Licensing can be a source of substantial revenues for publishers. Several publishers have created a sustained revenue stream by entering into licensing relationships with manufacturers and retailers, and extending their brands across a variety of products.
“Strategic part of the diversification plan”
They include legacy firms like Meredith, Playboy, Condé Nast, and Hearst. Sondra Newkirk, Senior Director of Brand Licensing at Meredith told Folio, “Over the last decade [brand licensing] has grown in importance and now is a strategic part of the diversification plan.” Some like Hearst have even gotten into creating their own products (yoga mat, Backslash Fit).
Digital native publisher BuzzFeed, which jumped into the licensing business a couple of years back has seen a steep rise in revenues. The publisher made $130M through retail sales of its branded products in 2018 and expects to double that figure this year.
While Good Housekeeping seals of approval and Playboy Bunny shirts have been familiar parts of the zeitgeist for decades, product licensing always tended to be an incremental side gig for publishers. Now, many media companies are expanding this side of the business and entwining themselves more deeply into product marketing and supply chain development.Steve Smith, Journalist, Folio
BuzzFeed started small, extending its brand with a set of cookbooks, followed by a line of cookware which it sold at Walmart. Now the company is set to rapidly expand its offerings through partnerships with Nestle (ice cream), McCormick (spice blends) and Wines That Rock (wines) among others.
Its Tasty brand will also grow to include products like soups, pasta, baking kits, and smoothies reports Digiday. The publisher is now set to take Tasty’s kitchenware program to Europe, the Middle East, Africa, and Latin America, through various partnerships.
Opportunities in licensing springs from the expertise and credibility, and of course the readership a publisher has earned. According to Business Insider, manufacturers are increasingly willing to partner with publishers to make branded products because of their digital properties i.e., compelling content and robust social media accounts. Additionally, they also possess the first party data of millions of customers.
When you combine the insight we can glean from hundreds of millions of consumers, the relevance of iconic brands in our stable and the power of our distribution platforms, I like our chances in any market environment.Josh Stinchcomb, Chief Experience Officer, Condé Nast
“Something we can do better than they can do”
Several publishers offer creative branding and marketing services. Condé Nast and Time Inc. use their social followings and influencer networks to promote their licensed products. SVP Consumer Products at Bonnier Corp, Elise Contarsy, told Digiday earlier, “If you look at how we support some of our licensing partners today, it’s completely different. If one of our licensing partners is looking for content, that’s something we can do better than they can do.”
Bruce Winder, a retail analyst, told Adweek that partnerships between publishers and retailers also serve the interests of the brick-and-mortar stores. For example, the partnership between BuzzFeed and Walmart is strategically advantageous for Walmart because it “adds a digital halo effect to the retailer—and keeps the products out of Amazon’s grasp.”
Looking from the publishers’ perspective, Diana Gordon, Director, Shop+ at Mindshare North America added, “It’s a chance for digital media companies to reach their audiences who would recognize their brands in these new settings.”
These partnerships also allow media companies to get into retail and reach more customers without investing in the expensive overhead of a store, according to Arnaud Simeray, VP of Strategic Partnerships at pop-up location platform company, Storefront.
This is not a trend. This is the way retail and the shopping experience is moving forward.Arnaud Simeray, VP of Strategic Partnerships, Storefront
“Maintaining relevance in today’s hyper-competitive marketplace”
Over the past year, publishers like Hearst, BuzzFeed, and Clique Brands have launched physical products either on their own or in partnership with other brands. Hearst has built a 15-strong product studio team that does creative ideation, product development, and marketing all the way down to fulfillment and customer service. The publisher is planning to launch around 10 products this year.
But then it’s not always a sure-shot formula to success. There have been some notable failures. In fact, according to Mitch Duckler, Managing Partner at Full Surge, a brand strategy consulting firm, the failure rate of brand extensions can be as high as 80-90%. He gives the example of KFC’s ‘Finger Lickin’ Good’ edible nail polish which was launched in 2016. It was supposed to taste like fried chicken and was a flop with Huffington Post describing it as “your worst nightmare coming true.”
Duckler says, “Robust brand extension strategies are vital to maintaining relevance in today’s hyper-competitive marketplace. To a degree, brand extendibility represents the most logical way to achieve profitable brand growth, however, many companies struggle with how far to stretch, where specifically to extend, and how to ensure success.”
He adds, “Marketers must weigh each potential brand extension by how effectively it leverages brand equity from the parent brand, as well as how effectively it contributes to the parent brand’s existing equity.”
“Fantastic way to spread the impact”
Steve Harvey, Co-founder of FabrikBrands a creative and branding agency recommends the following questions that publishers can ask themselves before making a plunge into extending their brands.
- Is there a desire for the new product? Can you find a USP that will sell your extension?
- Is the extension natural for your brand, or does it seem forced?
- Is your existing brand reputation strong enough to support a new product, service or marketplace?
- Do your customers trust you enough to see the value in your offering?
Harvey says, “Brand extension strategies are a fantastic way to spread the impact of your company into new areas and products. Used correctly, brand extension can reinforce the credibility of your company, help you connect with new audiences, and even strengthen your image around the world.”
He adds, “The key to a successful brand extension strategy is figuring out exactly how you’re going to stretch your company without going too far, too fast.”
Download WNIP’s comprehensive new report—50 Ways to Make Media Pay—an essential read for publishers looking at the multiple revenue opportunities available, whether it’s to reach new audiences or double down on existing super-users. The report is free and can be downloaded here.