Thursday, October 13, 2011

Licensing: Battle For The High Street

From Broadcast:
Licensing: battle for the high street

With seemingly every show from TOWIE to Mad Men and Peppa Pig launching branded merchandise, Ann-Marie Corvin finds out what it can do for the brand - and the bottom line.

TV and character-branded clothing lines were once the domain of kids’ clothing stores, but a slew of cult reality and retro TV properties are attracting the interest of licensees and retailers of men’s and women’s apparel.

In August, a Mad Men-inspired clothing line, made in collaboration with the show’s designer, was launched through a retail deal with Banana Republic, while in May, kids’ broadcaster Nickelodeon teamed up with Savile Row tailor Richard James to launch a range of SpongeBob SquarePants suits and accessories onto the high-end clothing market.

UK independent production companies such as Lime TV are also experimenting with apparel merchandising due to the interest The Only Way Is Essex has generated a year since its launch. Although TOWIE does not yet have a direct-to-retail deal in place, a string of show-based lifestyle products – including hair straighteners, nightwear, fashion T-shirts and that all-important fake tan – are set to hit the high street this month via a number of official licensees.

Lime Pictures managing director Sean Marley says interest in the show has been so phenomenal that licensing agency CPLG has been brought on board to lead talks with licensees and retailers.

“It became clear that the weight of the potential business was too much to handle in the relatively short space of time that the show is on air,” he says.

It has been a learning experience for the production company, which was forced to trademark key slogans and catchphrases from the show after unofficial merchandisers went straight to market with knock-off ranges. “They did very nicely out of them too,” he says.

The official route takes longer. CPLG managing director Vickie O’Malley estimates it can take “up to 18 months” for a product to go from the ideas stage to the clothing rack – although in TOWIE’s case, it was only six.

Deals through multiple licensees do not grab as many headlines as an exclusive range with a high-street retailer, but are still the most common route to market, due mainly to economies of scale: a manufacturer can get apparel out to a range of shops and many more units can be shifted.

“With direct to retail, especially if it’s exclusive, the proposal has to be of sufficient value to offset the opportunity of taking it to the market in general,” O’Malley says.

Entertainment One UK, which looks after ubiquitous children’s property Peppa Pig for Ashley Baker Davies, tends to work closely with both parties, says head of licensing Andrew Carley.

“Licensees tend to be smaller outfits and are usually heavily committed to your products,” he says. “They offer a degree of loyalty that the retailer might not have. On the other hand, retailers are right at the coal face. You could argue that they are closer to what the consumer wants.”

According to Julie Quirke, director of licensing at V&S Entertainment, which produces hit CBeebies pre-school show Everything’s Rosie: “Direct to retail is a quick route to market for the brand owner but this tends to put a lot of responsibility onto the retailer rather than the licensee, so it can be very time-consuming for the retailer.”

Before indies get this far with a deal, O’Malley makes it clear that they shouldn’t think they will be able to “fund season two from the product range launched in season one”.

Standard royalty rates are around 12% of wholesale price and mark-up prices vary: if you take the full retail rate as being 50% higher, then for every T-shirt retailing for £25, the rights owner is looking to collect around £1.50 on every unit sold.

Then there is revenue share among the other parties involved, depending on how the deal has been financed. This may include the broadcaster, the licensee, the retailer and a licensing agent. Marley is confident that TOWIE has generated enough market interest to make the venture worthwhile.

Once a deal is in place, Carley advises brand owners to tread a fine line between safeguarding a property’s DNA and enabling licensees’ and retailers’ designers to interpret ideas from the initial style guide or ‘look book’ concepts into fashionable items that people actually want to wear.

“In clothing, we’ve always tried to give it a sense of fashion and avoid the straightforward ‘label slap’. We want to produce clothes that kids would wear even if they didn’t have Peppa on them.”

Carley adds that Entertainment One and ABD offer a style guide and a ‘look book’, which is revised every six months. “Rather than being a document where they have to adhere to what we say, it is a springboard for ideas. If they come to us with an idea and adopt something from the style guide, we are open to that.”

From the manufacturer’s point of view, trying to find licences that fit in with the ebb and flow of fashion is as much of a challenge as the logistical and cost variables involved in producing a clothing line. The apparel market has been tough this year, with failing cotton crops in the US and China causing costs to rocket by 30%.

As Elliott Matthews, executive director at clothing manufacturer Poetic Gem, acknowledges: “When your raw materials start to go up, that’s not a good place to be when the majority of your business is with value retailers. It’s also difficult to translate that increase to the customer at a time when everyone is cutting back.”

Poetic Gem recently hooked up with Cartoon Network, another brand owner keen to exploit its loyal fanbase of young adults who have grown up watching its shows.

“The retro market is fantastic and growing,” says Graham Saltmarsh, UK licensing director for Turner/Cartoon Network. “This venture started when our schedulers told us there was a real interest in our characters among 25-45 year-olds.”

Brand awareness

Turner’s in-house design team sat down and produced a ‘look book’ of graphics and designs based around Cartoon Network’s ‘heritage’ characters, including Johnny Bravo, Dexter’s Laboratory and Samurai Jack.

Poetic Gem was one of the manufacturers that came on board, and together they are working on a limited clothing range, Cartoon Network Originals, for Spring 2012.

“The strategy is all about building brand awareness,” says Matthews. “So we’ll start with the smaller retailers and indie stores, then move on to Top Man or Burton or Asos. After a few years, this may have a waterfall effect, allowing us to go to the mass market like Tesco, Matalan and George.”

According to Saltmarsh and Matthews, the ideal T-shirt wearer for this market is ‘Barbeque Dad’ – a 25-45 year-old male who wants to wear something that’s still fun and trendy, and is likely to strike up a nostalgic conversation at a party or family gathering.

Cartoon Network has also built a programming strand around this audience, CN Late, which plays out from 9pm-11pm daily. It was launched on 17 September, the date of Cartoon Network’s 18th Anniversary.

Viacom-owned kids channel Nickelodeon is now tailoring apparel for its adult fans, drawing on the knowledge that at least a third of the 16 million viewers who tuned into watch SpongeBob shows last year were over 18.

According to Mark Kingston, vice-president of Nickelodeon Consumer Products UK & Australia at MTV Networks, the high-end deals with Richard James and cult T-shirt retailer Johnny Cupcakes were borne out of the fact that the owners of both are SpongeBob fans.

“The key to apparel is to be true to the brand but also flexible when it comes to the designs,” he says. “We don’t do the creative, we let brands give it their own take. That way, you get something unique.”

Kingston refers to these partnerships as ‘halo deals’ because, while they may not directly generate that much extra money, they generate positive PR for the brand.

“Everyone watches what everyone else is doing. Other retailers pick up. If the high street and the grocers see fashionable plays on our characters in the high end, then they might buy into those properties again. That’s when a halo deal can become a revenue driver.”

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