THE ROLE LICENSES PLAY IN INCREASING BUSINESS REVENUE
If you are looking to grow your brand in a short period of time, brand licensing might be the way to go. It can be challenging to find the right licensing company and an agreement that keeps expansion in mind while protecting a brand’s image and reputation. While it’s rare to reap the benefits of brand licensing without potential risks, a list of ways in which brand licensing can help set a brand on the path to expansion have been compiled.
It Can Increase Profit Without Cost Risk
Brands can earn royalties without investing any money into the production, marketing or distribution of the goods. Licensees have a lot to gain from licensors; from style guides to preferred supplier pricing, creative services and more, there is plenty of time and money saved from licensing. For example, having access to a licensor’s style guide helps a licensee with design time, as it streamlines the approval process products need before they go on the market. Licensing also benefits core businesses by allowing them to create a revenue stream with minimal investment, allowing them to allocate funds internally toward more risky projects. If a brand is planning on launching a new product, licensing some products from an existing line can be extremely beneficial if costs are an issue. Licensors can keep an eye on licensed products or lines, ensuring that the licensee is making the most of their partnership while their internal team develops the rest of their business.
It Can Increase Brand Awareness
Brand licensing reinforces a brand’s presence in its desired market and creates additional space for it in newer markets. Whether or not a brand is already a big name in its industry, it will benefit from more people seeing its licensed merchandise. If a smaller e-bike brand is struggling to get in front of its key audiences due to an influx of competitors, it can look to licensing. With a vast knowledge of key retailers, marketing plans and other resources, licensors can help a brand stand out among others and get into the hands of the right retailers. Additionally, I’ve noticed that many industries are embracing licensed products. In fact, Licensing International reported that global sales revenue generated by licensed merchandise and services went up by 4.5% in 2019 from the $280.3 billion generated in 2018. This growth is the largest percentage increase for the industry during the six years that this study has been conducted. So, while I understand the woes associated with brand licensing, people are definitely not as skeptical of licensed products as they have been in previous years.
You Can Enter New Markets
In addition to brand awareness, a brand will greatly benefit from licensing as it can enter new markets. As mentioned, licensors can place a brand’s products into brick-and-mortar or online stores that they haven’t previously been able to sell through. Certain department stores often shy away from selling higher-end private label products. However, after licensing, I find that stores are often more confident in a brand and willing to sell. Through brand licensing, smaller businesses and brands also gain the credibility they need to sell through desired retailers—boosting revenue all while getting in front of new customers.