While European brand licensing is steadily growing, a ban on the use of licensed characters in food and drink advertising to kids under age 12 could prove problematic.
"Retail has always been tough; in fact I'm bored of saying how tough it is. Let's stop moaning and get on with it," a prominent licensor said to me recently.
A pragmatic opinion or easier said than done? It's certainly a timely response, coming as the Office for National Statistics declared that despite heavy price slashing for the January sales, the UK high street suffered the worst monthly slump since records began. The value of goods sold nose-dived by 33.7 percent between December and January.
Nevertheless, stories of retail expansion are emerging. Supermarkets are strengthening their stronghold on the high street as Asda commits to building 18 more supermarkets, along with 10 Asda Living non-food stores. New Look is continuing its success with its low-priced fast-fashion strategy by opening 40 stores in the Middle East, and John Lewis has pledged to build a further 10 department stores and double sales to $12 billion within the next 10 years.
On the food front, Ofcom, the UK's communication regulator, recently confirmed its decision to ban junk food advertising around programming likely to appeal to kids under age 16 (we'll look at this subject in more detail in the April issue). In an attempt to lessen the blow, dedicated children's channels will be given until December 2008 to fully implement the restrictions. Regardless, Ofcom has predicted the loss of revenue to broadcasters will be about £39 million (U.S. $76 million), which will affect funding for children's programming. Also of concern to the licensing industry is the decision to ban the use of celebrities and licensed characters on all food and drink advertising to kids under age 12.
The "great obesity debate" is interesting, boiling down to who is to blame for making our children fat. The causes are numerous, and the finger of blame points in many directions: It's the producers of kids' TV shows and films who want to make an extra buck by using their characters on salty/fatty/sugary food; it's the manufacturers of said food who are tempting children in the first place; it's schools not providing enough sporting opportunities; it's computer games and the Internet preventing children from engaging in physical activity; it's the parents—they should know what's best for their children. Needless to say, there are plenty of arguments for and against the ban and how the licensing industry should respond. It's not just a UK issue either; childhood obesity and the reasons for it are debated the world over, and it will be interesting to see if and how onlookers respond.
In terms of brand licensing in Europe, it is steadily growing—although still far behind the U.S. market—and being driven by agencies such as MODA, Beanstalk, and Global Brands Group. "Think global, act local" seems to be the mantra of choice, as global brand licensing strategies are implemented with local markets in mind.
Take Ford, for example. In the U.S., it partnered with Mighty Fine for a range of retro T-shirts, winning a LIMA award in the process. This would be unheard of in Europe, but offer the same market a Jaguar pen worth £5,000 (U.S. $9,752), and it's a different story (as you can see in our Jaguar case study). As Ciarán Coyle, managing director, Beanstalk UK, reveals, the difference between brand licensing and entertainment licensing is that without a film or TV show as a hook, deals are strategic and revenue can be a long time coming. But if you get the right partnerships, the long-term rewards can be tremendous.