April 3, 2019 | By: Michael Stone

Why are retailers so interested in celebrity licensing programs when many of them (actually, most of them) fail (if they even get off the ground)? Consider the following three reasons (which also generally apply to brand owners):

1. Engaging Fan Base (Loyalists). Retailers benefit from the celebrity’s fan base that wants to interact with the celebrity in new ways, through licensed product. For example, Drew Barrymore’s fans trust her credibility in the category.

2. Attracting New Consumers. Celebrities can deliver a fresh audience to a retailer. This will only happen, however, when a celebrity resonates with the retailer’s core customer. In the case of Drew Barrymore, Walmart’s core customer wants a premium-like product she can afford. Flower delivers on that consumer need. Famous designers won’t sell their apparel to mass merchants, so celebrity lines take the place of designers at an affordable price. That’s the white space Jaclyn Smith filled at Kmart so many years ago. Always look for white space.

3. Remaining Relevant (Retention). Staying relevant to consumers is a major retailer concern, and associations with celebrities help them demonstrate relevancy. Celebrities allow retailers to connect with a wider array of consumers who the retailer may not have been able to reach through its traditional product and service offerings. This is particularly true with younger demographics and digital celebrities. But even more importantly, relevance encapsulates the entirety of the program, including selecting the right product category for the right consumer audience at the right price point at the right retailer. Every part must work together to ensure success. Flower competes with many major brands with substantial advertising campaigns. It is able to compete without those kinds of resources because of its relevancy to consumers that is communicated by Barrymore. Social media has enabled new brands to emerge without the massive resources required by traditional advertising.

Of course, retailers need to be mindful about the possibility of negative publicity with celebrities, much more so than with consumer brands. One media scandal can send sales of an otherwise successful product plummeting. Consider what happened with Paula Dean, whose racist comments got her kicked off The Food Network and sales of her licensed products collapsed.

After some initial setbacks, Martha Stewart ultimately survived going to jail in 2004. Kathy Lee Gifford lost her apparel collection at Walmart (over $700 million in sales) in 2000 because it was revealed that sweatshops in Central America were used to manufacture her licensed apparel products. And with digital celebrities largely unscripted, this is an even bigger risk. Negative publicity will always be a risk working with celebrities, particularly in the early years.

With so many failures over the years, what’s the secret that allows one celebrity to succeed and causes so many others to fail? Obviously, poor quality or ill-conceived products will fail no matter what celebrity (or brand) is attached to them. Beyond that, however, following are five factors that are necessary for celebrity success (and that although less exaggerated, more or less generally apply to any brand):

1. Vision: The celebrity must have a strong product and/or aesthetic vision for a product category, whether it be fashion, accessories, home products, health and beauty products, food, or some other category where there are volume opportunities. Drew Barrymore has a strong vision for beauty products as well as the business acumen to understand Walmart’s consumer and drive sales. Kathy Ireland had a strong vision when she started her home product line in 2003, and that vision remained constant even as she became a brand.

2. White Space: Retailers don’t need more of what they already have. The celebrity needs to be filling a gap in the retailer’s product assortment. There must be a need. For example, Mary-Kate and Ashley Olsen were very successful at Walmart for ten years with their mary kate and ashley line of fashions because Walmart was weak in offering fashion apparel and accessories for tween girls. The mary kate and ashley line filled the gap. Kathy Ireland uses her brand on products for everyday use by everyday consumers. Jennifer Lopez at Kohl’s and Sofia Vergara at Kmart satisfy the underserved Hispanic market.

3. Time Commitment: A celebrity needs to put in the time and be involved in all aspects of planning, product development, design, approvals, and then marketing. She needs to promote the line of products. When I meet with celebrities, I try to scare them off with the work that will be required. If they survive the scare tactics, at least I know they are serious. Many celebrities are simply not prepared for the demands a licensing program will place on them. If they don’t make that commitment, the products will likely lack authenticity and the consumer will “smell” it. Drew Barrymore, Jaclyn Smith, Kathy Ireland, Mary-Kate and Ashley Olsen, among others, all have devoted significant and meaningful time to their consumer products programs. Licensors need to be operationally ready, whether they are celebrities or consumer products companies.

4. Staying Power: The celebrity must be able to sustain his or her fame long enough for products to be developed, reach the shelves, and sell through. Waning fame or a public relations misstep can take its toll before product is even in the market. Certain types of celebrities clearly pose risky strategies (e.g., the “now” celebrity). Trying to ride the wave of recent exposure or semi-celebrity status is a short-term tactic (that might generate some revenue). That’s why so many gold medal Olympians, with high expectations of developing product lines, never get that far. Their fame dissipates quickly. Consider Gabby Douglas, gold medal winner at the 2012 London Games, or Michael Phelps, all-time Gold medal swimmer. In both instances, their fame faded before product could be developed and launched. Also falling into this category are the 15-minutes-of-fame television reality stars. Consider the failed licensing program of Snooki Polizzi, star of the relatively short-lived series Jersey Shore. Indeed, the only star of Bravo’s Housewives series to seriously succeed with product has been Bethenny Frankel with her Skinnygirl low-cal margarita mix (other Skinnygirl products, however, largely faded from the market). The same is generally true of influencers. With few exceptions, they haven’t demonstrated (yet) the staying power necessary to launch a consumer products program that lasts. Equity takes time to build, and flash in the pans are not in the public consciousness for a sufficient period of time. Public figures can also be risky given the potential for controversy. Donald Trump’s licensing program is a perfect example. When controversy struck during his 2016 Presidential campaign, retailers abandoned him (e.g., Macy’s). On the other hand, once launched, a successful licensing program can create staying power for the celebrity, reviving his or her celebrity status in brand form. Consider Jaclyn Smith who launched her program at Kmart in 1983 at the height of her fame as a television star on Charlie’s Angels but who is now “famous” for her line of apparel at Kmart. Ditto Kathy Ireland who is now “famous” for her consumer products and not as a Sports Illustrated cover swimsuit model. Both have transitioned from “celebrity” to “brand.”

5. Credibility: The celebrity must have credibility with the right consumers. People in the target demographic must believe in what the celebrity is selling. It’s not enough for a given Hollywood star to like fashionable clothing; she must at least seem like a fashion authority. Think about Sarah Jessica Parker’s role on Sex and the City. That role made Sarah Jessica Parker appear to be a fashion authority (unfortunately she chose to work with a retailer, Steve & Barry’s, that went bankrupt). Or consider Drew Barrymore’s credibility in the beauty space. Celebrities as well as consumer products brands can easily misfire in the wrong category where they do not have credibility.

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).