Linking the 20th century’s greatest physicist with a sci-fi puppet to promote a Japanese car may appear an odd combination.
Yet Daihatsu’s decision to use Albert Einstein and Brains from Thunderbirds in a campaign for its new model the Move – using the caption “Weird on the outside, Clever on the inside” – illustrates perfectly the role of character licensing in modern marketing.
Other names considered for the campaign included Dr Spock, Dali, Superman and Patrick Moore.
Whether Einstein would have approved of his image being used in such a way more than 40 years after his death is a moot point. Today, his name means money: and Daihatsu, through its agency Banks Hoggins O’Shea, had to pay a hefty fee to the Hulton Getty Picture Collection, and also make a contribution to the Einstein estate, to use it. Rather less strings had to be pulled to license Brains from PolyGram.
The use – and cost – of licensing characters to help marketing campaigns has increased significantly in recent years. Yet rights owners are introducing stricter controls on who they sell licences to and how much they sell them for. Many larger companies, such as Disney, prefer to negotiate worldwide or pan-European licensing deals.
The global market for licensing has never been stronger, reaching a new peak last year of $112bn (73bn), according to industry estimates at the Licensing 98 show in New York. However, that figure covers all forms of licensing, with the vast majority accounted for by licensed toys and other products. There are no separate figures for the licensing of characters for use in advertising or marketing promotions.
The largest category within licensing, worth $20bn (13bn), was the entertainment sector – which includes core classics from Disney, Warner Bros’ Looney Tunes series and the BBC’s Teletubbies.
Jonathan Fingerhut, of marketing agency Fingerhut Consulting, spent many years arranging licensing deals for his brand clients. He says: “The market has changed enormously over the past ten years from being a niche area used by a few brands to being an essential part of the marketing mix.
“In the past it was very much a reactive sector as rights owners waited to be asked. Now they will sell their characters to the brands they want to be associated with,” he adds.
For most brand managers the benefits of linking with well-known characters with whom their consumers relate outweigh the costs and the time-consuming negotiations involved.
As an example, sales promotion consultancy The Marketing Store Worldwide negotiated with Warner Bros to use the Looney Tunes’ characters for Walkers Crisps’ 12-month Tazo discs promotion. The tie-up was appropriate because the images appeal to children as well as to their parents who grew up watching the cartoons. All the company’s promotions are researched nine months in advance so it was also essential that the characters chosen did not lose their appeal before the campaign went live. “These characters can re-invent themselves and were superbly rebranded by Warner Bros during the World Cup,” says The Marketing Store’s director Andrew Kingham.
He adds that the high cost of licensing, which can be as much as ten per cent of the total marketing spend, means brands must also ensure they fully exploit any licence. If they are involved with a large music or sporting event it is not enough simply to use an accredited logo; brands should also give away merchandise or free tickets. If characters are involved, then launching a range of collectables, such as Tazos, will help to lock in consumers.
Premier Brands’ Typhoo Tea also licenses characters that are well known and unlikely to bring its own name into disrepute. Its sales promotion agency CbH licensed Wallace & Gromit from BBC Worldwide for two five-month on-pack campaigns.
The first promotion encouraged consumers to collect figurines from the films and to send away for themed flasks and mugs, while the second broadened the choice of products to include egg cups and character-shaped salt and pepper shakers. In total more than 2 million pieces of merchandise were dispatched and sales increased threefold during the first promotion alone.
Paul Bolland, contracts manager for Typhoo, says: “We are looking for longevity from the characters we use to attract people to the brand. We trade on quality and the Wallace & Gromit name gave parents confidence in the items we were promoting.”
Another company to choose Wallace & Gromit is Kellogg, which in the past has also linked its on-pack promotions with the latest blockbuster movie or popular children’s TV shows such as Gladiators.
Marketing operations manager David Walker says licensing adds value and topical interest. “This is particularly true for brands that are bought by families. The key to success is to ensure the correct fit between our products and the licensed property. You need something that is not readily available and, most importantly, you must get your timing right,” he says.
