Apr 10, 2019

Succeeding in Character Licensing: What You Need to Know

Okay, so you’re starting to see the benefits of licensing your brand. But what about character licensing? If the term makes your head start spinning, allow us to break things down.

Character licensing is one of the largest segments of the licensing business and is likely the most recognized by the general public. As with any licensing venture, one of the biggest perks of using a character to promote your brand is growth. The right character can boost the look and feel of your product and significantly increase revenue.

Character licensing is also a creative solution for achieving brand recognition without the exorbitant costs associated with advertising. Characters strengthen the profile of your products by attracting attention through instant recognition, thereby increasing audience acceptance and enhancing your product’s perceived value.

If you license a character during the early stages of your business plan, you will learn about the legalities of protecting your brand long term. So how can you successfully navigate the profitable, expansive and secure avenue of character licensing? Here are some helpful hints.

Getting started

Businesses looking to enter into a licensing agreement with an existing, globally recognized character brand will need to create a contract between themselves (the licensee) and the licensor (the owner of the character brand). In return, the licensor will receive a royalty (agreed upon amount) for every licensed item that you sell.

It is important to note: most major brand owners will not engage with businesses that do not already have a sizeable audience, substantial revenue, or a “proven record” of profitability. In essence, large companies want to ensure that licensing their property is worth it.

Know your audience

When licensing a famous character for your brand, there is one key element to consider: demographics. Oftentimes, businesses and manufacturers insist on licensing characters that have significant brand recognition (i.e. characters based on a movie or television series). While this is a logical assessment — famous characters from a movie or cartoon series undoubtedly have greater potential for exposure than lesser known figures.

But there is no guarantee that the decision will translate to greater sales. What matters most is the age of the audience you are targeting. If you are manufacturing a product that will be marketed to a more mature consumer base, they may not be as receptive to the use of a popular cartoon character as their younger counterparts. An older audience is more likely to be interested in factors such as product design, quality, and functionality.

target audince

If, however, your product is targeted towards a much younger demographic—infants and toddlers, for example—there are significantly less concerns. Kids, more than any group, love it when they recognize their favorite mascots from television and parents are aware of this.

Parents want to buy whatever looks nice, suitable and safe for their young children. If a product’s sole purpose is to make their child happy, parents will likely buy it for them regardless of its lack of timelessness or lasting durability.

Make a move

If you decide to move ahead with licensing a famous character, you will probably end up negotiating with the licensor and their licensing agent to define a set of mutually agreed upon terms. In instances like this, licensors want to protect their intellectual property, so they will want to ensure that they are covered.

In addition to royalty payments, you should expect to put down a “minimum guarantee” upfront. However, for some businesses, these costs can be prohibitive. Alternatively, owners of lesser-known characters are usually eager to close licensing deals quickly and tend to be more flexible.

Options for smaller businesses

Because the benefits of having a character to help with a product’s marketability are so great, smaller businesses often turn to other options when the cost of going big is too far out of reach.

Let’s say that you recently started a medium-sized company that manufactures apparel for children and young adults, and you are looking to license the use of a cartoon character to be featured on your garments.

Where do you begin to find a character with an image that resonates for a reasonable price? If you are in the early stages of business growth, you may want to consider working with a team of illustrators and designers to create your own character.

Character licensing team working to create a branded character

When searching for a source image or concept to create your brand’s character, the web is a fount of useful information and inspiration. Local animation companies or agencies with a roster of graphic designers and/or illustrators are often good sources for establishing your desired style, especially if you are building the character from scratch.

Many of these companies design original characters and have them up on the internet for sale, ready to go. YouTube and similar video sharing sites also offer examples of characters in motion, which can be beneficial if you plan to give your character a background (personality, voice, etc.)

In situations like this, the creator of the character (whether it’s the illustrator or the design company you source) would act as the licensor. You can either pay royalties to the licensor for using the likeness of the character they create for you (similar to the methods described above), or you can work to establish an agreement with the creator for a full buyout, giving you free rein to use your new character as you wish.

How should your character look?

It is important to remember that when you are working with a design studio to develop concepts—or even if you are shopping for pre-crafted identities—you are aiming for the long term. It is important to keep in mind that you are licensing the right type of character for the right reason.

Don’t forget: consumers need to experience an emotional connection with your character, creating a bond that will draw a parallel in their minds, instinctively tying the character image to your product.

In addition to the emotional connection, you also need to ensure that the character you choose will complement the look of your product. If your product will be be marketed toward children, choose a character that will be engaging to a young audience. If your product is sleek and high-end, avoid using something too juvenile, as it can undermine the product’s potential.

Most importantly, communicate with your licensor. Most likely, they will be willing to collaborate and customize graphics based on their own style guide so that you can get the best of both worlds.

As you can see, there are significant benefits to licensing a character for your business and brand. Depending on your budget, there are advantages to licensing certain types of characters—famous, or not yet famous. Whatever your business plan, the options for growth are yours to discover. By following the above tips for successfully navigating the world of character licensing, you can make a foolproof plan for coming out on top.


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