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cheap items are sufficient
There's a fine line to walk here. "Cheap" is good, but "cheapskate" is not so good.
Good qualities to aim for are compact and useful.
My all-time favorite promotional gifts were both. One was a simple pencil eraser with the company name on it; another was a tiny flashlight that fits on my keychain. I've kept both items around for years.
I'd still being doing business with them today, but I'm not in that business sector any more.
I'll second the warnings about 'cheap.' If all you can afford is a coffee cup, make it the best darn coffee cup available. I don't mean anything high-tech like stainless-steel with a computerized lid, I mean just the best-made plain-old coffee cup available.
(Not to go on about coffee cups, but it was a good example.)
I have received tons of promotional pens over the years. The ones I like are the ones that still work, and they are almost all 'name-brand' pens, not cheap no-name knock-offs.
USB flash drives are good. Just make sure that if you put software on it, you tell the client ahead of time, and make sure you've scanned it for malware. If you don't tell them, then the first thing many of them will do will be to format the drive -- A good idea for security, but terrible for your intended software promotion...
My four cents (too much coffee today) :)
oh, and welcome to WebmasterWorld [webmasterworld.com], shirielainerice!
welcome to you as well, lumenbeing!
It has a company name written along the length of the strap but I like the company so it doesn't bother me. Since everyone in the room likely has a similar ID tag attached to their person mine stands out which could be considered promotional.
Besides, it sounds like everyone will already have a favorite coffee mug. Follow a simple marketing principle...go for the under-served niche.