March 24, 2021
Six Key Takeaways from IP Experts in the Field
What licensing trends are emerging in 2021, and how are they reshaping the landscape of the licensing industry?
Recently, the Brainbase team appeared on multiple panels at World Trademark Review’s Spring Connect. After conversations with IP experts in the field, we identified six key takeaways on licensing trends in 2021.
2021 Brings a Licensing Boom
New licensing projects declined steadily in 2020, and it’s not hard to imagine why. As businesses struggled and in-store shopping hit all time lows, companies naturally prioritized getting products off the shelves over product innovation. Additionally, several companies felt a blow from the pandemic due to supply chain issues, bankruptcies and force majeure clauses being acted upon.
However, 2021 is the light at the end of the tunnel. Licensing is already beginning to ramp up, and many companies expect to return to normal volume as the year progresses. As vaccines are distributed and businesses bounce back, we’ll start to see more of a recovery from the pandemic. We’ll soon be back to a healthy licensing industry with the same amount of deals- if not many more- going through as prior to 2020.
Licensing & Nostalgia Marketing: A Return to Comfort
Perhaps an impact of instability from the global pandemic- or maybe because they just don’t make good after-school snacks like they used to– nostalgia marketing and brand crossovers boomed in 2020. From streaming platforms like Netflix acquiring shows like Cobra Kai, to Mattel licensing classic IP like Barbie and He-Man to Zara for street wear, 2021 will continue reminding us of the “good old days” through brand licensing collaborations. In a time of uncertainty, tapping into consumers’ memories of comfort and happiness can foster brand loyalty and a new stream of revenue.
Licensing as a Business Model – Not Just a Source of Extra Revenue
Going into 2021, companies are making licensing more central to their business models.
Some are acquiring distressed brands and retailers, with the intention of rebuilding the brand through franchising and licensing. One example is the brand Laura Ashley, which Gordon Brothers recently purchased. Instead of buying loss-making physical stores, Gordon Brothers purchased Laura Ashley’s IP itself (a portfolio with 70 licensees and franchises). They’ll continue to grow the brand by focusing on licensing opportunities this way.
Other companies are buying IP at scale as the core of their business. Authentic Brands Group purchases underperforming brands, and generates new brand strategy involving licensing and franchising the IP. They manage a large portfolio of 50+ consumer brands including Juicy Couture, Nine West, Forever 21, Barneys and Lucky Brand.
When done correctly, licensing is a low risk, highly profitable way of growing a business and bringing in revenue. By purchasing IP and harnessing the brand equity of those new acquisitions, many companies are bringing failing brands back with a focus on licensing as part of their key business models.
Influencer Marketing is Here to Stay
During the pandemic, influencer marketing increased as people turned to e-commerce more than ever. Now, there are even influencer marketing platforms to help brands easily discover, manage, and negotiate with influencers marketing their products.
As influencer marketing becomes more competitive, it’s possible that influencers and brands will change payment strategies. Influencers may begin to negotiate royalties rather than lump-sum payments for posts and marketing deliverables. This system would provide less upfront risk for the licensee.
Tighter Licensing Contracts
A force majeure occurs when unforeseeable circumstances prevent a contract from being fufilled. As one can imagine, 2020 was the definition of a “force majeure”. In the future, expect tighter licensing contracts with more specific regulations on what constitutes a force majeure. Contracts may also specify how e-commerce or other channels can supplement revenue in an unexpected circumstance. However, it’s also worth noting that at the end of the day, licensors want to avoid disputes with licensees. Successfully executed contracts have financial benefits for both parties, after all. So, “tighter contracts” may simply outline a procedure for moving forward in a practical way the next time an unforeseen global event happens.
The Right Technology Makes a Difference
Companies are trending towards having the right tech stack and infrastructure to allow a smooth transition to remote work when necessary. Companies that succeeded during the pandemic often had one thing in common: they already had a stable communications infrastructure and business platform in place. Employees adapted easily because the technology at their fingertips was extremely adaptable; In other words, it was easier to navigate tough times when in-person collaboration wasn’t possible with support from technology.
Three months into 2021, Licensing agencies with mid to large sized clients seem to be busier than ever. At Brainbase we’ve seen more “new” companies in licensing come to us looking for a platform to manage their growing licensing businesses. Now is the time to get your tech stack in order, and set your licensing team up for success now and in the future.