “But I think everyone had a bit of a light bulb moment – realizing if you don’t keep your employees happy, you’re not going to be able to meet your customers’ needs.”

What One Word Describes Q3 2025?

Ewald noted a similar phenomenon, where companies might be buying fewer, higher-quality items to build out employee gifting kits.

Meanwhile, he says, some marketing dollars are moving more toward digital. As a full-service marketing agency that also offers digital advertising, that hasn’t affected Fresh Horizon Group’s bottom line – but Ewald did note that promotional hard goods were a weak link in the company’s relatively flat sales last quarter.

“They would spend less on the promo item to give away at the event,” he said, “and more to drive people to the event.”

Again, there is some level of “wait and see” – or “hang on tight,” as Louise of Mark Promotional Products puts it – left in the year, as we approach the Nov. 1 activation date on another 100% tariff on China and final deadlines for companies putting in holiday orders.

But much of the panic that characterized the first half of the year has dissipated – and promo, as it always does, just keeps chugging along.

“It seems like companies are doing well, and companies still have employees to treat well,” says Stark of Gator Garb. “And we’re a great industry for that.”