This year looks like a bumper one for entertainment licensing. Lucozade has signed up Tomb Raider computer game character Lara Croft, BT is breaking its new ET campaign, and no one can have failed to notice that Star Wars and The Force will be with us once again.
Entertainment licensing is no more than a solution to a marketing problem. Marketers and their agencies should routinely consider its application to their business as one of the proven techniques available to them. However, Hollywood can be a seductive beast many a brand manager has forgotten the basics and been dazzled by its glamour.
Essentially the licenser (the company which owns the property) is selling a product and looking for revenue, as well as the ability to create consumer awareness. A defined objective and a dispassionate assessment of relevance are more valuable to both parties than tickets to the premiere.
Companies which sign licensing contracts fall into two broad categories. The first comprises those looking to add value to, or create differentiation in products which already exist toys or burgers, for example. The second reason companies try licensing is because they want to borrow the values of the event, such as Pizza Hut’s connection with Star Wars. In both cases the links attempt to establish or reinforce specific brand attributes, while generating excitement through association.
In either type of deal the rewards can be significant, both for licenser and licensee. For major properties, licensing revenues can generate as much, if not more than the box office. This is in addition to the extra marketing impact these deals deliver. Importantly for the licensee, delivery of the marketing objective whether awareness and/or volume growth can be easily tracked and measured.
Involvement in entertainment licensing can be in either the long or short term. Tactical use, on a property by property basis can bring high short-term rewards. However, this approach carries the highest risks. Entertainment is not a science and no one can guarantee a hit, therefore decisions are based on a calculation of the odds.
But longer term involvement allows risk to be spread with a portfolio approach. This results in better management of opportunities and justifies investment of the time required to understand and manage the deal. Yet too many companies forget that their investment can and should be managed as closely as their media budget.
Animation or “event” properties, such as Jurassic Park, start planning up to three years in advance. Regular contact with the studio representatives ensures that your interest remains top of mind and you are kept informed of the changes that occur as a project develops. Talking to other partners involved with the property is also essential.
Strong partnerships develop where everyone understands the others’ objectives and understands that success at the box office drives the deal. This, coupled with realistic expectations, should deliver both critical acclaim and brand value.
Simon Spalding is European head of consumer products at DreamWorks