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Marketing & Promotions

Fewer Marketing Requirements & Shorter Contact Terms

The following is an excerpt from TLL’s feature story on royalty rates. See the complete run-down here, including breakdowns by each channel and full data charts.

Fewer Marketing Requirements Imposed

The percentage of respondents saying that they pay into or require a contribution to a central marketing fund (CMF) continued to trend downward, falling from 45% in 2014 to 41% in 2015.

A smaller percentage of survey participants (32%) also report that they are required to commit a percentage of annual wholesale or net sales to their own advertising or marketing of the license (or require such a contribution).

It should be noted that these figures are likely to be higher than is actually the case for the licensing business as a whole. This is, perhaps, because the respondents who answered the questions about marketing contributions were skewed toward property types where such requirements are more common, such as corporate trademarks, fashion, sports and entertainment/character.

Among respondents who report making a CMF contribution, about three-quarters say it was 2% or less, while one-quarter report an average above 2% of net sales. For annual marketing commitments, respondents report a range of 1% to 20% (of either net sales or wholesale), with the most commonly reported amounts (cited by 38% of respondents) being in the 2% to 5% range.

Other licensee marketing contributions cited by survey respondents—sometimes in combination with one or both of the above—include requirements to:

  • Participate in trade shows, retail road shows and consumer exhibitions;
  • Produce animated shorts for digital distribution;
  • Buy TV or print advertising; and/or
  • Market their products in licensor-controlled venues such as Web sites and comic books

Three Years Most Popular Contract Term

Survey participants say that contract lengths in 2015 were, on average, steady from 2014, with more than four-fifths (88%) of respondents saying so, versus 6% saying the average length increased and 6% saying it decreased. The largest percentage of respondents (56%) say their average contracts were three years, followed by 32% who say the average was two years; 3% report their average contracts signed in 2015 were five years or longer in length.

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