Mickey, Winnie, Frado, Harry and SpongeBob are billion dollar brands. They’re characters who generate billions of dollars in retail sales. Pick the right one and it can be a winning formula for increasing your sales.
Kids characters generate billions of dollars in retail sales and royalty revenues to IP owners. Some of the biggest entertainment properties have grown to billion dollar plus retail franchises including Star Wars, Power Rangers, Batman and Winnie The Pooh to name a few. According to LIMA, the Licensing Industry Merchandisers’ Association, character-based products generate almost $113 billion worldwide in 2015, roughly 45% of the $251.7 billion total retail sales of all licensed products.
Many businesses are unaware of the benefits that a good character licensing partnership can bring to their businesses. They are always more concerned about the upfront licensing fees they have to pay, but many fail to recognize the profits and brand longevity a good character licensing deal can bring to them.
The biggest benefit is a higher sales volume, as the right character can boost the aesthetics of your product and significantly drive sales. Character licensing is also a great tactic for getting brand recognition for your product or service without the big advertising expenses. Characters are successfully used to increase the profile of products and services in a highly competitive market. They draw attention through instant recognition, increase product acceptance and enhance the perceived value or a product or service. That’s why many companies consistently license characters year after year.
One of my clients was a new toy company from Australia who wanted to enter the US toy market. Trying to build a new toy brand in the US is a very expensive proposition. Instead, we licensed several well-known kids characters that had big licensing programs with lots of licensed products at retail. These characters gave the company immediate access to those retailers. By using this strategy, the toy company was able to get into the US market faster and at a much lower cost than building recognition for their own brand.
Characters are discretionary by virtue of the nature of the IP. Generally products developed around these types of IP are totally discretionary. Retail sales are dependent on the character popularity, the right kind of products, and changes in the economy. Successful character products must be the right fit between the character essence and the product or service. If it’s a bad fit, it won’t sell. While not all characters are runaway hits, if it’s extremely popular it could overwhelm your production ability. If it’s a new or unknown character, a lack of (retail) support for the character by the IP owner could leave your products stranded in the marketplace.
What makes a character property a licensing success? While there is no specific formula, there are a several key characteristics that can make it a successful property at retail.
The first is the characters and a story line that resonates well with the viewer. In the case of kids, it lets them extend the characters into their own play activities, such as dressing up like the characters, recreating the story line in some form, or collecting the characters.
Exposure is one of the most important things that makes a character licensable. Movies and TV shows are concentrated marketing that exposes the characters to millions of viewers. It drives the potential for a big merchandise hit because these forms of media generate significant consumer exposure. The internet and digital technologies such as virtual worlds, online games, apps and social media sites offer options to traditional media for creating market recognition.
The viewer needs to have an emotional connection with the character. They are able to create a bond between themselves and the character. A good example of this is Snoopy. People relate to his alter egos and hidden talents, or Homer Simpson and how he struggles with mid-male-life.
Does the character share an interest with the viewer? This could range from planes and trains to fashion and make-up. The character itself can even become the object of association – for example, people who like cute/whimsical are drawn to licensed characters such as Miffy, or kids who like trains are attracted to Thomas.
It really helps if the character is loveable, nice and witty – all the same reasons why you may choose to be friends with a person. Successful characters such as Winnie the Pooh is crying out to be loved, which is its main appeal.
Don’t underestimate the attractiveness of characters at retail. While there are many products and services that succeed with character licensing, it’s not enough to slap the latest character on your product and hope for the best. Children may be fickle but they are not stupid.
While nothing is a sure thing, keeping these characteristics in mind when licensing a character property offers the best possibility for success at retail.