The Pop Idol format earned owners 19 Management and Simon Fuller £615m in 2002 alone. Much of that came from its international rights - it has been commissioned in 21 countries to date. But a significant portion will have been generated from the various merchandising and licensing deals now supporting the show.
Such has been the success of American Idol in the US that five of last year's sponsors are returning for the third series, which begins on January 20. Joining the existing line-up of AT&T Wireless, Ford Motor Company, Coca-Cola, Herbal Essence shampoo and Old Navy (the Gap Group-owned 400-strong clothing retailer) is Subway, the biggest fast-food restaurant in the US, with 14,000 outlets.
Compare that with the response to Pop Idol in the UK and the differences in what drives brand marketing strategies on either side of the pond when it comes to licensing are clear.
US programme sponsors get more for their money than their UK counterparts.
"Regulations in the US are relaxed. You can't have someone on screen saying 'I love Coke', but you can have in-show segments and product placements," says Olivier Gers, senior vice-president at Pop Idol production company Fremantle Media.
This liberal approach includes the Idols singing in a mini-video featuring Ford cars, Coca-Cola-branded cups in front of the judges and a branded Red Room featured in the show's wrap-up segments.Not only is AT&T's logo shown on screen when viewers are asked to vote, but it has levered its Pop Idol connection so that American viewers can only vote via SMS if they are AT&T customers. The result, claims Gers, is that AT&T single-handedly launched the use of SMS in the US through American Idol.
Gers admits sponsor activity is "blatant" but insists: "We translate sponsors' brand messages and integrate them into our production. If you watch the show, it is organic - our viewers would switch off at bad product placement."
Stringent UK regulations
But such liberalisation doesn't mean US marketers are more sophisticated in their use of licensing, argues Andrew Levy, managing director of licensing trade body Lima. Along with other commentators, he notes that US brands use TV ads as the primary vehicle to promote third-party links. In the UK, more stringent regulations force marketers to run integrated campaigns that incorporate below-the-line mechanics. "Europe is more conservative and you can only have one official sponsor," explains Dom Wheeler, licensing director at Fremantle Licensing Worldwide.
Nestle has been Pop Idol's only sponsor. It can't carry out product placement as in the US, so its presence is limited to pre- and post-show bumpers, and ad breaks. It took its link off-air last year with Choc Idols, a competition engineered partly in-house and partly through M&C Saatchi.
The on-pack promotion, on-shelf throughout the second series of Pop Idol, which finished in December, ran on six brands: Milky Bar, Nestle Double Cream, Mint Aero, Smarties Bar, Kit-Kat Chunky and Rolo. Each was given its own distinct personality and lifestyle, and viewers could see the characters on either side of programme ad breaks and vote for their favourite, either through digital interactive TV or a dedicated web site. Up for grabs were tickets to Pop Idol screenings.
Nestle Rowntree marketing manager Sam Ellison says it was the biggest sponsorship to date for Nestle's chocolate division. "Our positioning is 'Nestle brings chocolate to life' and the Pop Idol property gives us a chance to do that. It matches our target audience and brand personalities, allowing a great deal of synergy," she says.
The commercial success of the Pop Idol property is based on one simple reason: it travels well. It has a consistent global branding that can be adapted locally. As might be expected, Gers sees the US sponsor format as the way forward for Europe, but that level of liberalisation is some way off.
As entertainment becomes an ever more integral part of consumers' lives - and so increases its appeal to brands - an obvious option is movies, where the playing field becomes more level. Films such as Shrek 2, Spider-Man 2, Harry Potter, and The Lord of the Rings are enticing brands after a five-year lull in licensing link-ups and a spate of releases that didn't deliver.
Hollywood love story
Even here, differences in approach prevail. Tim Collins at DreamWorks - the studio behind Shrek - says: "American businesses are entertainment-friendly to the extent that big corporates make regular trips to Hollywood to keep abreast of developments and to identify the next big thing. Because American culture has a love affair with Hollywood, brands have to view it as important," he says.
With TV dominant as the main vehicle in leveraging third-party deals, "a competition premium or prize is less important and brands plough a significant number of dollars into these ads", adds Collins.
Brands use movie characters in their TV and print campaigns, and studios such as DreamWorks and Universal offer various options where characters can be placed in a brand's environment or used in ad campaigns.
DreamWorks' Shrek has featured in an ad for retailer Wal-Mart, which Collins estimates represents a third of all licensees' merchandise business. Universal similarly linked its Hulk blockbuster with soft drink Mountain Dew, and Sony offers a digital remastering service in which films are reworked after they have been shot to incorporate background billboards and products that fit with the regional needs of its brand partners.
"That has started to take off now. We did it with Charlie's Angels: Full Throttle and you'll be seeing more of it with Spider-Man 2," says George Leon, executive vice-president at the Columbia TriStar Marketing Group.
And while the fast-food and mobile phone industries are long-term prolific users of third-party enter-tainment links - both T-Mobile and Siemens say it is central to their marketing strategy - other categories have been waking up to the medium.
"We have a global deal with a major cereal manufacturer for Spider-Man 2 where the corporate head office has done the initial deal and we're working with its territories to decide which brands in which regions are featured in the movie," says Leon.
Like Gers, Leon claims that global deals are the way forward for brands, but stresses the imperative of having "a seat planted firmly in the regions".
Commentators agree that success invariably lies in local execution due to two market factors: economies of scale and pressure of gaining incremental retail space to ensure sufficient bottom-line impact.
While TV ads are seen as a sure-fire winner - provided the brand is working with the right licence - Leon argues that "you can't have the TV focus you see in the US working to the same extent in the UK, because brands have to fight harder for retail space to convert profile into sales".
