Brand Licensing’s Rising Value In The Digital Age

December 20, 2018 | By: Michael Stone, Co-founder and Chairman, Beanstalk

Consumers today have immediate access to troves of information about any product, so in theory, they no longer need to rely on the good name of established brands to guide decisions on what to buy. But that perspective is misleading: The volume of product information available is so vast, even overwhelming, smart brands have the power to rise above the information and marketing cacophony.

And while we all want to stay connected through our digital devices, there is another countervailing trend afoot: people are seeking a digital detox. More consumers are abandoning e-readers for real books or listening to vinyl records on record players. Even as ecommerce commands more of our purchasing attention, Amazon, the retail disrupter-in-chief, is distributing an ink-on-paper toy catalog for this holiday season and opening bookstores. And digitally native brands, such as Caspar and Eloqui, are opening brick-and-mortar stores.

With this backdrop, the landscape is such that brand licensing – the legal permission from one company for another to use its brand on different lines of products – can serve as a highly effective tool for brand building and strategic marketing.

Brand licensing is one of the most powerful ways to make the most out of an already strong brand because of its ability to extend brands to products outside the brand’s core business, reach new and existing consumer segments at new touchpoints and support and communicate brand equities. A stumbling block is that brand leaders and marketers sometimes view licensing too narrowly – as a form of logo decoration on products. Frequently, brand and marketing leaders will even neglect licensing entirely. When they do, they are neglecting a powerful tool to engage and bond consumers to their brand.

But once marketers recognize brand licensing’s potential – and understand that it’s not just a source of royalties and that it can deliver strong messages that cut through the digital and advertising information overload – they can develop programs that deliver big on marketing, communications and brand positioning objectives.

Among the many more meaningful and strategic benefits of licensing – these three go beyond royalties and logo decoration…

1. Licensing allows companies to deliver their message by extending into products that are outside of the core business, but that complement it. For example, Baileys is one of the world’s best-selling liqueurs, and the brand is most often seen as an occasional alcoholic beverage. But Baileys wants the brand to be used at all times of the day throughout the year and thought of as an impulse treat. So, to communicate that message and redefine the brand it made sense for Baileys to extend their brand through licensing to products such as chocolates, ice cream and coffee creamers.

2. Licensing can help companies reach new consumer segments and educate (or re-educate) them about the brand. Black & Decker, for example, initially served the male-dominated space of power tools. Looking to expand across gender demographics – while still maintaining aspects of their brand identity such as “power” and “electricity” – the company licensed the brand for a range of small kitchen appliances like toaster ovens and irons.

3. Licensing can build brand awareness and strengthen brand values. For example, Febreze, famed for its pioneering odor elimination technology and fresh scents, is now featured on a range of licensed products – often co-branded – providing its unique equities to products often associated with displeasing odors such as vacuum bags, spot and stain trigger sprays, trash bags and cat litter. The licensed products build brand awareness and drive home the brand’s marketing message ­­– that Febreze eliminates unpleasant odors and replaces them with light and pleasing scents – while also strengthening engagement with consumers and reaching new retail channels, such as pet and hardware stores.

While the bond between consumers and brands is being challenged and is changing in our digitally sophisticated world where so much product information is available to consumers, it remains uniquely strong. There are those who believe that brands are dying in this new environment, but as I’m sure you can guess, I’m of the opposite school of thought. In each of the examples above, the brand used licensing to strengthen the relationship with consumers, deliver the brand message and increase consumer touchpoints. And, by accomplishing any of these objectives, licensing promotes and supports the sales growth of a brand’s core product.

Brands today have the opportunity to be regularly connected to consumers, to make shopping easier and more convenient and to invite them into the brand experience. Now, more than ever before, brands need multiple messaging strategies. Brand owners just need to choose among the paths available to them and focus on those that will accomplish their objectives. Brand licensing is one of those choices, and perhaps one of the best equipped to navigate the complexities of the digital age and today’s marketing and retail ecosystem.

Contributed to Branding Strategy Insider by: Michael Stone is the Chairman and Co-founder of global brand extension licensing agency Beanstalk. He is also the author of The Power of Licensing: Harnessing Brand Equity (Ankerwycke, October 2018).