Evergreen Appeal: Spending up five percent as licensees seeks stability.

Spurred by flush marketing budgets and a widening pool of potential properties, spending on promotional licensing rose five percent to $5.5 billion in 1999, according to promo estimates based on industry sources.

Consumer spending on licensed products bounced back from a three-percent drop in 1998, rising four percent to $74.2 billion in 1999, according to The Licensing Letter, New York City. The areas of entertainment and brand extension licensing drove the segment’s growth last year.

However, industry experts say brand managers have become leery of entertainment licensing following several high-profile merchandising disappointments, most notably Star Wars: Episode I – The Phantom Menace, in which sales ultimately didn’t live up to the lofty expectations of many licensees.

As a result, marketers are looking more heavily at TV properties and older properties with more evergreen appeal. Entertainment licensees are finding that, while new films may generate huge short-term buzz, they’re also a larger gamble. Aligning with TV programs and smaller, older properties offer some insurance – often at a cheaper price. “This is a cyclical business, and right now people are doing more classic promotional licensing,” confirms Katie Chin, senior vp-worldwide promotions at Fox Consumer Products, Los Angeles.

Similarly, licensing opportunities at Universal Studios Consumer Products in Universal City, CA, are now multi-tiered, ranging from new films to the studio’s garrison of “Classic Characters” such as Curious George and Woody Woodpecker. Use of licenses from Universal’s “Classic Monsters” lineup is growing, particularly for Halloween-based promotions.

“There’s been real growth in business for classic characters that don’t necessarily have to be tied to an upcoming theatrical release,” says Universal senior vp-worldwide promotions Lisa Wright. “We have many different characters that can be licensed out [for promotions geared] to a lot of different age groups.”

Television properties, which offer brand managers targeted audiences at a fraction of the cost associated with the typical feature film tie-in, are as hot as ever. Fox last year teamed its Buffy the Vampire Slayer franchise with Coca-Cola’s Barq’s Root Beer, building off the beverage company’s long-used “Barq’s Has Bite” tagline.

Hollywood, too, is choosing partners wisely. “We’re taking a more strategic focus and making sure the partnership fits for everyone,” Chin says.

STORE-BOUGHT VALUE

Brand licensing also continued to grow last year, particularly in the food and hard goods categories, says Nancy Bailey, founder of licensing shop Bailey Associates, Miami. The agency recently brokered a Hawaiian Punch license to Betty Crocker for fruit snacks and another deal teaming Frito-Lay’s Cracker Jack with ice cream maker Dreyer’s Grand Ice Cream, Oakland, CA, for the Major League Baseball season. “Brand extensions are coming on strong,” says Bailey.

Meanwhile, non-traditional companies are checking out the benefits of licensing. Internet start-ups and technology businesses are examining both entertainment and trademarked properties. Santa Clara, CA-based Intel Corp, last year licensed the Homer character from Fox’s The Simpsons for a cross-media promotional effort, adding humor and mainstream appeal to its otherwise high-tech marketing efforts.

Product licensing is another area that continues to do well. In March, Procter & Gamble, Cincinnati, granted a license to eyewear manufacturer Marine Optical, South Easton, MA, to sell a new line of Cover Girl-branded eyewear frames.

Savvy marketers are analyzing small licensed properties as well as large ones. And licensors are just as busy scrutinizing potential partners.

Matchmaking is never easy.

– Spending on promotional licenses rose five percent to $5.5 billion.

– Amid industry concerns over high-profile Hollywood misses, marketers are looking for classic properties.

– Brand licensing within food and hard goods is growing.

– Retail sales from entertainment and character licensing increased four percent to $74.2 billion.