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Celebrity Endorsements – The Scent Of A License

How have celebrity scents become huge licensing opportunities? Do you smell that? Fee-fi-fo-fum, I smell the growth of celebrity scents. Yes, not only is celebrity licensing in general seeing tremendous growth opportunities, but in particular, the business of licensing celebrity scents is experiencing a steady rise.

Growth Areas for Fragrances… and Celebrities

One of the main reasons that scents will be a growing licensing opportunity for celebrities is that the fragrance industry in itself is expected to experience significant growth. Global Industry Analysts, Inc. released a Global Strategic Business Report on Fragrances and Perfumes last year, which forecast that the market will reach about $45.6 billion by the year 2018. That’s a lot of scents! And all those dollars and cents add up to something that celebrities should not be snubbing their noses at.

Global Industry Analysts also anticipate that there will be continued growth in the geographic areas of Europe, Latin America, and the United States. Most of the growth geographically, will come from the Asia-Pacific and Latin America regions. But also look towards Africa and the Middle-East for potential growth.

As all industries become more global in nature through continued improvements in communications technology, these areas will become much more exposed to the fragrance market and in purchasing opportunities.

Additionally, as younger teens and young adults place more emphasis on the importance of looking attractive and smelling good, their disposable dollars will increasingly be spent on fragrances and beauty products. Many of these teens and young adults will be looking towards celebrities in their own age groups for retail influences — we have already seen Justin Beiber and Taylor Swift enter the fragrance market. And don’t overlook the power of teen consumerism. With the aging Baby Boomer generation, and everyone wanting to look and feel younger, today’s youth is a big influence in their parents and even grandparents purchasing decisions.

The History of Celebrity Scents

Let’s look back at the history of celebrity fragrances for inspiration. Mae West was the model for the curvy perfume bottle of Elsa Schiaparelli’s fragrance Shocking in 1937. Today the bottle is considered a collector’s item. Later in the 1950s, Audrey Hepburn had a scent created by Givenchy.

The giant leap into the multi-million dollar celebrity licensing trend was when Elizabeth Taylor announced in 1987 that she would venture into the fragrance market with the release of her new perfume, Passion. Explaining the name, Taylor said that “Passion is the ingredient in me that has made me who I am.

It’s my passion for life… my passion for passion that has made me never give up.” Taylor’s introduction into celebrity fragrances was accompanied by a $10 million promotional campaign, which led to Passion becoming an overnight success. Passion’s success for Taylor may have been somewhat of a surprise, since the actress was no longer acting. But she did continue to have a large and loyal fan base. Taylor focused in on perfumes because she felt that was the business she was meant to be in, saying that “I think [perfume] is more than just an accessory for a woman. It’s part of her aura. I wear it even when I’m alone.” Passion was successful because Taylor put her heart and soul into developing her brand. She participated in all steps of promotion and creation of the scent – from working with the chemists in developing the perfect scent, to packaging the perfume in her signature shade of violet. By 1991, sales of Passion reached an estimated $100 million dollars.

The success of Passion and Passion for Men led to the 1991 release of the perfume White Diamonds, this time with a $20 million dollar promotional campaign that included tours of high-end department stores in the United States and Canada. White Diamonds continues to be one of the best-selling celebrity fragrances, and is the model that other celebrities with perfume deals try to emulate. By 2007, White Diamonds had made more than a billion dollars in sales; and in 2010 alone, White Diamonds grossed $61.3 million globally, becoming “the most successful celebrity fragrance of all time.” After Taylor’s death, in 2011, her fragrances still continue to provide her post-mortem estate with plenty of value.

In Forbes annual list of top dead celebrity earnings for 2013, Elizabeth Taylor was ranked number 4, earning her estate $25 million, which expects to sign on more licensing deals in the future. The House of Taylor Beauty currently has eleven successful fragrances that are distributed by Elizabeth Arden, Inc.: White Diamonds, Sparkling White Diamonds, Brilliant White Diamonds, Diamonds and Emeralds, Diamonds and Rubies, Diamonds and Sapphires, Elizabeth Taylor’s Passion, Elizabeth Taylor’s Passion Men, Forever Elizabeth, Gardenia, and Black Pearls.

