The business environment for incentives today is such that, even if the TARP Taxpayer Protection and Corporate Responsibility Act had never been conceived, things would still look pretty bleak. The fact is that the funding and enthusiasm for these programs have taken a turn downward.

"The overall mood is one of concern and caution," said Rodger Stotz, chair of the Industry Leadership Council of the Incentive Performance Center. "A study done by the Incentive Research Foundation back in October and November of last year looked at what was happening in 2008 and projections for 2009 in terms of travel as well as non-cash merchandise incentives. In both cases, those areas were seeing declines, whereas the year before there were projected increases."

Stotz believes declines in spending on incentive merchandise will be driven by three factors for the foreseeable future.

"One is because those incentive plans are based on performance, and it's challenging to meet goals right now," he said. "The second is that when you read unemployment figures, you realize that there will be fewer and fewer people enrolled in these programs. The third is that as companies review every expenditure, they'll cut back the amount of money they are spending on incentives programs."

Landry agreed, and added that the media focus won't help things in the near term, either.

"It's very challenging," he said. "We have a situation where companies' use or misuse of taxpayer funds has really come to the forefront. It monopolizes the evening news, and it's a real challenge for anyone in the incentive business to keep their heads above water and understand what role we play in the general economy. We've taken a series of black eyes. Incentive travel is where the media is focused right now, but I'm convinced that it's just a matter of time before that goes to merchandise. These incentive planners are going to recoil back from luxury travel and start looking at merchandise."

Of course, the downturn has impacted various incentive providers and practitioners generally. Some are really struggling, whereas others haven't been hit too hard—yet.

"On the merchandise side, we're seeing smaller numbers," Landry said. "Those numbers have really dwindled since January of this year. That's when we really started to get hit. In the past, companies might have done some kind of corporate gifting program with, say, 350 of their top producers. What they've done recently is ratcheted the bar up a little, so that instead of giving $200 gifts to 350 people, they might give $100 or $150 gifts to the top 200 people. Budgets have been cut back, numbers are getting smaller. It is what it is. It's the new economy, and we've all got to be prepared for it."

"It depends on who you are and what the composition of your business is," Mitchell said. "If you're the type of supplier who has business planned out well in advance, the first four or five of the past nine months didn't really see much change. Up until November [2008], our side of the business was toodling right along, but the retail side of our business started to feel softness back in the spring of 2008 and was really hit hard over that summer. But we didn't feel that until November or December. We were the last in, and we'll be the last out."

No matter how they might happen to be at the moment, though, they're all anxious to see signs of improvement.

"One of our biggest challenges is figuring out when our clients are going to exhale," Mitchell explained. "Everybody's holding their breath right now, waiting to see indications from the market and the government to see if we've reached the bottom. Investments in recognition will slow until we can get a better read and determine where we're going as an economy. Everyone's just retrenching. There's real reasons for it, but the primary motivator right now is fear, and fear is driven by uncertainty about whether we're at the bottom yet."