The 2007 Global Licensing Industry remained strong with a 2.6 per cent increase over 2006, with about a $ 191.7 billion retail sales turnover, an increase of $ 4.3 billion. Rajiv Sangari talks about licensing in India and the role of licensing agencies.
As I always maintain, 'kids business is no more a kid's business, it's serious'. Today's kids have the kind of time, our generation never had. They have 8 kids channel wooing them, plus a few more coming in soon, including our own 'Spacetoon Kids TV'. They do have various options of choosing the best of the character-based consumer products from swanky departmental and fashion stores, choice of books, choice of fast food chains; they no longer have to play with the monotonous, shapeless wooden or cheap plastic toys of our age and of course, their parents do have more disposable income to spend on them, compared to ours.
Global stalwart licensors have realised that the presence of the biggest kids base and the ever-growing 370 million kids (thanks to India's productivity at play) and the burgeoning media market in India, are definitely making this segment more attractive for them, than anywhere in the world. Finally, someone somewhere has started realising that all the fun in the world is here in India. This concentration is only going to increase over a period of time, and hardly any board room in the world can afford to abstain from the two magic words today, ' India and China'.
Licensing industry
I may be taking the risk of repeating the published figures, but for the benefit of those who may be new to the licensing world, the 2007 global licensing industry remained strong with a 2.6 per cent increase over 2006, with about a $ 191.7 billion retail sales turnover, an increase of $ 4.3 billion. The two categories posting the largest percentage increase in retail sales were 'interactive' and 'entertainment', with an increase of 5.3 per cent, to $ 6.1 billion and 3.5 per cent, to $ 23.8 billion, respectively.
Nevertheless, like always, 'character' remained the largest category but only increased by 1.9 per cent to $ 43.5 billion in 2007. The second largest was 'fashion', which increased by 1.8 per cent, to $ 39.8 billion. Estimates that licensed products' retail sales turnover will hit $ 200 billion by 2010, seem to be well on track.
Licensing agents
'Who says it's a thankless job, there's lots attached to it.' That is, licensors trust us to get them the best deal; licensees show good faith in us to support them in all possible manners - humongous vertical business models which can be explored being agents; and of course, there is, the respectable commission.
An agent is an entity which in the licensing and merchandising industry, acts as a one stop shop for all licensing/franchising solutions, in return for remuneration in a certain territory, for a specified tenure. It has the following benefits:
- Full representation: An agent owes 100 per cent of his dedication and loyalty to the brand that he represents.
- Great knowledge of the market: An agent knows 'what is out there' better than anyone else. Agents spend much of their time in understanding the market and where all the good deals are.
- Effective negotiating skills: An agent is an effective negotiator, as one main part of his job is to offer the rights holders, the best possible situation and deal. Agents completely understand all the details of a licensing/franchising contract. An agent makes sure that it all works out in the best interest of the rights holders.
- Synchronised brand representation: An agent takes a 360 degree approach towards brand marketing. He not just negotiates deals but also gets various expertises such as events, marketing, sales, etc. together and gives a brand, a total representation in all forms.
- Negotiate and facilitate all contracts between the IPR holder and the licensee/franchisee, ensuring that it meets the criteria laid down by the rights holders. In some cases, there is also a tripartite contract made, in which the agent is also a signing entity.
- Service the licensees/franchisees to ensure that it stays in sync with the demands of the contract.
- Ensure timely and full payment, as specified in the negotiated and executed contract.
- Maintain the brand of the IPR owner in the territory.
- Identification of prospective licensee (client/brand)
- First meeting and presentation proposal and understanding of the client's requirements
- Negotiation
- Deal closure
- Execution of applications/deal memos
- Agreement execution
- Invoicing and payment collection
- Design approvals and licensee maintenance
- Product development
- Marketing & events
- Support to licensees
- Royalty reports & royalty payments
- Manufacturing and marketing expertise in their line of product
- Distribution strength
- Design strength
- Financial strength
- Past experience
- Brand name and presence
- Promotional strength