Taylor’s fragrances have made her an icon in the business of celebrity scents. With over 200 scents released every year, a celebrity affiliation can help raise awareness for one scent over another. And with so many dollars in the smelly pot, there are plenty of celebrities who want in on that dish.

Celebrity Scents Today

We mentioned earlier that the fragrance and perfumes market is expected to reach $45.6 billion by the year 2018. Since it takes time to bring a fragrance to market (finding a celebrity, creating a fragrance with the perfumer, designing a bottle, distributing the perfumes to retailers, developing a marketing campaign, etc.), we are sure there are plenty of celebrity fragrance licensing deals currently in the works.

The business of licensing celebrities can be a win-win in many industries for both the celebrity and the manufacturer.

Celebrities usually don’t have too many responsibilities with their licensing deals, and manufacturers add to their profits.

Perfume deals can be especially appealing as celebrities usually get between a 5-10% royalty rate, plus typically get an upfront payment for licensing their name. Perfume bottles retail approximately between $60-$100 and the cost of manufacturing is estimated at only 25% of retail; so the high margins offer a fantastic value proposition for both the licensee and the licensor.

For those attending the annual Licensing Expo, we will gain access firsthand to a celebrity who has ventured into the fragrance market. Nicole Richie, who is providing one of the Licensing Expo Keynote Addresses, has her own fragrance line Nicole which was inspired by her memories of her mother layering bath oils, lotions and perfumes to create a unique fragrance. Along with her House of Harlow 1960 fashion collections, Richie has turned from being the young party girl from The Simple Life to her own reputable fully-fledged brand.

Richie’s success has also come from her taking an active role in her licensing opportunities.

Besides financial ownership, she takes ownership in the product with the scent itself and the bottle design. The scent becomes the persona of the celebrity.

For Richie, her perfume was a natural extension of her celebrity brand. And that is true of many celebrities who may wish to enter into the scents scene. If you can create a celebrity fragrance brand, the natural extension is into beauty products, hair supplies, fashion, and so forth. Celebrity scents are just a stepping stone for a complete celebrity licensing package.

As we stated before, many celebrities are jumping into the fragrance industry because of the win-win situation it affords them. Even celebrities who poo-pooed the idea in years past have changed their smelling instincts and jumped on the scented band wagon.

Take Adam Levine. In 2011, Levine tweeted, “I would like to put an official ban on celebrity fragrances. Punishable by death from this point forward.” So what changed his mind last year, when and stable exposure increases a celebrity’s value. And products, including fragrances, do not have to always be high-end exclusive licensed deals. Celebrity fragrances and other licensed products geared toward the discount consumer, such as WalMart, CVS, or Target shoppers, fare just as well, if not better.

Britney Spears is one celebrity whose estimated $220 million+ net worth most likely comes from her licensing royalties, since she has not made much of an impact on the music scene lately. But remember the key to her success is that she launched her fragrances at the peak of her career, and has kept a loyal following.

Coty, Inc. is one company that is at the forefront of holding a portfolio of many of the celebrity fragrances, becoming a one-stop shop for the celebrity. As a whole, Coty’s net revenues, for fiscal year 2013, was $4.6 billion, with their fragrance portfolio accounting for 54% of those earnings. They have dealt with many celebrities, many times having the foresight to know what celebrities will be successful in their careers. Coty helps oversee all the steps, from conception, to dealing with the perfumery, to distribu- Levine released his duo of scents Adam Levine for Men and Adam Levine for Women? I’m sure the allure of possible multi-million dollar royalties may have been a touch tempting. He does promote that his scents are not like other celebrity perfumes, and that what sets it apart is “It’s very basic and very classic, the anti-celebrity fragrance.” But it still takes someone with a celebrity status to promote an anti-celebrity product.

And many celebrities besides Levine have embraced the concept of fragrance licensing deals as a worthwhile alternative to endorsement deals. While celebrity endorsements are still popular and successful, (Nicole Kidman and Chanel, Catherine Zeta-Jones and Estee Lauder), a licensing agreement is a better deal for the celebrity.

