Case Study: Navigating a Cause Licensing Agreement
During the 2011 Licensing Expo in Las Vegas last week, one of the hottest topics was Cause Marketing in the licensing industry. The class was put together in order to teach the various models that exist in the for-profit and non-profit worlds when it comes to licensing relationships and their successes and failures.
Speakers included:
Tony Summers, director of Production and Licensing for National Wildlife Federation
Dawn Ciccone, senior director of Brand Licensing for PBS and PBS Kids
John Merrick, founder of Lemur Licensing
Cause Marketing is a partnership between a non-profit and a for-profit formed in order to create a mutual profit. Within cause marketing you have Sponsorships, Promotions, and Licensing.
Here I highlight the various topics that were covered during the seminar:
Why do Brands Implement Cause Marketing?:
For the charity, things like building brand equity and brand awareness, revenue, increased reach, becoming competitive, and brand extension all take center stage.
For the company, it’s about creating an emotional connection with the consumer, increasing market share, and creating incremental lift in sales.
The Effectiveness of Cause Marketing:
According to a Cone Group Study, 85% of consumers have a more positive outlook on brands that embrace cause marketing and 65% would switch to a brand upon learning their involvement. But one might argue whether this can really be viewed as accurate. People often say one thing and do another.
One example was brought up by Dawn Ciccone who called upon an example of a cause marketing effort done with PBS kids and Philosophy skin care. They created a core product that was not in alignment with a cause and the same product that was in alignment with a cause. The core product outsold the cause product. This, they believe, was attributed to the fact that the cause product did cost a bit more and consumers just weren’t willing or able to spend more money, even if it was associated with charitable giving.
But for those consumers who do embrace cause marketing and charitable donation through purchasing, they tend to do so because it truly is an expression of their values and a personal connection with the brand. They feel good about the fact that they can donate through their purchasing power.
Licensing for Non-Profits:
If one piece of advice can be sited when deciding whether a non-profit should align itself with a brand it is to make sure you’re in a space that makes sense for your brand and speaks to your core audience.
Brand fit is extremely important. If you look back at case studies or any unsuccessful licensing done in the past, you will often find that the brand fit just wasn’t there. The company you choose to work with must align with your brand and fit your strengths and weaknesses.
Editor’s Note: While this piece of advice was offered to the Non-Profit side of Cause Marketing, this writer ventures to say that it is completely applicable to the Company side of the partnership. While supporting a deserving cause of any kind is commendable, choosing a cause that compliments your brand and makes sense to your current customer base seems like a smart move.
Choosing the Right Form of Licensing for your Brand:
There are two forms of licensing a brand can choose to focus on: Affiliate Licensing and Endorsement Licensing.
Affiliate Licensing, while powerful, can cause concerns around the revenue of a brand. An example of this is when a credit card company wanted to become an affiliate of PBS. PBS met this with opposition because, as they saw it, if using your credit card made you a supporter of PBS, then why would you ever take out your checkbook and make a separate donation?
The only way to avoid this pitfall is to test it. Create a list of credit card affiliate holders and follow their additional donations. If they’re not donating, then it’s not a good licensing agreement and should be re-evaluated.
The messaging (how you tell the consumer what they are supporting) is very important. Affiliate licensing requires total transparency and brands venturing into the area should be in touch with the Better Business Bureau to fully understand the compliance laws and rules.
Endorsement Licensing, can often be met with opposition on the part of the non-profit. They tend to not like the word “endorsement” , they often don’t like to be seen as “endorsing” anything. But endorsement licensing can be very powerful for the brand that is associated with the non-profit.
There are a lot of brands out there that want to be associates with PBS Kids; simply based on the feeling of trust it gives consumers. That is why PBS kids is extremely careful about any endorsements they may consider.
Sometimes endorsements don’t immediately make sense but upon further consideration, there can be many successful partnerships formed through them. An example is when GreenWorks, a cleaning supply brand, was endorsed by Sierra Club, an environmental non-profit. Yes, cleaning products are bad for the environment but when GreenWorks creates a product that is 99% chemical free doesn’t it make sense, as an environmental cause, to support such efforts?
How Do I Know if My Brand is Right for Licensing?:
Brands need to evaluate by looking inward.
· Do you have enough awareness; do people know who you are?
· Do you tell a story?
· Do you have an emotional connection?
· Does it fit you legal business structure?
· Does senior management “get it”? If not, an education must come first.
· Can you financially support the effort?
· Do you have patience in seeing return? These things take time.
What Makes a Cause Licensing Relationship a Success?
Before anything else, it’s important to set expectations before going into a licensing partnership. Then make sure everyone involved understands their role and responsibilities. Success is measured by whether those roles were filled and those expectations were met and/or exceeded.
Nicole Giordano has an established a career as a social media strategist and brand ambassador for a variety of fashion-based companies. Giordano is the founder and editor of StartUp FASHION, a resource for emerging fashion professionals, as well as NicoleGiordano.com, a textile and accessory blog which concentrates on ethical and slow fashion. You can follow her on Twitter @NicoleMGiordano.
