Beef jerky and sofas: Why Hearst is expanding product licensing

Publishers need to play to their strengths when diversifying revenue streams. For lifestyle magazine brands like Hearst Magazines UK, this means co-creating branded products that it knows its loyal audiences want. Product licensing is becoming an increasingly important part of its business.

Revenue from product licensing makes up 5 percent of Hearst’s total revenue, a growth of 30 percent from 2014, according to the publisher. Given the growing interest in product licensing from Hearst’s ad partners, the publisher expects this to reach between 15 and 20 percent over the next three years. This revenue doesn’t include the additional revenue that Hearst could also get from promoting the products through its media channels. In the U.K., Hearst has around 25 different product deals at the moment, including flower bouquets designed by Country Living, a variety of carpets by House Beautiful and gym equipment by Men’s Health.

“Licensing is supposed to do two things: sell products and give the manufacturer a long-term strategic association with our brand — that’s gold dust,” said Duncan Chater, chief brand officer of luxury, young women, fitness and health at Hearst Magazines UK.

Product licensing is nothing new. Hearst has dabbled in it for years, but a cluttered media landscape, plus dwindling ad revenues, has renewed its appeal: Manufacturers want their products to seem authentic, and magazine brands make a product seem more relevant to a consumer.

Men’s Health beef jerky is available in U.K. supermarket Tesco.

Typically, Chater said Hearst’s product licensing deals take around a year to finalize because they need to work out the product, packaging, launch and marketing plan. For instance, the Men’s Health editorial team spent time making sure its brand of beef jerky had the right protein levels without compromising on the taste.

While taking a year to finalize a contract is a big change from selling advertising, the obvious benefit is that deals last longer. Hearst has worked with sofa retailer DFS for seven years. For DFS, exclusive brand partnerships with House Beautiful, Country Living and French Connection have delivered a 35 percent growth in bookings in 2016, an increase of 75 percent from 2015, according to the retailer’s annual report.

Country Living’s Interflora bouquets

Men’s Health conducted research that found that 70 percent of readers are the primary food buyers at home, making the decision to create Men’s Health-branded food products targeted at the audience seem low risk. Hearst’s product licensing deals can originate from the publisher noticing a gap in the market or from brands and manufacturers approaching it.

For Hearst, aside from an additional revenue source, product licensing is becoming more attractive because of the additional data it can get from audiences and how this can be used in content and commerce strategies. A quiz on Cosmopolitan about what retail therapy will help you on a bad day — lipstick, shoes or a handbag — can be shared with licensing partners to create new products and used for retargeting audiences with relevant content or commerce-related posts.

“A big focus on the coming months and years will be thinking what does precision marketing look like for commerce data and how we utilize across the business broadly, not just through licensing products, but print and digital as well,” said Chater. Connecting these dots across the business is something all publishers grapple with, and Chater notes that Hearst is still in the learning stage.

As with any growing area, Hearst shouldn’t pursue all product licensing opportunities thrown its way, and not all of its magazine brands will suit product licensing. Typically, the publisher will try product licensing with magazine brands that have highly engaged and invested audiences.

“Our focus is understanding if the opportunity is scalable; there has to be a return to the business,” said Chater. “We know the areas within which of our brands that we want to engage with; that’s the filter we use.”

Images courtesy of Hearst

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