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What are the core benefits of licensing? Start Licensing’s Ian Downes picks the brains of Rose Marketing, Nerdy Banana, A Perry and The Makersss to find out.
One of the recurring questions I get asked by companies who haven’t been involved in licensing is ‘How do I get started in licensing?’ and ‘What are the benefits to me?’ These are questions I am happy to tackle – if you call your company Start Licensing, you have to accept you will get a few enquiries focused on getting a start in licensing!
I also think that for Licensing PLC as a whole, it’s important to educate companies and encourage them to start licensing. As the licensing business matures, it is increasingly important that new companies and sectors are developed by the industry. Otherwise, there is a real risk that things could stagnate.
New companies and categories can also help bring in fresh thinking, add unique distribution and also help educate the industry, particularly around issues like sustainability and new technology. Of course, one dynamic of licensing is that it binds together businesses from a range of sectors at different stages of their own development. Typically, a licensing programme might see a blend of companies, including well established brand names through to start-ups.
I was recently asked by the Department for Business and Trade to run a webinar for businesses who were interested in learning more about licensing, how it works and the potential benefits it might bring them. I thought a sensible way of addressing this topic was to ask a number of licensees to share their experience of licensing. I contacted five companies and asked them to reflect on the value of licensing to their business, the reason for developing licensed products and to share some of the benefits it has brought them.
“Licensing gives companies a competitive advantage, with the opportunity to achieve a point of differentiation.”
The first company I talked to was Rose Marketing UK. Rose specialises in licensed confectionery, including freeze at home ice pops. They are very active in the FMCG market and have built up a strong portfolio of licences, including Tango, Vimto, Robinson’s, Slush Puppie and Chupa Chups. The firm’s Licensing Director, Carl Richardson, explained that licensing was a strategic choice for Rose. It gave them the opportunity to achieve product differentiation in a crowded market, gain a competitive advantage and develop brand awareness at trade and consumer levels. Bear in mind they are in a market dominated by some big global players.
I asked Carl to highlight a specific example from their portfolio and how it had helped their business. He referenced their Chupa Chups license and its role in helping Rose to build their export business. Carl explains: “The Chupa Chups brand has wide international appeal and has facilitated the penetration of new export markets for our Freeze at Home products.
“We invested in new multi lingual packaging following the addition of a number of territories to our contract and have opened new business in France, The Netherlands, Germany, Spain, Poland , Greece, and Norway.”
In this case, licensing has been a door opener for Rose and accelerated their international growth. This hints at an emerging trend in licensing where companies are becoming more adept at and interested in multi territorial distribution. This approach to distribution used to be generally confined to toy companies and publishers but now it’s more common for licensees to seek out international opportunities.
One of the strengths of licensing from an IP owners’ perspective is that it allows them to explore a diverse range of commercial opportunities and markets. This is a particularly useful when it comes to new and emerging market sectors.
Print on demand e-commerce company Nerdy Banana are a good example of younger businesses who are fusing licensing with digital marketing successfully. Nerdy Banana develops products like the Snugzy – a ‘mini-me’ hybrid of a cushion and a plush toy. Their business offers a range of generic design options blended with a carefully selected portfolio of licenses sourced from the sporting world, including Manchester City, West Ham and Team GB.
Nerdy Banana founder Max Rodman explained the businesses rationale for incorporating licensed ranges into their offering, stating: “Personalisation is a booming £1bn market in the UK and the Nerdy Banana portfolio of DTC brands have been sat the forefront of the trend. As we looked to extend our market reach and create engaging consumer narrative, associating with sports and entertainment brands was the perfect vehicle.”
Interestingly Max also highlighted that, during Covid, more brands went online to do business and as such, customer acquisition costs escalated. Licensing gave Nerdy Banana a competitive advantage with the opportunity to achieve a point of differentiation.
Max went on to explain that licensing has delivered added value to his business in regards to content and engagement: “We’ve got some great relationships with all our partners but we’ve seen some really impactful activations with, for example, Manchester City through online quizzes, competitions, photo shoots and unique moments like meetings with players”.
For a business like Nerdy Banana, licensing provides a rich vein of content and a plethora of opportunities. This of course needs planning on both sides, but also a willingness from IP owners to work proactively with licensees.
Another trend to note in licensing is the growing importance of digital marketing and fan engagement. Rights owners need to be prepared to help manage their fan communities progressively and to integrate licensing into their plans.
I spoke to Steve Perry, Marketing Director of A. Perry and Company who have developed a line of licensed garden statues under license, including a collection of Aardman characters under their Primus brand – Aardman was their first venture into licensing.
Steve’s insights on their move into licensing reveals how a licensed range can help a company in a competitive sector insulate itself from competition.
“Primus are in a market that is design lead and, although driven by creativity, products can easily be imitated and copied – there is a relatively low barrier to entry,” said Steve, adding: “Licensing has enabled us to truly differentiate ourselves. We are able to sell something that cannot legally be imitated, giving us a real USP.”
Some companies fear that working with a well-established license will mean they lose their own identity. This is something that Primus’ experience demonstrates isn’t necessarily the case.
Steve continued: “In terms of marketing and branding, we have made a conscious effort to ensure that our own brand is always visible alongside our licensed products. We use our own logo and branding on all packaging and marketing materials, and we feel it’s important to highlight our own design contributions in any product descriptions or promotions.”
Another company that is new to licensing is The Makerss, creators of needle felt kits. Up to very recently, these had been exclusively based on their own designs. Company owner Steffi Stern signed a license with Aardman to develop a Robin Robin kit and has moved on to license other brands.
For Steffi, the motivation for using licensing was all about amplifying her message and reaching more people. She tells us: “As a small business owner, everything is about stories. How does it fit with the big picture and growing the business, but also introducing more people to needle felting. Working with licenses has helped both grow the business and raise awareness about a really exciting craft.”
It was also useful to get a rightsholder’s perspective on licensing and why they engage with the licensing market. Rob Goodchild from Aardman offered this insight: “We license our brands in order to generate awareness, revenue and brand touchpoints. Our licensing business is the scalable element of what we do – it can generate business exponentially and help finance future productions.
“It’s also a great way for fans to engage with our IPs, offering them products and experiences that can take them beyond the original content. A successful licensing programme is often seen as the litmus test for a brand’s success in any market. If your brand touches people enough for them to part with money to enhance their experience or express their fandom, then you are on the right track.”
Current market conditions are tough and there is increased competition. In this context, it’s sensible to take stock and reflect on things. My conversations with licensees suggest they are very clear on the benefits that licensing can bring businesses. It is probably a good moment to go back to basics and reflect on why companies should start licensing.
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