Generating Revenue: e-Commerce

By Marc Levasseur (French)

Marketing tie-in products for television content with multi-platform extensions can be very rewarding but there are a few simple steps that you can follow so as to avoid costly mistakes.

Although many producers may be familiar with ways to distribute their content or boost user traffic in order to sell advertising, sell their games or sell the CDs and DVDs associated with their productions, T-shirts, stuffed toys and other tie-in products can also be a great source of revenue… provided that you plan your production and sales the right way.

Tie-Ins: The Basic Ingredients

In order to be able to produce tie-ins, a producer must retain the rights to royalties from the production when negotiating with any distributors, broadcasters, co-producers and other financial partners. These rights allow the producer either to sell or personally manage the production and sales licences for tie-in products derived from their property. This is called operating or exploiting a brand – a business concept known as merchandising.

Needless to say, the more popular a property (brand) is, the more possibilities there are on a large or small scale for further success…and additional profits.

Let’s take a look at a few examples where producers decided to see what merchandising could do for them.

Marblemedia, a Toronto-based company, recently launched two lines of tie-ins – mugs and T-shirts – with images of the main characters from the series This is Daniel Cook (www.thisisdanielcook.com) and This is Emily Yeung (www.thisisemilyyeung.com).

Manufacturing, distribution and sales of these tie-ins were outsourced to the specialty website Cafepress (www.cafepress.com) which handles online merchandising operations for the Daniel and Emily websites.

The formula is simple. Cafepress prints the characters’ pictures on sweaters, mugs and other generic objects, and then sells these online through “Merchandise” links specifically dedicated to these product lines on “Shop” sections of their respective websites.

(See http://www.thisisdanielcook.com/grown-ups/shop.html and http://thisisemilyyeung.treehousetv.com/grown-ups/shop.php).

These are complete, one-stop hosted showrooms, each with its own URL address and all the tools required to manage these kinds of online sales.

Cafepress takes care of everything: manufacturing of the tie-in products, storage, processing of orders and payment. All producers have to do is select the items they want to have printed, supply a graphic file of their brand’s image (a character, animal or decorative element), decide what price they want to charge for their mugs and T-shirts, and place hyperlinks to these online shops on their own websites. This exercise can be quite profitable. If, for example, Cafepress charges $7 to cover its production and operating costs on every T-shirt it sells, the producer can decide to sell the shirts for $20… and pocket $13 for every item sold.

In terms of sales volume at these online shopping pages, this case proves that it’s definitely the original brand (like a TV series or interactive production) that attracts people who want to buy. Over 75% of sales on the Daniel Cook and Emily Yeung shopping pages come from visitors who found the Cafepress site through the hyperlinks placed on the websites for the original series.

Do It Yourself?

An alternative to using services like Cafepress is to manage the merchandising internally. For example the huge success of têtes à claques (TAC) and the characters on the online shows at http://www.tetesaclaques.tv lent themselves particularly well to efforts to generate sales of the tie-ins derived from these characters. Dolls and various other items picturing the popular TAC characters were manufactured, distributed and sold. The tie-in business, however, was managed internally. But according to the producers of TAC, this was a major learning experience: it was very demanding and risky. Here are several things a producer must pay special attention to:

– Make sure you know how long it actually takes to manufacture the products you want to sell. A custom-made doll, for example, can take up to a year to produce.

– Make sure quality materials will be used that comply with applicable government rules and standards (avoid any toys that may be painted with lead paint). For information about Canadian regulations, please see:

http://www.hc-sc.gc.ca/cps-spc/pubs/cons/toy_safe-jouet_secur-eng.php.

– Make sure you understand the annual merchandising cycles and plan your product releases with these in mind. Small producers normally try to avoid competing with releases by the major American brands. You must also be able to sell your products at a competitive price.

– Make sure you know who your partners are and be very careful about how you award merchandising licences. Beware of any supplier or distributor who offers to buy all your tie-ins. Someone who specializes in gift mugs isn’t necessarily the ideal choice for making and marketing figurines. The right way to develop your brand through various tie-ins is to sell separate licences to partners with established reputations in each of the niches you’re targeting. The rule is: “To each his or her own niche!”