Chris Taday, vice-president of Columbia TriStar Marketing Group, says: "Retail in the UK is not as consolidated as in the US, so brands have to spread their wealth across many chains to run successful campaigns."
And as Simon Gresswell, founder of licensing consultancy SPLG, points out, bigger activity can be run in the US because there are no language barriers and fewer cultural differences, whereas the more fragmented European landscape means that however global the brand, marketing teams tend to be headed regionally.
Siemens is a case in point. Last October it struck a third-party deal to support the launch of its MC60 prepay handset on T-Mobile with Twentieth Century Fox's X-Men 2 on DVD and video. The synergy between brand and movie revolves around the X - which features on the handset design.
John Bernard, channel marketing manager at Siemens, says the brand had been "looking at getting into bed with a major release for a while, and X-Men 2 was the biggest hit of 2002".
Partnership power
The promotion, through Grasshopper, gave consumers a free DVD featuring the original film and a preview of X-Men 2 with a purchase of the Siemens MC60 handset on T-Mobile. It was supported by poster and promotional handset box packaging, as well as text-and-win activity on all X-Men 2 DVDs produced for the UK.
Bernard's territory is the UK and his objective is to raise Siemens' profile. He says the X-Men 2 link isn't flawed by the lack of a pan-European element because the strategy of working regionally rather than globally delivers effective results.
"Licensing partnerships are pivotal to raising awareness, and we have deals with Real Madrid and the McLaren F1 team. In the UK we introduced a Java racing game off the back of our McLaren sponsorship, which helped achieve 12.7% market share to December 2002 in handset sales, up from 5% in April 2002," he says.
Ultimately, as Leon says, licensing affords an opportunity for brands and property owners to market smarter.
Brands and their partners share the need to get on-shelf. As Nestle knows, an effective way is to create interest to grow category. Ellison concludes: "There's interest in Choc Idols and consumers understand it. The first roll-out is exceeding expectations in the amount of stock we're getting out. It's looking good."
CHARLIE'S ANGELS GO FULL THROTTLE WITH T-MOBILE AND CINGULAR
One of the biggest movies of last summer, Charlie's Angels: Full Throttle, took more than $150m (£90m) at the global box office for Columbia TriStar, the Sony Pictures Entertainment-owned studio.
"Everyone wanted to get placement in the movie," says George Leon, executive vice-president of global promotions and product placement at the Columbia TriStar marketing group. "Wireless provided one of the best fits for movie content because the Angels communicate with Charlie by phone, so we linked with T-Mobile in Europe through our global partnership deal, and with Cingular in the US." Mobile phone use differs in the US to the UK. The focus in the UK is on the use of data such as downloadable games, so T-Mobile's aims for its European work concentrated on the data messages; Cingular focused on the voice side. Both leveraged their alliances with the film, although in different ways.
While T-Mobile created executions in line with its ongoing 'What will you start?' campaign, Cingular focused solely on a bespoke TV campaign driven directly from the film through scene extracts. "Cingular created two separate spots on a simple message - 'I'm so cool, I could be an Angel'," explains Leon.
T-Mobile's approach was more complex. Its partnership with Sony Pictures Digital Network was brokered globally at about the same time the provider decided to consolidate its various operators under one brand, T-Mobile, in April 2002. The Charlie's Angel: Full Throttle link was the first exclusive content deal to emerge from this partnership.
It ran last June across the UK, Germany, Austria, the Czech Republic and the Netherlands. In addition to the ad - best described as a trigger-happy suntan lotion beach fight started by a picture text of Lucy Liu in gun-wielding pose - T-Mobile offered a package of down-loadable images, ringtones, Java games and video trailers from the film aimed at increasing use of its t-zones service.
T-Mobile's approach typifies that of European brands in general, according to Leon. "The campaign here was a lot more integrated than in the US because in the UK, brands invest more of their marketing dollars on in-store," he says.
WHAT'S BIG IN THE US
Top five hot US properties
1 Spider-Man
2 Yu Gi Oh!
3 Disney Princesses
4 Bratz
5 SpongeBob SquarePants
Source: Advanstar US, organiser of Licensing International
HOT PROPERTIES FOR 2004
- The Cat in the Hat (Universal)
April
- Garfield (20th Century Fox)
Summer
- Catwoman (Warner Bros)
Summer
- Shrek 2 (DreamWorks)
June
- Harry Potter and the Prisoner of Azkaban (Warner Bros)
June
- Looney Tunes: Back in Action (Warner Bros)
February
- Spider-Man 2 (Sony)
July
- Thunderbirds (Universal)
July
- Van Helsing (Universal)
Summer
- Shark Tale (DreamWorks)
November
- The Polar Express (Warner Bros)
November
- Scooby-Doo 2: Monsters Unleashed (Warner Bros)
Release date to be confirmed
AND FOR 2005 ...
- Robots (20th Century Fox)
- The Magic Roundabout Movie (Pathe)
- Star Wars: Episode 3 (LucasFilm)
- Madagascar (DreamWorks)
Source: License! Europe Magazine
LICENSING EVENTS IN 2004
Licensing International 2004
Date: June 8-10, 9am-5pm
Venue: Jacob K Kavitz Convention Center, New York
In its 24th year, Licensing International is the premier annual trade event and conference where consumer product manufacturers, retailers and marketers go to acquire intellectual property rights, forge merchandising and promotional ties and preview trends that have an impact on consumer spending.
Brand Licensing London
Date: October 26-27, 9am-6pm
Venue: Earls Court 2, London
Now in its sixth year, Brand Licensing London is Europe's premier event where all the major property owners, representing thousands of brands, characters, images and more, come together. It attracts more than 130 exhibitors, 2000 properties and brands available and more than 5400 manufacturers, retailers and marketers.
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