Given that it is a relatively new market, what is the biggest challenge companies are grappling with when it comes to evolving a scalable brand licensing strategy?
I believe in the three 'tick' marks which are important in licensing around the world, of which the first two work very well in India. The number one is entertainment and in India, everyone has access to it. Two, people have brand awareness and even the so-called niche brands are becoming accessible to many because India is a young, aspirational market. Our consuming class, therefore, is large. The third part that is not happening is retail. And this is hampering the growth of brand licensing somewhere. Yes we are waiting for the 'intersection' to happen and as organised retail grows, this business will grow exponentially. Tom and Jerry can reach audiences in India through television but retail is yet to reach this set of consumers. And if companies are unable to serve consumers, it breeds other issues that can be detrimental to the organised growth of brand licensing. Piracy, for instance. In fact, I look at the growth in e-commerce in India as a way to fuel the growth of brand licensing.
There have been sporadic efforts at brand licensing one must admit. But why haven't they become mainstream? What are the typical mistakes that companies commit while evolving their brand licensing strategies?
It is very important to look at the brand fit in licensing - what you want to communicate and what your brand stands for. Look at films in India. Entertainment is big business and has a reasonable fit too. Ideally, brand licensing should work well but producers typically use it as an after-thought; it is more of a marketing influence point but not worked upon to be a revenue stream. Some FMCG companies focus on increasing sales but not all are bothered to have the right fit while engaging in a brand licensing exercise.
You spoke of piracy as a challenge in the brand licensing business. What are the other challenges the industry is facing?
The fact that it is a growing business can be both a challenge and an opportunity. In the West, what can sustain you on one property requires far more work in India. In mature markets there are far more product categories for consumers to experience; in India we are yet to see some of those categories. For instance, Angry Birds has 800 different products but in India only 300 different products can be accessed because retailers choose only those. Consumers have no choice but to select from that particular range of product categories even though the brand has much more to offer. That's why I am personally upbeat about the growth of e-commerce, which will facilitate and provide more opportunities for consumers and companies alike.
At a point when brand owners and retailers are not exactly tuned in, how can specialist brand licensing agencies help improve the scenario?
I'll give you an example of what our company has done. We've got standalone SKUs with Tom and Jerry for Parle cream biscuits. We haven't approached it as a promotional strategy; it is instead a product integration for three years that is fun and instantly connects with the consumers. This is an association that is gender agnostic, it also cuts across age and language groups. It is such a good fit and works purely because it is an integration of two classic brands coming together to create a formidable partnership. Ditto with Go Cheese, which is also seeing brand integration with Tom and Jerry. You have cheese, you have the iconic Jerry… what can be a better fit? Brand licensing deals should have a focus on fit. The best strategy for success in such partnerships is not to look at them as hasty decisions to increase sales. It has to be linked back to the brand DNA - with what the company/client wants to project.
If they were to educate their corporate clients where should brand licensing agencies start?
It is important to convey to the client that the focus of acquisition has to be at the inception stage… the brand cannot be retro-fitted as an afterthought to suit the company's growth strategy. Licensing is a formidable partnership between two companies that can go on for decades. You cannot ask for changes every now and then because that is detrimental and can harm product categories that are on the retail shelves. Agencies should build appropriate style guides and show just how companies can benefit with the integration. It is important for agencies to be innovators. For instance, we are seriously looking at clip licensing from a pure brand strategy point of view. We can use clips of movies or customised animation in commercials to push brands. As an example, for Friendship Day, an agency can intelligently use clippings from a show like Friends and push the brand. A good agency will always build brand assets.
Look at the problem with brand endorsements in sports. For every celebrity endorsement that MS Dhoni does, if the team doesn't perform to the full potential, then brand associations can backfire. The reason why branded products from Tom and Jerry works is because the brand owners continue building content - and product categories - making it relevant for consumers.
Now that we have identified the problems and prospects, what would be the major trends we are likely to see in the business going forward?
The biggest trend for the year will be the continued emphasis on digital - you cannot dismiss it. Globally, the market is $150 billion at retail. Though it is some time before India becomes a big market in this business, the big trends are coming here. We will see more licensing opportunities emerging from the digital world. Look at Angry Birds, a brand which has emerged in the entertainment, publishing and licensing world. It started a phenomenal trend and this year, we will see growth in digital assets such as Candy Crush, Outfit 7 (bringing out Talking Tom and Friends).
In India, the brand licensing market is $450 million at retail. Sports licensing is poised to grow phenomenally this year. We have seen a lot of aspiration getting built around cricket, but now we see a trend related to football. The leagues (wrestling, hockey etc) are a pointer towards the interest of consumers - want to experience shorter format sports other than cricket. On our part, we are upbeat about representing FIFA and bringing kids and adult apparel, watches, sunglasses, besides other products for the Indian market. On the whole, India is a serious market in licensing given that the biggies like Disney, Cartoon Network, Mattel are already here.