Licensed to thrive

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Ad characters such as the Pets.com Sock Puppet and the Taco Bell Chihuahua got the star treatment at this year's Licensing 2000 International event, but marketers want to make sure their icons don't steal the show.

As ad symbols become at least as popular as the companies they promote, advertisers say the hoopla doesn't necessarily serve their original marketing purpose.

"The key is to make sure [the Sock Puppet] is true to his core mission, which is to communicate about Pets.com," said Pets.com President Chris Deyo. "We won't have him peddling his own wares."

Those wares include Pets.com-branded merchandise such as actual Sock Puppet puppets, stuffed animals, key rings and T-shirts.

"You've seen the commercials," one attendee told another as they passed the items on display. Counting on that kind of familiarity, other marketers are playing off commercial icons and slogans, among them Anheuser-Busch's "Whass-up!," KFC Corp.'s Col. Sanders and Heinz Pet Foods' Morris the Cat for 9 Lives.

And as Pets.com's Sock Puppet and his pals enter the licensing arena, marketing executives said they'll carefully monitor the scope of their icons' expansion.

KEEPING FOCUSED

Anheuser-Busch has a long history with licensed products -- extending its successful ad campaigns with apparel and collectible lines -- but the marketer is careful not to run too far afield of its principal mission.

"We are, at the end of the day, in the beer business," said Rick Robertshaw, manager of international sales and marketing for A-B's promotional products group. "It all goes back to supporting the brand message and we want to do that diligently and with focus. Licensing is an ancillary program to support our main marketing message."

A-B tries to keep a tight rein on how its products, advertising images and designs get licensed by managing the efforts in-house, via a 110-person group within the brewer's marketing department. During the years, that group has developed licensing strategies for A-B's popular Clydesdales, Spuds MacKenzie, the Bud Light "I love you man" slogan, its animated frogs and lizards, and, most recently, the ubiquitous "Whassup!"

Big media budgets and catchy creative help thrust characters and phrases into the spotlight.

"When you have a well-executed marketing campaign, it captures the excitement of consumers," said Brian Hakan, president of licensing agency Hakan & Associates. "If in real estate, it's location, location, location, in licensing, the three things that determine success are exposure, exposure, exposure."

EQUITY DILUTION DANGEROUS

Taco Bell has spent an estimated $200 million on its Chihuahua-centered effort; A-B spent roughly $137 million to buoy its Budweiser brand via the humorous frogs and lizards and the "Whassup!" mantra last year; and Pets.com has doled out $19 million on its ads featuring Sock Puppet.

But while the upside of capitalizing on a successful ad effort via licensing deals is certainly a lure, marketers said they must walk a fine line to take advantage of the additional revenue stream.

"Diluting the equity of your brand is always a risk," said Leigh Ann Schwarzkopf, manager of corporate licensing for General Mills.

Ms. Schwarzkopf works closely with the food marketer's in-house advertising department and ad agency Saatchi & Saatchi, New York, to "develop natural extensions of products and deter- mine what is that line," she said.

Central among General Mills' efforts have been infant and toddler development products including toys and books based on Cheerios and a variety of cookware bearing the Betty Crocker name.

"It's a rigorous process," Ms. Schwarzkopf said, "but we tend to err on the side of being conservative because we're dealing with the company's greatest assets."

LESSON LEARNED

General Mills is very detailed with licensees about how its icons -- such as Lucky Charms' Lucky the Leprechaun, the Trix Rabbit, Cocoa Puffs' Sonny the Cuckoo Bird and the Honey Nut Cheerios Bee -- can be used, a lesson Ms. Schwarzkopf learned from the master.

"I remember going to something 15 years ago called the `Disney Voice' where they said, `Minnie Mouse would never go surfing.' It's very important to stay close to the character's core essence," she said.

Often those guidelines come in the form of a character biography or resume that details the personality and lifestyle of the fictitious icon (see story above). Pillsbury is also particular about how its Doughboy is represented.

Determining when to license an ad theme or icon is always tricky. The California Milk Processor Board, which with Goodby, Silverstein & Partners, San Francisco, created the omnipresent "Got milk?" slogan, has conducted research showing that 90% of adults and 97% of teens report an immediate recognition of "Got milk?" And, a national study of favorite ads among kids ages 6 to 17 ranked the slogan No. 5 ahead of Coke, Barbie and Snickers. Such findings have led to the licensing of the slogan for everything from kitchenware, including creamers and dishes, to gift sets for newborn babies that include "Got milk?" bottles and bibs. A "Got milk?" CD is even planned for fall.

In the case of Pets.com and its popular Sock Puppet, the idea for licensing came from consumer demand.

"When you receive 10,000 e-mails and letters from consumers, that tells you something," Mr. Deyo said. "Over 6,500 of those specifically inquired, `Where can I buy a Sock Puppet?' "

But as marketers stand to profit greatly from licensing deals extended from popular advertising, ad agencies that created the slogans many times don't see any returns.

'GOT' LEFT OUT

Although A-B often relies on successful campaigns as the platform for its licensing strategy, it does not involve its core agencies, Goodby and DDB Worldwide, Chicago. Goodby has also been left out of the profit for "Got milk?'s" extensive licensing agreements, said an executive close to the agency.

TBWA/Chiat/Day, which created the work for Pets.com and Taco Bell, has tried to anticipate potential licensable campaigns and build a cut of the revenue into the agency's contract in some form, said an executive with knowledge of the situation. The agency declined to comment.

But there's no telling how long a campaign will resonate with consumers. "We're in a fast [paced] era where there's change all the time," said Robert Hollander of licensing company WHN. "Pets.com's big strategic challenge is: Can I make it last longer than 30 seconds? And the answer is maybe. Consumers are a fickle bunch."

Contributing: Ben Healy, Alice Z. Cuneo.

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