2. Images and Merchandising Images and Merchandising Licensing and Royalties Licensing and Royalties 2

3. Section 14.1 – Images and Merchandising – Objectives Define the term image Describe the role of merchandising in entertainment marketing Discuss how the United States government controls endorsements Describe the role of sponsorship in entertainment marketing 3

4. Section 14.1 – Images and Merchandising – The Impact of Image Celebrities are the source of public scrutiny as long as they stay in the public eye Media feeds the public’s fascination with images of celebrities through television, radio, magazines, and newspapers Images portrayed of celebrities by media are often false, or slanderous –Slander is a false or damaging statement that can affect a person’s public image Celebrities in the public eye are constantly considering their image –Image is a mental picture or concept of something or someone –How they look, What they say, What they wear –Public image can make a difference between success and failure 4

5. Section 14.1 – Images and Merchandising – The Impact of Image Selling the Image There is an increase in the opportunity to make a profit from Merchandising when a celebrity or company is in the public eye –Merchandising is the variety of promotional activities and materials that complement and support the advertising effort –Marketers develop merchandising that involve: packaging, displaying, and publicity of a product, theme, or personality Direct Merchandising: Creating products that directly tie-into movie –Toys and plastic figures Indirect Merchandising: Creating products that indirectly tie-into movie –Bedding with movie logo Merchandising is a multibillion-dollar industry There is a five-year period to make money through merchandising 5

6. Section 14.1 – Images and Merchandising – The Impact of Image Selling the Image – cont. Marketers develop merchandise tie-in promotions between two or more parties Popular marketing strategies between fast-food chain and major motion pictures –Mutually beneficial as food and merchandise sales as well as product recognition increase Children experience toy fatigue from all merchandise offered –Loss of interest in toys 6

7. Section 14.1 – Images and Merchandising – Endorsements Celebrities can also improve their images by involving themselves in other forms of promotions –Endorsements in entertainment are when a person in a commercial is acting as himself or herself and not as a character The FTC (Federal Trade Commission) is a government agency whose purpose is to ensure an American free-trade market Defines endorsements as any type of advertising done by a person who reflects his or her own opinions, beliefs, findings, and experiences that are separate from those associated with the products' company Endorsements should be from actual people, otherwise the authenticity of the endorsement is jeopardized 7

8. Section 14.1 – Images and Merchandising – Endorsements Controversy of Endorsements Companies and celebrities can have a difficult time making sure that problems from endorsements do not occur –Ex. Celebrity failing to used endorsed product in public Endorsements can get more complex and risky when entertainers become involved and endorse political issues and groups –A statement or endorsement of a political nature can have a damaging effect on a celebrity career –Ex. Fans may boycott a star or band if they do not agree with public political statements 8

9. Section 14.1 – Images and Merchandising – Sponsorship Sponsorship occurs when company supports an event, activity, or organization by providing money or other resources that are of value to the event –The sponsor is provided with some type of advertising at the event in return for money or other resources –Sponsorship is one of the most popular methods that companies use in promotion Types of events and broadcasts that occur and use sponsorships: –Award Shows –TV programs that get high ratings (especially season-finale episodes) –Popular interview shows 9

10. Section 14.1 – Images and Merchandising – The Need for Sponsorships Sponsors can also be seen at events such as music concerts Musicians on tour are promoting their image in order to increase their record sales Money from concert ticket sales does not cover the complete cost of tour for musician Costs and fees associated with tours: –Sets –Transportation –Arena –Security Companies may ask for advertising space on the stage, T-shirts, and event programs in exchange for their money Marketing personnel for the sponsoring company spend time analyzing the feedback from the concert to ensure that their money sponsored is well spent 10

11. Section 14.1 – Images and Merchandising – The Need for Sponsorships

12. Section 14.1 – Images and Merchandising – Why Sponsor Return is the amount of profit that is give back to the sponsor for the sponsor’s initial investment or sponsorship Company’s sponsoring a music concert may not have an easy time calculating the return on their money invested Return can be determined if sales increase for the sponsoring company The Right Representative Sponsoring company wants to make an investment in a person or group that is best suited to represent the company Person or group does not have to use the product Person or group is representing the product by allowing the company to sponsor them 12

13. Section 14.1 – Images and Merchandising – Sponsorship Risks Sponsorship does have risk and can have damaging outcomes Sponsorship may decrease as a result of poor performance or legal troubles Companies do not want to be associated with a person who has a poor public image or whose popularity is decreasing Government Regulations There are certain risks for sponsoring an industry, in addition to the risks associated with the person or group –Ex. Sponsorships was reduced and various venues were in jeopardy when the federal government passed laws forbidding tobacco and alcohol companies from advertising at events appealing to children and teens –Opportunities for funding various events decreases and seeking sponsors becomes more challenging 13

14. Section 14.2 – Licensing and Royalties – Objectives Explain the importance of entertainment product licensing Explain aspects of royalties Identify participants of a record that may share in the royalties 14

15. Section 14.2 – Licensing and Royalties – Overview Licensing and royalties are a major aspect of both sports and entertainment marketing industry Merchandising Entertainment-related companies also utilize merchandising Examples: –Popular band name/logo placed on t-shirts to sell at concerts –Amusement parks place retail areas adjacent to new rides to encourage people to buy merchandise when they leave the rides –Selling photographs of your experience from rides All of these types of items are licensed products, or goods or services that legally use logos or images owned by other companies or people 15

16. Section 14.2 – Licensing and Royalties – Licensing Licensing is required when the owner of an original image or product gives legal permission for a fee to another company or person to copy, manufacture, market, and sell reproductions of the original item –Can be owner of Logo, good, service, or creative idea Owner of product (licensor) makes money from licensing fee, while manufacturers and vendors (licensee) makes money by means of their merchandise production and sales of product 16

17. Section 14.2 – Licensing and Royalties – Licensing Music and Royalties Licensing can also apply to music, software, motion pictures, and video Songwriters and publishers of a song may charge a licensing fee when an artist and label want to record or sample that song –Example: Whenever the new song version is sold or broadcast, the original song owner receives benefits and royalties Record labels have rights through contracts that are signed between the original artist and the record company In return for the use of the music, the artist receives: –Royalties – a percentage of record sales –Up-front money based on their popularity and public image –Founding for the production and promotion of the music Several agents between the artist and the record company can deduct money from the profits 17

18. Section 14.2 – Licensing and Royalties – Paying for Entertainment Celebrities make up a small portion of the entertainment industry Entertainment industry employs over one million people who depend on income from purchases of: –Music –Software –Tickets for movies –Video rentals Profits from entertainment products pay for the expenses of producing the products, with only a portion going to the artists themselves 18