Omnichannel Brand licensing reinvented for a consumer-centric world
The licensing industry is in the midst of a transformation in response to shifting consumer dynamics, digital advancements and a growing emphasis on ESG (environmental, social and governance) and DEI (diversity, equity and inclusion) initiatives.
3 key trends impact the industry:
- Omnichannel licensing
- Sustainability and DEI
- Diverse generational consumers
Ignoring these trends could be costly. No one wants sales to drop to a point where there is leftover inventory, abundant markdowns or too many sell-off period sales.
Omnichannel licensing: Embracing the evolving shopper
A cornerstone of the contemporary licensing industry, omnichannel licensing embodies a profound change in consumer behaviors. According to Licensing International, brands with an omnichannel presence in licensing witness an average 7.5% higher royalty rate than those with a single-channel approach.
Omnichannel licensing uses intellectual property (IP) across multiple channels, including retail, ecommerce, social media, streaming services and mobile apps. This allows brands to create a seamless experience for consumers.
A testament to the success of this approach is the integration of licensed products into popular gaming platforms, expanding licensing horizons and underscoring the potential of omnichannel licensing to engage consumers at various touchpoints.
Sustainability and DEI: Imperatives in licensing
With an ever-increasing focus on conscious consumerism, sustainability and DEI are in the spotlight on the licensing stage. Brands, licensors, and licensees must weave eco-friendly and socially responsible principles into their products and marketing.
The licensing industry acknowledges that sustainability, ethical sourcing and inclusive representation reflect the evolving values of the global consumer base. For instance, a licensing brand might partner with manufacturers committed to sustainable materials and practices. Alternatively, it might license its intellectual property to product lines championing diversity and inclusion.
Consumer tribes drive purchases
Understanding the unique preferences of diverse generational consumer tribes is paramount for the licensing industry. Brands want to be seen as sustainable and inclusive, but the almighty dollar will still affect their decisions. A significant emerging demographic is the “kidults” — adults who harbor a nostalgic fascination with products traditionally aimed at children. Fueled by nostalgia, this group’s purchasing habits catalyze licensing opportunities that bridge the chasm between childhood and adulthood. According to Forbes, spending on licensed products by kidults will reach $75 billion by 2025.
Gen X, Millennials and Gen Z also play instrumental roles. Gen X consumers are more likely to purchase licensed products associated with nostalgic brands and products. Gen Z places substantial emphasis on digital experiences and authenticity and commands an estimated $143 billion in direct spending power — making them an indispensable demographic for licensors. Millennials tend to gravitate towards nostalgic and sustainable offerings.
Brands need to get ahead of the curve by making forward-thinking decisions based on routine analysis of past and current performance of their licensing programs and embracing available data dimensions.
For licensing programs to succeed, brands must understand these consumer tribes and change with them. Licensed product purchasing must be encouraged through emotion or reason tied directly to the consumers’ tenets.
Navigating the terrain with data-driven solutions
In a world of rapid technological advances, data-driven solutions are crucial for managing licensing contracts and royalties.
Data-driven solutions and analytics provide profound insights into consumer behavior, market trends and royalty performance, improving licensing companies’ efficiency, profitability and decision-making. These solutions are instrumental in:
- Identifying and negotiating more favorable royalty parameters
- Determining regional and demographic buying patterns to drive the direction of marketing and delivery
- Automating contract and royalty updates
- Gaining real-time insights into licensing performance
- Quickly modifying licensing program strategy, minimizing related efforts and costs
Shifting the curve
According to Statista, the global licensing industry will reach $303.9 billion by 2026. As the dynamic consumer landscape shifts, innovation and adaptability will be the keys to success.
The message is clear: by embracing omnichannel strategies, prioritizing sustainability and DEI initiatives, understanding generational preferences and harnessing data-driven solutions, licensors and licensees are well-positioned to flourish in an arena defined by constant change. Consider it a moment to shine in the industry.