Just as character licensing covers properties as diverse as veteran cartoons to the heroes of blockbuster sci-fi films, so clients turn to this marketing strategy for a wide variety of objectives.
But however it is used and whichever character is chosen, its fundamental power lies in achieving instant brand awareness.
The cartoons, characters and personalities could be on TV every day or originate in a film that’s backed by a major marketing campaign.
Brand owners can link their products to a well-known set of characters to bring freshness and colour to regular seasonal lines, such as Cadbury’s long-term relationship with Warner Brothers’ cartoon characters for selection boxes and Easter eggs.
Character licensing can also be used tactically to raise a brand’s profile and achieve a short-term sales boost.
David Moore, chairman of sales promotion and marketing consultancy Twenty20CbH, says: “Typhoo Tea, for example, ran four or five licensed promotions back to back, offering, among other things, Wallace & Gromit premiums. The brand achieved its biggest market share for six years.”
The strategy could be part of a long-term investment where the licensed product becomes a brand in its own right. Sainsbury’s, for example, has been producing Mr Men yogurts for more than ten years.
Kirk Bloomgarden, president of the entertainment division at the Copyright Promotions Licensing Group (CPLG), the agent for a range of properties including Mr Men, says: “These are brands that consumers now expect to see on the shelf. There is a lot of confidence and trust in the product.”
Long-term link-ups allow manufacturers to exploit their sponsorship fully with in- and out-of-store promotions to both the trade and consumers.
Brand owners may be prepared to make a major investment by linking up with a film release. These are riskier ventures but ones which can increase sales massively. Moore says: “On most occasions, film licensing is very risky. It offers no guarantees. Recent examples include the much-hyped films Godzilla and The New Avengers, both of which were promotional and commercial disasters.
“The most suitable films for promotions or merchandising are sequels. Indeed, the James Bond movies and Star Wars, as well as the next Austin Powers film, are about as close as you can get to guarantees.”
Film tie-ins involve an intense period of licensing activity over a short period of time – about six months compared with maybe five years for a TV series.
Some properties, known as “evergreens”, last for decades. This year, The Simpsons celebrates its tenth anniversary with a worldwide promotion called The Simpsons Global Fanfest. The Mr Men characters are 25 years old, while Rupert the Bear is almost 80 years old.
Many of the oldest characters originate from publishing. Parents remember cartoons and stories from their childhood and read the same books to their children, and even grandchildren. Well-loved characters such as Thomas the Tank Engine feature widely on, for example, dairy products or tinned pasta packaging. These are staple foods which parents have confidence in and which can command a price premium.
Dave Lawrence, head of Kids Insight, the research division of marketing consultancy Logistix Kids, says: “On the whole, parents are very positive about character licensing. It gets the child involved in making a decision about food. There are some negative connotations to ‘pester power’, particularly with very young children. But, as with all marketing principles, it’s based on product acceptance. If the child will eat it, it’s not an issue.”
Fast-food restaurants are experts at using the massive exposure of Hollywood film releases to achieve a short-term sales boost. They often have tie-ups with film promotions to get people into restaurants using mechanisms such as scratchcards and sweep-stakes. By offering children something exciting and different – Bart Simpson meals with figurines and comics, themed Happy Meals, and so on – they often increase customer numbers.
Third-party tie-ins with well-known brands such as Burger King and McDonald’s maintain brand awareness and benefit both parties.
Character licensing has traditionally been very effective at targeting six- to 11-year-old boys. Newer properties such as Buffy the Vampire Slayer – owned by Twentieth Century Fox – are gearing up to attract teenage girls. Meanwhile, the success of BBC series the Teletubbies opened people’s eyes to the potential for targeting pre-school children.
Lawrence points out that older children are less drawn to character merchandising on consumer goods. But merchandising in fields such as sport – for example, when it is based around football teams – appeals to a wide audience.
The royalties manufacturers must pay to the licensing agent or licenser vary according to the sector. In any case, royalties have to be paid for each unit sold.
Bloomgarden says this costs less with consumer goods because margins are already tight. By contrast, the royalties on clothes, stationery, toys and gifts are “double digit”.
There is also a minimum guarantee: the amount of money the licensee must pay during the term of the agreement (usually about a year, but for a toy it could be up to five years).
Moore says: “When approaching licensing agreements, one of the best rules of thumb is to work on the principle that the sponsor’s fee should be the first ten per cent of the budget.”
The organisation negotiating the licensing deal, whether it be an independent broker such as the CPLG or the licence owner dealing direct, will insist that the characters are used in an approved manner. A detailed style guide is often provided. If new drawings of characters are permitted, it may be that only approved illustrators are allowed to do them.
Michelle Hocking, an associate director at integrated agency Milton pdm, says: “It is important to be aware of the character licence-owner’s rules and regulations on use of their characters. For example, Warner Brothers and Walt Disney do not allow their characters to endorse a product.”
This means that for pack designs and point-of-sale material characters such as Daffy Duck are not allowed to be shown drinking, eating – or even touching – the product.
Hocking says: “Character licensing is cost-effective if you choose the right character for the brand. If it is irreverent, you could turn off the purchaser, which could be the mother. If it is too soft, it may not appeal to the child.”
Apart from constantly assessing new film, TV and book characters’ potential, the owners or agents of licensed properties have to seek out new product sectors.
Twentieth Century Fox Licensing & Merchandising International (TCFLMI) has spent the past 18 months developing a range of Simpsons-branded Bensons Crisps that are designed to appeal to both adults and children. They include Bart Simpson Eat My Shorts pepperoni pizza flavour snacks and Homer Simpson-branded Couch Potato Chips. A Bart Simpson-shaped ice-cream – made by Birds Eye Wall’s – will be launched this summer.
TCFLMI vice-president and managing director Peter Byrne stresses that new technology is opening up a wide range of possibilities to extend character licensing. For example, voice chip technology allows companies to produce innovative products such as talking clocks and watches or character figurines which seem to interact by responding to each other’s speech. “The product becomes not just a toy but a gift,” says Byrne. “It takes the toys to adults, who can have them on their desks, for example.”
As more and more young people acquire mobile phones and computers, licensing experts are busily exploring ways to exploit these sectors. Themed mouse mats and mobile holders are just the tip of the iceberg. Byrne says: “You can’t no longer just do a T-shirt, cap and mug.”
So long as consumers keep going to the cinema and watching TV, character licensing is destined to grow. A widening pool of brand owners are prepared to pay to link their product to another company’s creation in the perennial hope of catching the consumer’s eye.