The celebrity is the connection to the licensed perfume, and needs to be at the forefront of their own advertising campaigns. A licensed celebrity is no longer just a spokesperson getting a onetime fee, but someone who has and takes ownership of their personal brand. The goal for celebrity licensing for any type of product line is longevity. Longevity tion to department stores. Their success with Jennifer Lopez in 2002 helped them approach many rising celebrities, from Beyoncé to One Direction, and inspired a new gold rush of celebrity scents.

Sometimes the licensing promotions may help a celebrity’s appeal grow further.

Tim McGraw may be one example. A country music singer, and married to another country singing darling Faith Hill, he exudes the scent of Middle America.

But many musical fans outside of the country genre were not aware of Mc- Graw. The promotion of his first cologne coincided with the release of the movie The Blind Side, where McGraw played the leading role opposite Sandra Bullock.

Since then, McGraw’s brand awareness has grown over 13% and his appeal to marketers over 6% (The Marketing Arm, Davie Brown Index). Did one help the other? You can make the point that for a celebrity, the added exposure in licensing your name to a fragrance will make your business as a celebrity even more marketable.

Fans now know McGraw worldwide, and that provides added value.

To stay on top of the competition, celebrities and their licensed products need to stay innovative. Yes, the scent is the key and a quality product will keep consumers returning to the perfume counters. But innovative ideas will get new consumers attention (and their dollars), especially those in the teen/ young adult age group. Take Lady Gaga’s Fame perfume. The black colored juice becomes invisible once airborne. The perfume’s revolutionary fluid technology is the first of its kind. You must agree, that’s pretty cool. As the industry looks towards marketing to a younger age group, image and lifestyle are key factors in winning the celebrity perfume race.

We are interested in how technology will play into innovative ways to capture this new generation’s cents. Will Beyoncé’s perfume waft through a smartphone app as you’re working out to “Single Ladies”? We wonder how that will play out at the gym.

Besides expected market growth through younger age groups, remember that geographically most of the growth in the fragrance market is expected in Asia-Pacific and Latin America. Both are in cultural areas where consumers typically place value on their local celebrities. We would expect that local celebrities would enter the world of celebrity fragrances. Licensing should prove to be a very lucrative market in these emerging localized areas.

The Impact of Social Media

Part of placing value on a celebrity brand, as we do at CONSOR, is that in today’s media atmosphere you must take into consideration the amount of self-promotion that the celebrity includes in their personal marketing. Visual imprints create value for the celebrity and their licensed products which they are promoting. Every view, like, share, and retweet is value.

Paris Hilton is a prime example of how social media has kept her products in the consumer’s minds. With over 12.5 million Twitter followers, Paris Hilton’s perfumes sell, and most are available at WalMart and Target, as well as Macy’s.

For a celebrity that is no longer at the forefront of the public eye, and whose reputation was tarnished a few years back, she keeps her perfumes in demand through her tireless self-promotion via social media. While Hilton is no longer a marquee celebrity, her perfumes remain in demand.

The Celebrity’s Bottom Line

Licensing success in the fragrance market, or any other market, is achieved by the celebrity’s own vision and commitment.

The celebrity is the connection to the consumer and that celebrity needs to be in the forefront. Celebrities have to own it to make it as a licensed icon. And true success comes to a celebrity when they create such a successful fragrance, that a whole licensing portfolio can be developed. As we see with the success of Elizabeth Taylor’s perfumes, the goal is to create a celebrity brand that transcends the real celebrity themselves. No matter what happens in the celebrity’s career, their personal life, or even if they are dead or alive, an iconic celebrity brand enjoy staying power, and that is lasting value.

Is there growth in the licensing of celebrity scents? Perfumes are a sexy business, and it takes appealing celebrities to draw attention to their scents. Even as an initial naysayer, Adam Levine should admit that it’s his sex-appeal that makes his anti-celebrity scent a hot product for men who want to be like him, or for women who want to feel skin tight against him.

Yes, celebrity fragrance licensing has grown, and will continue to grow along with the global fragrance industry.

Weston Anson’s newest book, entitled “Right of Publicity: How Much is Your Client Really Worth?” is due out later this year, and will be published by the American Bar Association, Section of Intellectual Property Law.