That's Show Business

Music and TV deals increase spending 5 percent.

New interest in tie-ins with musical acts including Britney Spears and television shows such as Sponge Bob Square Pants helped strengthen spending on promotional licensing by five percent to $5.8 billion despite a relatively dreary year at the movies, according to promo estimates based on industry sources.

Tie-ins with movie properties generally pace promotional licensing, but a certain Phantom Menace cast such a long shadow over the industry in 2000 that it was still scaring retailers and licensees a full year after its arrival.

In fact, retail sales of licensed goods were off one percent to $73.8 billion in 2000, as sales of entertainment/character-based product dropped five percent to $15.2 billion, according to The Licensing Letter, New York City.

A good part of the blame goes to 1999’s over-hyped Star Wars Episode I — The Phantom Menace, which was saddled with such unrealistically high hopes for product sales that it was almost destined to be a disappointment.

“Licensees produced too much stuff. Retailers bought too much stuff. And then, everyone was stuck with stuff,” says T.L. Stanley, editor of Los Angeles-based What’s Hot Now (whnx.com), an online licensing marketplace. “It’s had a lasting effect on business. Retail is so much more cautious.”

In addition, 2000 offered few blockbuster theatrical releases that required large-scale, multi-partner promotions. One exception was Universal Pictures’ release Dr. Seuss’ How the Grinch Stole Christmas, which “had some phenomenal promotions that stood well on their own but [also] used cross-synergies,” says Mitch Litvak, president of The LA Office, a Los Angeles-based entertainment marketing agency. The partner list boasted Visa U.S.A., Kellogg Co., Hershey Foods, Nabisco, S.C. Johnson, Wendy’s International, and the U.S. Postal Service.

“The key issue for promotions in 2000 was, is the promotion complete? ” says Ira Mayer, publisher of the Entertainment Marketing Letter, New York City. “Having more partners is a positive. People are paying more attention to what they are doing, trying for more measurable results, and are more sophisticated about their promotions.”

The risks-vs.-benefits debate over movie tie-ins continues. Many brands are becoming much more selective about the properties they’ll align with, and are looking for a greater return on their investments. That’s perhaps why the biggest “big event” movie of 2001, Warner Bros.’ Harry Potter, will have a single promotional partner: Coca-Cola Co. committed a reported $150 million to get Harry all to itself.

Changing Channels
While the silver screen has lost some luster, TV has been shining.

With American preschoolers expressing their love for everything from Sesame Street to Rugrats, licensing of animated characters has been extremely popular. “Kids TV is on every week — sometimes six times a week,” says Stanley. Plus, “kids shows tend to be on a while, unlike prime time [programming].” However, the first year of the new millennium may be remembered in licensing and promotional circles as the year of the pop star. Britney Spears, the Backstreet Boys, ‘N Sync, and Christina Aguilera dominated not only the Top 40 but marketing collateral as well; each of the teen acts lent its likeness to promotional campaigns both on the concert tour and off. “Music has universal appeal [and] corporations are getting behind groups,” says Litvak. “To predict who’s hot and when can be tough, but it can be extremely rewarding.”

The year “had a lot of high-visibility promotions,” says Lois Sloane, founder of Sloanevision Unlimited, a New York City-based licensing agency. “It seemed every time you turned around, there was another one.”

On second thought, 2000 will probably best be remembered as the Year of Pokémon, as the PokeMania that began in fall 1999 carried through most of the year, ringing up $3.5 billion in retail sales of its own and pushing overall sales of licensed product based on toys and games up 13 percent to $3.6 billion. Kellogg’s Pokémon SKU, part of a huge, $6 million-plus tie-in campaign, earned its own one-percent share of the cereal market in September.

Brand Licensors
Meanwhile, sales of merchandise based on corporate brands and trademarks rose two percent to $18.2 billion, according to The Licensing Letter. “Brand owners and trademark holders are mining their vaults for leverage-able assets, whether they are active brands or from history,” says Marty Brochstein, The Licensing Letter’s executive editor.

The nature of the licensing business also changed in 2000, as marketers such as Disney began working directly with retailers like J.C. Penney Co. to eliminate middleman manufacturers. “It’s becoming bigger than anyone ever thought,” says Sloane. “It’s taking the guesswork out of manufacturers’ ability to get into retail. This way, retailers have more control.”

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