-You must also be prepared to manage inventory, process orders, handle various methods of payment and process returns of merchandise. To simplify matters, you can also outsource these aspects to specialists who already operate an online shopping business, such as MPV Productions (http://www.kafkaboutik.com/html_fr/Accueil.asp), Zazzle (http://www.zazzle.com), Jiinx (http://www.jiinx.com) or Animationshops http://www.animationshops.com.

Given strong audiovisual or interactive content, tie-in merchandising obviously can extend the original brand. But tie-ins must be treated as an entirely separate commercial activity because they’re subject to rules that are totally different from the ones most content producers are used to. It probably makes more sense to do your homework and consult the experts before jumping head first into a venture of this sort.

A large number of companies that manufacture tie-in products are listed on the Canadian Toy Testing Council website and on Importers.com

Producers who would like to sell directly from their own websites should also consider the cost of an online resource that makes this possible (costs and time vary with demand), as well as the costs of inventory planning and management, registration with agencies that handle online payment, such as Visa and MasterCard, not to mention methods of secure payment (there are some ready-made solutions such as Paypal (http://www.paypal.ca/) or GoogleCheckout (http://checkout.google.com/seller/fees.html ) and sales taxes (http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/menu-fra.html).

Using a Distributor

Some distributors have their own in-house merchandising department and can work with producers engaged in tie-in ventures. One such distributor is CBC/Radio-Canada, which in some cases adds a merchandising component onto its traditional negotiations for television broadcast licences and web productions.

Cuts of the tie-in pie are negotiated separately with the producer if the broadcaster believes a production on its airwaves has strong merchandising potential.

CBC/SRC has its own network of manufacturers, and manages distribution through its own nationwide chain of shops and boutiques, as well as the shopping section on its websites, where various tie-ins are sold from shows produced or aired by Canada’s public broadcaster. (Please see http://www.cbcshop.ca/CBC/shopping/product.aspx?Product_ID=FTSRC00480&Variant_ID=FTSRC00480&lang=fr-CA.)

One example of these is the tie-in associated with the children’s show Toc Toc Toc produced by the Montreal-based Téléfiction company. This highly popular show for children ages 5 to 6 features the character Grubule, a little mouse with a huge following among the target audience of young kids… and an ideal subject for a stuffed mouse toy. The first production run of 3,000 toys has already sold out. (Please see
http://www.cbcshop.ca/CBC/shopping/product.aspx?Product_ID=FTSRC00329&Variant_ID=PG2008&lang=fr-CA.)

The producer has now reordered a much larger quantity of the toys. They say that the investors in their main production, such as Telefilm Canada (which is entitled to 50% of all receipts) as well as various copyright holders (designers, graphic artists and others, who are entitled to various percentages based on agreements negotiated subsequently with their professional artists’ associations) are very happy with this initiative.

This producer warns that tie-in releases should be carefully planned so that the product appears on the market when the brand is at its strongest. Generally speaking, a tie-in launch for a given series should coincide with the first anniversary of its main broadcast… provided, of course, that the show is still drawing a major audience.

Tie-Ins via Cell Phone

The steady growth of cell phone use makes this a market worth considering. Although there are various ways of creating tie-ins for cell phones, the most popular are the production of telephone ringtones based on musical themes of TV series, or interactive features and background screens derived from these properties.

The aggregator Airborne mobile (www.airbornemobile.com) designs and distributes cell phone products for Canada’s leading wireless service providers. Because each provider uses its own technology, an aggregator is crucial as it must translate codes for ringtones and screen backgrounds so that they meet different service providers’ standards. Traditional editing facilities no longer export files in different mobile formats.

Airborne is willing to work with producers in the cell phone tie-ins sector and take charge of production and distribution of these products.

In terms of business, it can offer a minimum guaranteed payment, an advance for operating a brand, provided the brand is a highly popular one. In most cases, however, it offers a revenue-sharing formula. For a producer this may represent 10% to 30% of all receipts, or 10 to 30 cents for every dollar earned on a sale. Once again, the volume of business is directly proportional to the brand’s reputation.

The Montreal firm Lipso also provides support for tie-ins to certain areas of the cell phone market. (Please see http://www.lipso.com.)

Conclusion

Tie-ins may prove to be a valuable source of additional revenue provided they are approached and developed in a serious, thoroughgoing way. The main ingredients for success are a solid brand reputation, the right partners, and a sound production and marketing strategy.

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