Typhoo and Kellogg are two of only a handful of brands that BBC Worldwide will allow its characters to be associated with, because its licensing policy remains extremely strict. The success of characters such as Wallace and Gromit and in particular the Teletubbies is helping to develop the corporation’s new Global Brand Development division.
The BBC earned 23m from licensing the Teletubbies last year, with merchandising accounting for 17 per cent, compared with 43 per cent for video and 11 per cent for books. This excludes royalties collected in the US, where Teletubbies are licensed under a separate agreement with Ragdoll Productions.
BBC Worldwide’s head of global brand marketing, children’s genre, Tracey Hinchliffe, is recruiting a new brand manager – and is receiving many applications from marketers working within the packaged goods sector as a result. This, she says, is evidence that the marketing industry is taking licensing more seriously.
“We see licensing as brand extensions for us and the money earned is re-invested into the programmes. Yet we turn down hundreds of approaches from companies we do not regard as suitable. A company must have products of the quality we expect, have strong distribution and be one of the market leaders in its field,” she says.
As well as using fictitious or dead characters there is a growing trend in licensing to use the image of a living celebrity to endorse a product or to appear in a series of advertising campaigns, such as Gary Lineker and Walkers Crisps.
For example, licensing agency ADM Associates is also exploiting the current football craze and has licensing agreements running for footballer-shaped bottles in the strips of the top Premiership clubs and a range of lollypop tins endorsed by players including Denis Bergkamp, Paul Gasgoigne, Paul Ince and Jamie Redknapp.
While some brands are using sporting heroes, others have chosen musical ones – perhaps the best known example being PepsiCo’s licensing agreements with stars such as Madonna, Michael Jackson, Tina Turner, the Spice Girls and Boyzone.
The link benefits both parties because record labels are aware of the massive rewards from placing the image of an act on millions of soft drink cans around the world.
The on-pack Spice Girls promotion gave fans the chance to obtain an exclusive CD if they collected 20 ring-pulls. A total of 600,000 CDs were distributed, representing 12 million cans, and the tie-up played a major role in helping Virgin Records promote the girls in a number of new international markets.
Of course, associating with music stars can be risky, especially if a band attracts poor publicity part way through a promotion. The risk is similar if brands use the name or characters from a blockbuster film, which may not be as successful at the box office as the licensing agency had claimed it would be months before release. One current example is Godzilla which received a negative response from film critics. As far as licensed merchandise and toys are concerned, this means the film is unlikely to be as successful in the playgrounds as Jurassic Park was a few years ago.
Obviously, brands which sign up stars before they become stars can reap substantial rewards: the downside, of course, is that guessing which bands, sporting heroes, TV characters and toys will top next year’s charts is a gamble.
For marketers who don’t like risk, there can be considerable benefits from signing longer-term deals with characters with proven longevity – like James Bond, Elvis and the crew of Star Trek’s starship Enterprise, all of whom are now appearing on Visa cards from the Bank of Scotland, in association with licensing and marketing consultancy Trans National.
There are already more than 15,000 Star Trek card holders and 2,000 James Bond members, all attracted through fan clubs, Internet sites and advertising. The rights owners are paid a percentage royalty while, for the financial companies, it is a useful way of bringing new people into the credit card market.
Long-term licensing can also be used to link with a classic children’s story or TV programme. Licensing agency Design Rights International, for instance, has joined forces with rights owner Alltime Entertainment to promote a worldwide licensing programme for the children’s classic Watership Down. The novel was published in 1973 and more than 50 million copies worldwide have been sold. Next year is the 20th anniversary of the animated film and the theme tune Bright Eyes, and Alltime Entertainment is producing a new television series.
Assuming you pick the right one, licensing the image of a popular character should not only increase sales among existing customers but attract new consumers too. And you don’t have to be Einstein to see the benefits of that.