Brands Display Their Power as Sales From Licensing Deals Grow

Pink Starburst gelatin snacks. Frank’s RedHot sunflower seeds. Wendy’s chili—in a can.

These products are just some of the many licensed items Conagra Brands introduced during the first half of 2023. Indeed, the Chicago-based food manufacturer behind Slim Jim, Duncan Hines and Chef Boyardee has a history of working with brands in ways that generate buzz and drive sales.

“The best licensed partnerships are quickly and easily understood,” said Caitlin Davy, manager of brand communications and content at Conagra Brands, who noted that deals of this sort help Conagra reach more consumers than it could on its own.

And it’s certainly not the only company pursuing this strategy.

Last year, global sales of licensed brand merchandise and services climbed to $87.6 billion, according to a new report from the trade association Licensing International, a 14% increase over 2021.

Corporate brand licensing has grown in other ways, too. In 2017, the category represented 20.5% of the entire licensing industry, which includes segments such as sports, fashion and entertainment. Today, brand licensing constitutes 25.7% of the market.

“We’re really seeing corporate brands come up fast and furious in the business of licensing,” said Maura Regan, president of Licensing International.

In total, Licensing International estimates licensing activity around the world generated $340.8 billion in revenue during 2022, up 8% compared to 2021.

Brand power

Rising sales tied to brand licensing highlight the gravitational pull of well-known names and logos. For chief marketing officers struggling to defend budgets or prove their worth to other members of the C-suite, this means the asset they’re responsible for nurturing and protecting—i.e. brand—is only increasing in value.

“Licensing is perhaps the most perfect illustration of the power of brands and branding,” said Graham Staplehurst, director of thought leadership at Kantar’s BrandZ.

Licensing International’s findings arrive at a time when brands are doing much more than distinguishing one product from another on store shelves. They’re part of people’s personal identity. Consumers embrace or reject them depending on their politics.

Brands, along with patents and copyrights, have become a bigger part of life as the American economy has shifted from focusing on physical objects, such as land, vehicles and factories, to non-physical assets.

As Staplehurst put it: “The intangible value of the brand sits in the minds of consumers.”

Picking a partner

Marketers interested in either licensing their brand or leveraging another company’s brand strength, however, should think before they jump. Not everyone has a Barbie in their portfolio.

Elspeth Ross, managing director at M&C Saatchi Group’s design and experience agency Re, recommends imagining how a licensing deal will influence the way a brand shows up in culture.

“What are smart, interesting or unexpected licensing partnerships that achieve your operational goals, while also demonstrating your brand’s personality, purpose or a new way into your value proposition?” she said.

Simply slapping a logo on a product that doesn’t evoke the same emotion or meet the quality consumers have come to expect can alter how people feel about the brand—sometimes for the worse.

“In our experience, great licensing deals often add a different layer to the story brands can tell,” Ross added.

Understanding how the public feels about a brand, of course, is a fundamental first step. Kantar’s Staplehurst advises looking at brand equity to measure the strength of an asset and command the best possible premium.

Regan, president of Licensing International, noted a core benefit of licensing is the ability to bring more people into a brand’s universe, whether they’re aware of the business arrangement that created the experience or not.

“The consumer doesn’t care if it’s a licensing deal,” said Regan. “They don’t know if it’s licensed. Why should they?”

But, she continued, “they know if something’s not fun, inauthentic, cheesy or a money grab, and most times they reject it.”