The Marketing Manager's Yearbook 2009
Lessons of Licensing
A Formula for Success
Kelvyn Gardner clarifi es the mystery surrounding the licensing industry and explains how it can benefit
those who have failed to recognise its wealth of potential.
The formula for success in marketing – licensing. Well, it’s the start of another new year so why not commence
with a bold claim? Bold, maybe, but I’m convinced it’s true. As someone who has earned a living from the
licensing business for 27 years, and started two companies in that time entirely dependent on licensing for
their success, I think my opinion carries some weight.
Secret World
Those of us in the licensing business occupy what sometimes seems like a secret world. We are not
understood, or even misunderstood, by the majority of the public, the press, or business as a whole. We’re
basically unknown. The way we think about opportunity, the places we look to for inspiration and ideas, the
channels we follow to secure revenue, retail space and promotions are not those followed by the majority of
the companies working in UK plc. We need to remind ourselves of this, to pinch ourselves occasionally before
we become convinced that our quaint ways are open to everyone. They are, in fact, open to everyone, but
only insofar as business at large can look into our world and understand enough of it to take the plunge.
A trawl through licensing industry reference books such as The Guide to the Licensing World or Licensing
Pages indicates that, in the UK, there are around 600 manufacturers or marketing companies that regularly
use licensing as a marketing tool. Only 600! How many consumer goods companies, for one category alone,
are there in the UK? 10,000? 20? Clearly there are far more companies not using licensing than taking up the
opportunities that licensing offers. I’d like to encourage anyone reading this to give licensing a try.
Licensing in Practice
Let me give you an example. For over 100 years Lightbody of Hamilton was a Scottish regional bakery chain
with some 30 shops. In early 1994 they looked into the future and saw that it did not include them. They
took the decision to sell off the shops, build a new plant and supply supermarkets with birthday and other
celebration cakes. Starting this new venture in 1996, they went from a turnover of zero to £50 million in less
than ten years, half of which was revenue from licensed cakes. The company completed a successful £47
million merger with the Finsbury Food Group this year.
While birthday cakes may seem an obvious use for famous children’s characters, I’d like to encourage you to
believe that, with a few exceptions, the right licence can be found for virtually any product, and bring success
with it. High quality electric tyre-infl ation pumps are a long way from the bakery business, but they are a big
success for the licensee of Michelin for this category. JCB, another ‘chunky’ brand if ever there was one, has
had great success with heavy-duty footwear and work boots. A few years ago I arranged a deal licensing a live
version of the TV game show Family Fortunes for Butlin’s holiday parks. All of these deals show the diversity of
the opportunity that licensing has for you.
Misconceptions
There are, of course, misconceptions about licensing and the costs involved. At a trade function last year I
ran into a very senior staffer from the IPA. Upon discovering my presence as head of the UK licensing trade
association, this person assured me that licensing famous characters was so ridiculously expensive that it
was cheaper for a company to develop its own. I was quite frankly shocked to hear such a fallacy. Licensors
and agents want paying, of course, for the use of their intellectual property (IP), but quite simply, even the
biggest of licensing deals is cheap compared to the costs of establishing your own character or brand. Even
if it costs you a six-fi gure sum to get onboard with a licence as big as Star Wars, Doctor Who or Barbie – and
six-fi gure sums are the high-end exceptions and not the rule – that’s a snip given the weight of the IP you’re
buying into.
I also hear from marketers that licensing is all very well for low-profi le businesses who need the association
with famous characters to make up for their otherwise lack of trade impact. Such associations do work well,
no doubt, but you only have to look at powerful brands such as Nestlé or Yoplait, who have gained greatly
through the strategic use of licensed promotions to support already huge brands such as Frubes or Yop, to
see that licensing can and does work for established brands.
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Open Arms
Here’s another thing worth knowing: if you are new to licensing, the industry will welcome you with open
arms. More than any other business sector I know, licensing, for the most part, is made up of companies who
recognise that a good deal is one that all parties are happy with. Licensors are happy to share success with
you. Is it competitive? Do rights sometimes go to the highest bidder? Of course they do, but, on the whole, fair
deals are struck and both licensor and licensee expect to make their profi ts from real sales and the royalties
that accrue from them.
Merchandise covering many areas of consumer goods are produced by established, regular licensees who
have worked in the sector for some time and who are respected and trusted by licensors and retailers alike.
That’s certainly not to say that this is a ‘closed shop’ of any kind. Far from it. Licensors welcome new blood
into the industry. The holy grail is, collectively, companies who approach licensors to look for rights on products
not yet established in licensing. If your exclusive widget or new-fangled piece of sports equipment is in a
category not licensed to date, this is both ‘found money’ for the licensor plus the chance to move their IP
into a new product, or even new industry sector. Selling licences to manufacturers is all about ‘borrowing the
competence’ of those manufacturers. If your competence is in a new, uncharted fi eld, this is fresh air for the
licensor and you can add a whole new skill set to apply to his/her IP.
As new products proliferate, so do the licensing opportunities for those products. However, even if you work in
a very traditional fi eld, I’m sure you can fi nd the right licence at the right price for your company to benefi t. If you
need assistance taking your fi rst steps in licensing, I can, naturally, recommend that you take up membership of
LIMA. We can help you directly, and also give you details of agents, consultants and other support companies
who can assist you professionally and in greater depth to make sure that licensing works effectively for you.
Differentiating your products from your competitors is getting harder than ever, and fi ghting for space at retail
can be a battle royal. Let the power of licensing come to your aid: I know you won’t regret it.
Kelvyn Gardner is Managing Director of LIMA UK, the licensing industry trade association. He has worked in
licensing for many years, and currently also acts as licensing consultant to a number of leading licensees.
He can be contacted at kgardner@licensing.org.