Imagine Barbie, Action Man and SpongeBob SquarePants all in a bicycle race. Then add Willy Wonka to the field, on a Kawasaki 1200. This essentially sums up the character licensing market in recent months and, worryingly for those only able to afford a Raleigh Tiger, the Kawasakis of the confectionery world are showing a growing interest in character licensing.
Nestlé Rowntree’s tie-up with the film of Roald Dahl’s classic book Charlie and the Chocolate Factory has been one of the most successful licensed launches to date. The combined sales of the three chocolate bars that Nestlé launched to coincide with the film - Triple Dazzle Caramel, Whipple Scrumptious Fudgemallow Delight and Nutty Crunch Surprise - have already passed £5.8m. Graham Walker, sales communications manager at Nestlé Rowntree, says: “The film was basically a 5,400-second advert for our chocolate. That’s why it’s had such an impact.”
Next year Nestlé will be launching products tied up with the Bratz brand, whose doll sales are £80m. It will also be linking with the Action Man ATOM characters, taking advantage of Hasbro’s marketing support, and will be doing seasonal stuff with Wonka and Winnie the Pooh.
However, the character licensing market in general is flat, and there is some suggestion that those who follow a more ‘evergreen’, or constant strategy, using characters that benefit from regular airtime on TV or strong market presence, that can be rolled out week after week, are under pressure from one-off licences.
For suppliers such as Bon Bon Buddies, Kinnerton and Mr Lucky Bags, which derive the vast majority of their sales from character-licensed products, this could spell trouble. However, Pauline Howarth, licence and design director at Bon Bon Buddies, says these one-off events should ideally not represent the lion’s share of sales during their life cycle.
The majority should ideally come from evergreen properties. She says: “Because this is our entire business, we need to make sure we don’t have exaggerated peaks and troughs.”
But the fact that Hollywood is starting to increase its interest in franchising out its film characters could be of some concern to such companies. Next year will be extremely busy for film companies, with blockbuster releases to include Pixar’s new film Cars, the sequel to Pirates of the Caribbean, and Ice Age 2. The fact that film companies are also increasing the longevity of their movies with DVD launches and extended marketing campaigns is also starting to impinge on the licences of evergreen specialists.
However, the potential for evergreen properties is still there, as the growth in children’s programming attests. There are now 28 children’s TV channels available in the UK, and 86 ‘premium’ character properties available to licensees. Yet the main problem at the moment is that many marketers don’t understand how children think, according to Gary Pope, partner at Kids Industries, a marketing consultancy for businesses targeted at children.
Indeed, retailers in particular are missing out on a potential gold mine in the form of character
licensing because they don’t do the proper research. Pope says: “The big retailers just don’t understand that kids won’t always choose a character over a normal product, that some characters work and some don’t. Instead they send some 21-year-old buyer over to Hong Kong with a brief to bring back a money-spinner, and it’s leading to a devastating decline in innovation.”
Significant growth is only likely to occur if Pope’s model of ‘4ft thinking’ is applied, he says. By using child psychologists to research the market, Kids Industries claims that it gains insights into children that haven’t been tapped so far. A nine-year-old boy, for example, given the choice between Bart Simpson and Anakin Skywalker, will choose Anakin Skywalker, because “they are just discovering the dark side of life, which is exactly what Anakin Skywalker was going through too”, says Pope.
Research by Mintel has found that the younger a child is, the more favourite characters they will have, and for this reason the bulk of the character licensing market is aimed at pre-school children. Legislation on advertising and marketing makes this a tough sector to target, however, and competition is fierce.
Pope adds: “Whereas in the past a child’s brain would be occupied by 30 to 40 different ‘things’, these days it’s more like 400. But the brain isn’t developing any quicker, so what licensees are trying to do is develop ‘mind-share’.”
Despite Pope’s gripes with industry, the market is, in fact, becoming more sophisticated. Dave Lawrence, planning director at marketing consultancy Logistix, says: “Previously, character licensing was all about label-slapping. Now, with sensitive issues such as obesity and child marketing being talked about, it’s much more about using the value of the brand to target mum and dad as well as the kids.”
Kinder has most recently done this, using SpongeBob SquarePants to push a promotion where children can get a free swimming session with each Kinder product they buy. Bon Bon Buddies follows a health theme where, although not directly linked to the characters, each pack displays low-salt, GM-free and portion-controlled notices. And Kinnerton advertises nut-free products, but also looks at things from a bottom-line perspective.
Rachel Wyatt, marketing director at Kinnerton, says: “Looking for a licence is a bit like betting on a horse; you have to look at the stable it’s come from, its last few races, and judge whether it’s something that fits your portfolio.”
But the majority of licensees still look for ‘the next big thing’, and this can prove to be a risky strategy. “This idea of a next big thing is an ideal which is difficult to predict
accurately, because you have so many trends among so many different age groups,” says Howarth.
Nevertheless, research by Logistix shows that 48% of seven to 14 year-olds, when asked to name their favourite character, chose Bart Simpson. Twenty per cent chose Scooby-Doo, while Shrek, Harry Potter and SpongeBob SquarePants all came out even at around 13%. A significant majority of mothers also chose Bart Simpson when asked which was the favourite character in their family.
As for what we can expect to see in the future, Kinnerton is said to be looking at a little bear character called Pocoyo, which it will roll out next year, while creations from author Jacqueline Wilson, aimed at young girls, are also touted as ones to watch. Barbie, long-time stalwart and still favourite among pre-school girls, is under pressure from Bratz, while the traditional Action Man is in decline and being replaced by Marvel Universe characters at Mr Lucky Bags.
Character licences are there for the taking, and the more children are exposed to them, the more they will feel attracted to them. Pope says: “Half the time a licensee doesn’t realise what they have, and retailers see children as a commodity.”
With a bit more research, this is one area where real growth could soon develop.