Licensing has come a long way since the early days, when it meant little more than sticking a logo on a mug or T-shirt. Today, licensing is big business – worth an estimated 38bn
in worldwide retail sales. And it will grow bigger as more and more companies recognise the value of exploiting licences at point of sale.
Character licensing remains the largest sector of the business, driven in recent years by movie studios and TV companies’ increasing eagerness to exploit their properties in as many ways as they can. Examples are legion: from Mighty Morphin Power Rangers to Gladiators and Baywatch. Such licences are attractive because they are high profile.
“Licensing is one of the main weapons a company can use to impact on sales in the short term,” says Simon Gresswell, marketing executive, fmcg promotions at licensing specialist Copyright Promotions. “There has been a tremendous amount of growth in interest in licensing for sales promotions and at point of sale.”
On-pack promotions have long been a promotional mainstay for grocery multiples, he adds. But only in the past two years have film and TV licences become big business.
Media exposure is critical for a successful licensing programme for both parties: the owner of the property wants to promote its property while the licensee wants to exploit the licence to sell its product. Get it right and a licensee can piggyback the multimillion-pound marketing campaign for a blockbuster movie’s release. But the scale of its potential rewards are balanced by the risk. Get it wrong and both character and product can sink without a trace.
By linking a product with a licensed property, the product receives the positive association and preconceptions of that property. Characters are used as a vehicle both to reward loyal customers and stimulate loyalty. They can add value and it can differentiate a brand in a particularly competitive sector.
“It’s a very powerful tool because you are riding on the back of a tremendous publicity machine and because your product becomes fashionable and contemporary,” Interfocus managing director Matthew Hooper believes. Interfocus has developed a number of licensing initiatives including a range of Simpsons branded cheeses for Express Foods and a licensing promotion which linked chocolate bar Time Out to the video release of Jurassic Park.
The aim of the Time Out promotion was to create “huge impact at point of sale when shelf space was dominated by confectionery assortments”, Hooper explains. The autumn video release date dovetailed neatly, and both products shared a broad consumer appeal. The subsequent promotion comprised an on-pack competition to win 10,000 video and 20,000 money-off vouchers. “It stimulated the trade to stock the product which otherwise might have proved difficult at the time,” he says.
But licensing has its pitfalls. When considering properties, a potential licensee must weigh up the respective benefits of selecting an established, traditional name – such as Bugs Bunny – which can cost more and for which tighter limits on exploitation might exist, against opting for a newer rising star – such as Speed Racer, a TV cartoon series produced by Fred Wolfe, the man behind Teenage Ninja Turtles. This route might offer greater ‘street cred’, but with less established properties, promotions can backfire if popular tastes change.
“You must ensure there is positive synergy between product and licensed property – that they both appeal to a similar age group and that each will enjoy a positive benefit,” Gresswell says. On-pack design must have visual impact, but not at the risk of swamping the brand.
Timing is also essential. An on-pack promotion tied to a licence usually has a shelf life of about eight or ten weeks. “That’s about as long as it takes to ride the promotional wave and make sure both activities fade so your product is not still associated with a licence that is no longer fashionable,” says Hooper. “You can make a lot of money very quickly. The downside is if you get it wrong, you can be left with millions of packs with an unfashionable promotion and this can have a lasting effect on consumer perceptions of your brand.”
However, some campaigns can run for longer. Interfocus devised a promotion for Express Foods involving Simpsons-branded cheeses – part of a campaign to encourage children to eat more cheese. Cheese portions were available in packs with a detachable Simpsons sticker and in bags which also included a Simpsons badge. The promotion ran for 18 months.
Longer campaigns are more often achieved with older, more established licences, explains Christopher Crouch, licensing manager at Yaffa Character Licensing. “Characters with a definite personality can be used effectively in promotions,” he says. Yaffa represents a number of properties including Popeye, The Smurfs and the Magic Eye hidden picture books.
Choosing the right character to fit a particular product’s individual needs is critical. Understanding the nuances between who’s in and who’s not is critical, not least because this can vary dramatically among children just a few months apart in age. But it’s no longer a children-only business, Crouch adds.
“Licensing has traditionally been seen primarily as a kids’ marketing device,” he says. “But increasingly, manufacturers are recognising the value of older, more established properties which can also be of significant appeal to older consumers.” Yaffa created a successful campaign for the character Hagar the Horrible, which featured in TV advertising for Skol beer for four years as well as posters and point- of-sale material.
The growing sophistication of licensed promotions is illustrated by the increasing use of licensed characters in above-the-line advertising campaigns for particular brands. Also, the way promotions are designed in-store, Gresswell believes. “Affinity branded promotions” are an emerging trend, he says. “This is where you link a burger brand with chips using a theme that connects both. This can increase traffic through a store, boosting both brands and the retailer’s sales.”
Another trend is the grouping of licensed promotions “to create an in-store story”, Gresswell adds. This is a concept Copyright Promotions is developing for retail clients including Marks & Spencer and BhS. And increasingly, characters created by brand owners to promote their own products are appearing in promotions interacting with third-party, licensed characters – such as Frosties’ Tony the Tiger, who has shared re cent on-pack promotions with Mighty Morphin Power Rangers and Sonic the Hedgehog.
The key is to make a licensed promotion work as hard as it can, he says. The company recently created a campaign for Lyons Tetley brand Quick Brew, which featured Hanna-Barbera characters and Tom & Jerry. Two different promotions ran on small and large packs. As well as giving away chocolates and egg cups, the promotion includes a back-of-pack video offer and inside the pack were games.
Tales of millions of pounds made through successful licensing campaigns are legendary but many in the industry believe that a solid property, carefully exploited over the long term makes better commercial sense both for licensor and promotional partner. In licensing terms, Teenage Mutant Ninja Turtles was a brief – if highly lucrative phenomenon: generating an estimated 200m in retail sales in just 18 months. But heavy licensing of the property combined with massive media exposure from movies and TV series meant that in the UK market in particular, after a year and a half the Turtles burned themselves out.
Other properties are more tightly controlled to limit the momentum built around characters. This ensures steady growth of awareness and a longer run for licensees. Characters do not have a typical shelf life – much depends on exposure, exploitation, taste and fashion. In this respect, licensing a new character – which often begins before the property is known, such as in the run-up to a movie release – is more an act of faith than a science.
Meanwhile, brand owners and licensing agents alike continue to look for the elusive “killer” licence that will give them a competitive edge. And they’re not just looking to the movies and TV. Sports events and competitions, charities and even corporate logos have a growing role to play – especially in the tea sector where most brands attempting to justify premium prices by running value added promotional activities. PG Tips alone has been associated with Comic Relief, the Olym- pics and World Wrestling Federation.
Today, brand owners looking to license a property for sales promotion have more characters than ever to choose from. But this increased supply has not made the business easier or any the less risky. For at the end of the day what counts above all else is correctly judging the public’s taste – and predicting that remains as random as it has ever been.