Singing the praises of marketing’s hidden hero: How licensing can help brands grow
Brand extension through licensing, a business model in which a third party manufacturer produces and distributes products on behalf of another brand, has long been flying under the radar for marketers. However, an increasing number of brand owners are recognising the financial as well as strategic benefits of expanding their offers through licensing, using the approach to generate new revenue streams, reach new audiences, and strengthen their brand’s position in the market. When done correctly, licensing is an effective tool in expanding a company’s offer, tapping into new opportunities and enabling fans of a brand to enjoy it in new ways and occasions. Just take American-style baking destination, The Hummingbird Bakery: licensing has proven to be an ideal model for leveraging the brand’s widespread popularity, with a new, beautifully inspired gift range, developed in partnership with specialist manufacturer Scoop Designs, just launching exclusively on Amazon.com.
Overall, licensing as an industry is continuing to flourish, with the European region responsible for nearly a fourth of the $241.5 billion of licensed merchandise sold globally. In recent years, we have seen an upsurge in the general market outlook, with retailers expressing a more positive view on growth and consumer spending which, naturally, translates into a greater demand for products. At last month’s Brand Licensing Europe (BLE), the number one trade show for the European licensing world , it was encouraging to see how the industry as a whole is diversifying, with a broader scope of brands opening up to extending their reach into new product categories. Fitness vlogger and social media entrepreneur, Cassey Ho, hosted a well-attended key note at the show, discussing how she has managed to build a successful apparel brand on the back of her 2.6 billion subscriber ‘Blogilates’ YouTube channel. Her appearance highlighted an overall increase in the show’s focus on properties born in the online space and also indicates how new media celebrities are increasingly exploring the opportunities to expand their brands via licensing.
Meanwhile (if my BLE observations are anything to go by) we can expect to see a continued interest in the licensing of corporate trademarks going forward, with several high-profile companies making a first-time appearance as exhibitors at last month’s show. German automotive giant, Volkswagen, made a significant splash despite the recent emission related controversy, taking out a large booth complete with a 50s inspired diner décor and retro-style camper van as centre piece. It certainly seemed a well-considered move playing up the heritage-aspect of the brand and in general, people I spoke to did not believe that its merchandise programme has been poorly affected by the core product scandal. Overall, nostalgia is an important trend in licensing at the moment with other properties, such as Betty Boop and Aardman, celebrating milestone anniversaries at the BLE show.
In 2001, when I first joined Beanstalk, one of the world’s leading brand extension agencies, licensing as a business was still in large part dominated by character and entertainment properties. At that time, the entertainment category alone accounted for over $56.5 billion (34%) in worldwide retail sales, compared to $31.5 billion (19%) amassed by corporate brands and trademarks. Almost 15 years on, the industry is still led by the entertainment sector but other types of properties are on the rise with fashion and sports reporting 2014 retail sales of $29 billion and $26 billion respectively. Overall, it is encouraging to see how Marketing’s hidden hero (yes, that would be licensing) is slowly making its way up the ladder of public consciousness – in fact, Beanstalk co-founder and chairman, Michael Stone, is teaching a course on licensing at Long Island University this year. I would like to argue that brand extension through licensing is one of the most dynamic and consumer-reflective models for product development that exists. I look forward to seeing the industry grow even greater in coming years.
Lisa Reiner is the Managing Director, Europe & Asia Pacific, of Beanstalk, a global brand extension agency. To find out more, please visit: www.beanstalk.com.