Many producers and licensing agents would agree that the key to any successful merchandising campaign is gaining the maximum amount of exposure for your show. However, in an increasingly competitive and sophisticated marketplace, one that tends to expand beyond borders, hooking up with the right broadcaster to drive and support merchandising is only the beginning of a long, layered and potentially lucrative process.

‘The really successful properties are not only tv supported, they have strong roots in publishing and a commitment to high quality,’ says David Jacobs, group head of licensing at Britt Allcroft Group, a u.k.-based associate of Toronto’s Catalyst Entertainment.

And he should know. Jacobs is responsible for the licensing and merchandising of Thomas the Tank Engine and Friends, an evergreen classic property for preschoolers, distributed worldwide by Catalyst and broadcast on Fox Kids and tvontario in North America.

Since the tv series – which was born out of a book series roughly 15 years ago – was created in Britain, it has extended its name to an almost unlimited host of merchandise, including toys, apparel and videos that have captivated the attention of toddlers across the map.

‘In the hard-goods area, we selectively develop lines that can travel beyond borders because it’s cost effective to do that in terms of development. But in the soft goods, particularly publishing, we localize,’ says Jacobs.

In Canada, publishing is done with Random House Canada, Tomy handles the toy program, Brigitta Imports supplies the Learning Curve line, and a wide selection of videos is developed with Anchor Bay Entertainment.

‘Generally, what you’re doing is like a codevelopment project, where the partner develops the goods and you receive a royalty based on the sales,’ says Jacobs, adding, ‘Traditionally broadcasters don’t take merchandising rights.’

They may, however, get involved as a coproducer in the development of a project, which would entitle them to a cut of the merchandising revenue. Or, in some cases, they might take a larger position in a property by forgoing money in the licence fee to be returned through a royalty structure.

‘Typically in Canada, broadcasters are in a position to take an equity position in a show and would then share in any merchandising, but it’s usually not linked to the licence itself,’ says John Leitch, executive producer at Toronto’s Radical Sheep Productions. ‘The situation is different in the u.s. pbs has become much more aggressive in terms of getting a piece of the back end. They recognize what they have in terms of generating dollars and they’re saying, ‘If we’re such a key piece of this puzzle then we better share in the revenues,’ and that deal’s struck right away.’

Likewise, the American pubcaster pays Radical Sheep zero licensing fee for The Big Comfy Couch, which airs on pbs affiliates across the u.s.

And unlike Disney, which has the capacity to launch a merchandising program and a show at the same time, smaller prodcos don’t have the resources to promote and advertise a series at such an early stage of the game.

To many Canadians, this last point might seem like an obvious disadvantage, but to Sid Kaufman, Nelvana’s vp of merchandising, a successful licensing and merchandising program should be rolled out slowly, and only when a property has already established a market.

Nelvana’s animated series Little Bear, for example, wasn’t merchandised until its fourth season, largely because the market wasn’t there. The book on which the series is based, however, has been in publication (Harper Collins, u.s.) for more than 40 years, so when the company initiated its merchandising program, it approached retailers who understood the property and whose customers might be familiar with it.

In recent years, Nelvana has taken much more control of the merchandising process. ‘We meet with the retailer directly before the licensees because we’re trying to create opportunities for the properties. Instead of our licensees going out and selling a buyer, we’re out selling integrated programs with promotional overlays and cause-related outreach,’ says Kaufman.

In a similar fashion, the prodco tries to find selected opportunities to leverage its brands with retailers, ‘so they don’t have to worry that the guy down the street has it for less. In return for exclusivity, they will promote our brand. It’s a win-win situation for the retailer and the licensor,’ says Kaufman.

Nelvana recently concluded a highly successful program with u.s. retailer Target on Little Bear. Target was given an exclusive apparel licence, and in exchange, it ran ads to promote the merchandise.

Similarly, Nelvana has a licence arrangement with an undisclosed retail chain, which will promote Franklin the Turtle merchandise and feature it as an exclusive.

The core categories for merchandising are publishing, home video, toys, apparel, multimedia and accessories.

Nelvana gives its licensees full grant of rights. ‘We’re not slicing and dicing the pie so small that we’re overlapping in our grant of rights. We try to give our licensees full rights to operate in their category,’ says Kaufman. ‘We also don’t like to stretch our properties into product that doesn’t make sense.’

As for the broadcasters’ role, Kaufman says although it comes on a case-by-case basis, Nelvana, which has a relationship with most of the children’s broadcasters in the u.s. (pbs, Nickelodeon, the Cartoon Network, Fox Family and wb), tends to work collaboratively and encourage cross promotion.

On the importance of working with an American broadcaster, he says: ‘You pretty much need one.’

But Mary Graziano, manager of licensing at Montreal-based Cinar, disagrees. Although she follows the mantra ‘You’re only as good as your broadcast support,’ she cites Cinar’s Caillou, broadcast on Teletoon daily, as a perfect example of a Canadian series that has garnered much merchandising success without an American broadcaster.

She does admit, however, that when the series begins airing on pbs in September 2000, ‘there will be spillover, especially into English-speaking Canada, and that will just reinforce the awareness of the show more.’

Merchandising for the series includes home video, plush, home fashions, games, puzzles, plastic figurines, bedding and apparel.

‘Once you have a strong broadcaster behind you, then you have to identify the essence of the property and how that spins off into product. Once that is done, you identify the manufacturers of the products you want to go after, and at the same time, you should be selling the property to retailers,’ says Graziano.

Cinar’s licensing deals are largely based on sales projections from its licensees. ‘Once they’re signed on, we meet to develop product and product rollout. We try to understand their business, their major trade shows, what they will need from us to help support their effort. A style guide is developed and given to them, and with that they can develop product to reflect the program,’ says Graziano.

Licensing and merchandising is a massive, complicated and costly endeavor from whichever side of the fence you stand. Likewise, manufacturers and retailers are becoming increasingly sophisticated and asking the right questions like, What are the ratings? What’s the time slot? Who’s on board? How are you going to help support the project? It’s no longer just a matter of plastering a logo on a product.

As for the future of merchandising, Graziano says, ‘I think it will only get tougher. Licensors will really have to do it all, from art development, marketing, licence acquisition, to retail presentations and relationships. Also, a lot of the buying decisions at retail stores for licensed product are not being made at the buyers’ levels anymore, they’re being made above, so you need management support, which means the licensor will have to go in.’

In addition to Caillou, Cinar’s current merchandising focus is on Wimzie’s House (pbs), Zoboomafoo (pbs) and Mona the Vampire (ytv).

Cinar acts as producer, licensor and licensing agent, the latter being the major difference between the larger prodcos like Cinar, Nelvana and Catalyst, and the smaller ones.

Radical Sheep, for instance, uses Hollywood Ventures, an external licensing agent with which it equally shares merchandising revenues (8% to 12% of any wholesale sales).

In the case of Big Comfy Couch, Hollywood Ventures also acts as u.s. distributor.

‘In terms of finding distribution for our new product, we’re trying, particularly with Amigo & Me, to ensure that whoever distributes has a licensing and merchandising arm as well,’ says Leitch.

‘It’s one thing to get a show placed in a country, it’s quite another thing to get it placed in the right place at the right time.’