September 1, 2021 - When you purchase a Black & Decker toaster oven, a can of Sunkist orange soda or a Mr. Clean broom, you are purchasing a licensed product. A recent Ad Age article, “Why NFTs, fashion and entertainment deals should be moneymakers, not just marketing,” suggests that while licensing is a marketing tool, brands should also consider licensing as a moneymaker. While that’s true, money is only a side dish—not the entree.

In our age of information overload, consumers are less likely than ever to be swayed by what a brand says about itself. To survive, brands must keep working at delivering their message. Licensed products are an effective way to tell a brand’s story, communicate its message, connect with consumers (sometimes for the first time), strengthen brand meaning and burnish its reputation.

In other words, marketing is the entree. Consumers who are satisfied with their Mr. Clean broom, for instance, might become interested in its other cleaning products and even switch from their current liquid cleaner to Mr. Clean. Those are big wins for P&G.

Here is a look at how brands use licensing to support marketing objectives:

Licensing reinforces brand values

Shortly after Asa Candler purchased Coca Cola from founder-inventor John Pemberton in 1891, he positioned the brand as a lifestyle—sound familiar?—with print, billboard and point-of-sale advertising. He also emblazoned the logo on non-beverage products, including clocks, wallets and pocket knives. That positioning continued right up to the present as the company today uses licensing with famous designers and fashion brands to burnish the brand’s lifestyle reputation.

Licensing builds awareness and brand meaning

Febreze is one of P&G’s billion-dollar brands and a leader in the air care category. What makes Febreze different is its technology: Febreze doesn’t just mask odors, it eliminates them while smelling good. P&G reinforces brand equity by licensing Febreze for use on products where odor elimination is important to consumers, including Glad trash bags and Fresh Step cat litter.

Licensing increases consumer touchpoints

Baileys, among the world’s best-selling liqueur brands, uses licensing to reframe the brand message—encouraging consumers to make it a part of their everyday lives. Baileys licensed the brand for coffee creamers, chilled and frozen desserts, coffee pods and chocolate, all to be enjoyed at various times of the day throughout the year.

Licensing opens new distribution channels

Through licensing, Coca-Cola can be found at fashion retail, Febreze in the pet aisle and Baileys in the grocery store. Briggs & Stratton, a manufacturer of small engines used mostly in other companies’ power equipment that it supplies to other companies for their branded power equipment, wanted to develop its own branded products. Using licensing, Briggs & Stratton now reaches consumers with branded engine oil, fuel containers, air compressors, air conditioning tools, premium fuel and more.

In all of these instances, licensing allows these brands to enter businesses with strategic value that fall outside the companies’ core businesses, while educating consumers about brand meaning to support marketing and communications objectives.

While brands make money through licensing, it will often be a very small percentage of their top line. Chasing the razzle dazzle of a ringing cash register can lead to mistakes – the product might be wrong, the quality inconsistent or brand perceptions confused.

Remember Colgate frozen entrees, Life Savers soda, Cosmopolitan yogurts, Coors Rocky Mountain spring water, Frito-Lay Lemonade or Ben Gay aspirin?

Some of these ideas were supported by research and all are in big categories with significant sales opportunities and royalty revenue potential. Each supposed brand extension failed, and I’m sure generated a brand disconnect with consumers, which is never a good thing. There are more recent examples of brands (I’ll protect their names) who pursued licensing in sizable product categories, blinded by substantial financial guarantees, only to face failure, contract disputes and, sometimes, litigation.

I’ll end where I began. Licensing is an effective marketing and communications tool. Do it right, do it strategically, align it with brand goals and objectives and the money will come. But don’t do it just for the money. That’s simply the side dish.

Michael Stone is chairman of Beanstalk, a brand licensing agency, and author of “The Power of Licensing: Harnessing Brand Equity”.