December 07, 2023
Licensing
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The most thrilling questions about adult licensing
The adult licensing market in Russia is experiencing significant growth. According to expert estimates, the potential profit of licensors in the niche, which became empty after the withdrawal of Western franchises in this category can reach 5 billion rubles.
Despite the great potential of this area and its profitability, many companies are still hesitant to develop a licensing business: both rights holders and manufacturers have many doubts and concerns.
Experts from the Consumer Goods Licensing Department at Gazprom-Media Sales House (part of Gazprom-Media Holding), who have experience in developing adult licensing on the Russian market from the perspective of the largest foreign and Russian brands, answered the most thrilling questions about licensing.
Why it is necessary to lease adult brands? Child licenses are a well-trodden path, they are a more reliable option.
First of all, the manufacturer should be guided by their goals and the specific features of the product. Who is your target audience? What are you producing and what needs are you trying to meet? In a highly competitive environment, sales depend not only on the quality of the product, but also on the emotions that it evokes.
At the same time, only a very small number of children’s brands can appeal to an adult audience. The availability of universal children’s franchises has been practically reduced to zero, especially after the exit of major players from the market. Adults watch different content: they are interested in different stories, themes, and genres. Working with adult brands provides an opportunity to speak to the audience in their own language.
Therefore, only a franchise, which is properly selected for your consumer, effectively appeals to the emotional side of demand and aligns with the buyer’s motivation, can be called a reliable option.
Frugality is currently a popular trend. There is a chance that parents may buy a licensed toy for their child. But why would an adult purchase branded goods for themselves?
Although adults react emotionally to many things, their motivations are much more complex. Rational inhibition is activated, and the individual begins to analyze their desire to make a purchase.
Just like children, we respond to bright packaging, funny memes in messengers and get emotionally attached to brands we can relate to. But to convert that initial emotion into a purchase, a product must meet additional criteria. When purchasing a product, adults are motivated by their desire to identify themselves with the images and characters of their favorite shows and series, follow social and visual trends, and trust in the manufacturer’s validated expertise.
The phrase “emotions sell” is not mere words. Most global manufacturers intentionally design the emotions their products evoke in adult consumers through consistent advertising, packaging design, and brand ambassadors to draw attention to their products. Licensing is a universal neuromarketing tool that provides manufacturers with a ready-made solution in a highly competitive market. With a popular brand placed on the packaging, a product immediately gains measurable recognizability and evokes a certain set of emotions associated with the franchise that are relevant to the target audience and address their motivations.
Are there really no brands for adults left in Russia after the foreign rights holders have withdrawn?
A huge market niche has opened up for domestic brands. Undoubtedly, this is an advantage for those who are ready to actively explore this niche. In 2023, a range of licensing offers has already emerged among adult brands on the market. They are often based on Russian series and computer games. Today, a strong franchise that has its own loyal audience and a unique story that engages viewers has every chance of success on the Russian adult licensing market.
Right, there are not many stories with really high recognizability and millions of viewers that are typical for Hollywood blockbusters. However, there are big domestic brands in the market that enjoy nationwide popularity and strong marketing support. These franchises can be evergreen, or they can be new characters and stories with high ratings that have shown excellent results in the context of adult licensing. Moreover, according to statistics, 73% of Russians are loyal to domestic brands, which indicates their readiness to positively respond to licensed products in this field.
What if the parallel import of adult brands will compete with my Russian-branded products?
For historical reasons, our country is quite loyal to products that are imported or counterfeit. At the same time, the market is currently severely undersaturated with brands (The Walt Disney Company, MARVEL, Warner Bros., Universal Pictures, Hasbro, Mattel, Viacom, and others have left the market), and the volume of products that are available for parallel import cannot satisfy this demand.
Moreover, imported goods will have a number of significant disadvantages in the buyer’s opinion. The first of them is the price. Logistical issues, customs duties, and transportation costs can drive up the price and make a product less attractive for a potential buyer.
Another disadvantage of parallel imports is that the goods may not always be localized, or adapted, for our market in terms of textual content and other locale-specific features that affect product perception.
Domestic brands and franchises have a number of significant advantages. One of the main ones is a focus on the Russian consumer. Offering comedy that resonates with the audience, sharing expertise that will be relevant in our country, and evoking nostalgia familiar to the Russian consumer are all strong factors for potential success, specifically for domestic brands and franchises.
I have a strong adult trademark. Why do I need a license?
Licensing does not eliminate the need to develop your own brand. Instead, it provides the most accessible and effective tool for promoting it. See for yourself: even the largest market players in various product categories base their business strategies on the Red Queen hypothesis: “It takes all the running you can do, to keep in the same place.” The environment is constantly changing, and to survive, you need to think outside the box and take action. At present, to feel competitive, it is necessary to constantly amaze potential customers and retain their attention.
For consumer goods manufacturers, developing product recognizability often requires significant marketing expenses, as it is necessary to convince first retail chains and then consumers to vote with their wallets. Licensed products are in a better position because the brand placed on the packaging is popular with the target audience and relevant to it. This means that a well-chosen license can both strengthen the position of a product in a competitive environment among the existing target audience and significantly increase the potential consumer reach with its own audience.
Licensing can be beneficial for all trademarks and brands that strive to win the competition for market share and build long-term relationships with consumers.
Can a brand limit its target audience?
There are buyers who have an extremely negative attitude towards a brand and are unwilling to purchase their products, despite the fact that they have purchased them before.
The success of a licensed product largely depends on the constructive dialogue between the licensor (rights holder) and the licensee (manufacturer).
Any licensing program starts with identifying the needs of the consumer that will be met by the finished product and evaluating the competitive environment. At this stage, the participants of the licensing transaction should together determine the core of the target audience and its interests in order to anticipate expectations and ensure guaranteed consumer attention to the product. It is crucial to choose a specific franchise and the format of its utilization only with regard to all collected data and the specific tactical task that the licensing will perform. If a franchise is chosen properly, it will contribute to the success of the product. Furthermore, when both parties’ expertise is in synergy, we can say that the licensor and licensee are working together to ensure mutual success.
Of course, if the franchise concept, functional direction, and product positioning contradict each other, there will be no productive work.
I do not produce goods, but provide services. Can a license be beneficial in my case?
It does not matter whether it is a product or a service, in any case you build an offer for your potential buyer.
It is difficult to imagine products or services that are not currently experiencing competitive pressure and do not require direct communication with consumers. For the consumers of your services, a relevant license may be an added incentive to choose you. For instance, seeking expert assessment may an effective motivation in such a scenario. If the service offered by your company or brand is acknowledged by the experts of a show that people trust, this will give you a competitive advantage over other players in the service market within your field.
How can one work with celebrity brands in today’s world, when one careless statement can greatly damage their image?
It is important to understand the difference between the terms. There is a celebrity image and a franchise image. They are not the same.
The licensor does not sell the image or recognizability of a particular celebrity. Instead, they sell an established franchise that is safe in terms of reputation, which has a well-loved story, popular images, favorite characters, and even phrases that have caught on. As a licensor, we also offer visual solutions within the framework of a style guide, which reproduce the visual identity, style solutions, and values of the franchise, even without actors or celebrities being involved. Such visual solutions often seem more advantageous. Although, of course, the licensee is still free to choose. In any case, franchises help minimize risks and work specifically to promote the positive image of the manufacturer’s brand and increase revenue. This is our ultimate goal.
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