FMCG and retail brands are constantly looking for new ways to attract and retain customers. One highly effective tool is the use of licensing in loyalty programs. This strategy allows companies to incorporate well-known brands, characters, or franchises into their promotional and communication campaigns, boosting recognition and attracting new consumers.
Licensing in loyalty programs offers numerous benefits. According to Licensing International, in 2023, global sales of licensed goods and services reached a record $356.5 billion – a 4.6% increase from 2022. Licensing is an investment, not an expense.
But what needs to be considered for it to pay off? How should you build a loyalty campaign strategy and understand your audience, product, and sales channel? Let’s explore.
Practical Aspects of Success: What to Consider When Using Licensed Brands
Incorporating licensed brands into product manufacturing can provide a strong competitive advantage. However, as Daria Bakhmatova , Commercial Director at Art Nation Loyalty, points out, the effectiveness of such a strategy depends on several key factors.
“When a manufacturer uses licensed brands in their product, it definitely attracts new customers, increases turnover, and boosts sales – thanks to a product with advantage that isn’t the most expensive on the shelf,” emphasizes Daria Bakhmatova. But if a brand releases a licensed product that ends up being the most expensive among competitors, success is unlikely. So the first advantage is: don’t be the most expensive. The second is: stand out among competitors.
According to Daria, consumers seek the best balance between price and value. If a licensed product is significantly more expensive than similar regular items, its competitiveness drops. She outlines three key steps that can make licensing successful:
- choosing the right product-license combo: Not all licenses are equally effective for every product category.
- practical testing: Select a license, conduct focus groups, place the product on store shelves, and compare it with competitors. Only then should the product line be launched.
- reasonable pricing: Raising the price just because a product is licensed is a mistake. According to HubSpot, 68% of consumers are willing to pay more for branded items – but only up to 10–15% above the average market price. Manufacturers must strike a balance between exclusivity, trendiness, and affordability.
What Licensing Brings to Loyalty Programs
Higher Consumer Engagement: Popular characters or brands help build an emotional connection between companies and customers, significantly increasing loyalty program engagement.
Broader Audience Reach: Well-known brands have strong potential to attract new customers. Gen Z values style, trends, and social media visibility, while Millennials are emotionally drawn to nostalgic brands from their childhood. Savanta research shows that 61% of Millennials and 58% of Gen Z are more likely to buy from brands that evoke emotional connections through nostalgia or current pop culture trends.
For example, The Smurfs and Teenage Mutant Ninja Turtles are timeless classics. They appeal to both kids and adult fans — the so-called kidults who gladly purchase clothing, toys, or licensed goods featuring their favorite characters. These brands haven’t just survived decades – they’ve been rebooted, modernized, and continue to thrive.
Revenue Growth: According to Licensing International, the “Entertainment/Characters” category grew by 6.9% in 2024, reaching $147.6 billion in revenue. The most successful segments were anime, video games, and social media, accounting for 38% of licensed revenue in this category.
Challenges and Risks
Despite its many advantages, licensing in loyalty programs comes with challenges. Olena Nekhotsa , CEO of Art Nation Licensing, highlights the importance of a comprehensive approach:
“Incorporating licenses into loyalty programs can be a powerful tool for increasing customer engagement and strengthening brand loyalty. However, success depends on a thorough strategy – from choosing the right license to adapting the product to the local market. It’s also crucial to continuously monitor the market and respond quickly to changing consumer preferences. Only then can licensing projects deliver real results.”
A strategic decision may be to launch a licensed product during the release of new branded content – like a movie or series premiere. At such times, interest in a franchise spikes, and with the wave of promotion and media buzz, sales can soar. It’s a great opportunity for a brand to ride the wave of popularity and amplify the impact of a loyalty program.
For the license holder, it’s also critical that consumers feel the value of the brand when purchasing a licensed product. Poor quality or a cheap appearance can harm both the licensee and the brand.
Licensing is, above all, a legal agreement. Breaching its terms can lead to serious legal consequences. Licensees must carefully coordinate all materials with the brand owner. While this may slow down processes, it ensures legal protection. The cost of a license – including royalties and advance payments – can also be a significant barrier, especially for small and medium-sized businesses.
As Maura Regan, President of Licensing International, states:
“The global brand licensing industry continues to show steady growth. Year after year, consumers affirm their loyalty to favorite brands, characters, and products. Moreover, licensing has once again outpaced global retail growth, underscoring the powerful influence of brands on sales volume.”
To Sum Up
Licensing is more than a marketing tactic – it’s a strategic tool that, when used correctly, can elevate a loyalty program to a whole new level. The key to success lies in choosing the right brand, setting a fair price, delivering high quality, understanding your audience, and being ready to adapt to market demands.
