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Merchandising: Cult meets commerce

For some people it is an expression of their enthusiasm – for others it is fan loyalty, branding and a huge business. Merchandising is a real growth market and beyond that a sector, which becomes increasingly more interesting for the promotional products industry.

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“The postman wants an autograph. The cab driver wants a picture. The waitress wants a handshake. Everyone wants a piece of you,” John Lennon once said in the mid-1960s, when “Beatlemania” was at its heights. Worshiping heroes and role models is probably as old as mankind itself. The industrialisation of the star cult however is a modern-day phenomenon and was first made possible by the mass media. There was indeed a flourishing market for star memorabilia of all kinds in Lennon’s era already, but the development of the merchandising industry took several decades before it developed into its present form. And, especially in the music sector, it is currently thriving: Whereas the music industry itself is presently experiencing a crisis, the opposite is true for merchandising. The revenue in the area of legal download and streaming platforms can nowhere near compensate for the dramatic losses in the physical record sector, which is why additional business fields are extremely welcome. One of them is the marketing of fan items, which is in the meantime a business area at each major label.

Merchandising products offer high profit margins – some tour shirts are sold for 50 Euros and more – as well as having the big advantage that they can’t be illegally downloaded. Both the amount of concert-goers and the prices for live experiences have increased significantly over the past 15 to 20 years – the artists can still earn money with tours, but also with the offer of merchandising products. A significant source of income not least for the artists themselves – many smaller acts earn a considerable part of their living with fan items. Merchandising stands at concerts and in particular at festivals are in the meantime the size of a small living room and even if the T-shirt is still the number one revenue driver, the product palette has long since become extremely diversified. The items are certainly not just bought “live”, but indeed also online as well as in the stationary retail outlets: For example, T-shirts bearing the tongue of the Rolling Stones, the striking lettering of AC/DC or the emblem of the rock ‘n’ roll dinosaurs Motörhead are offered in numerous fashion chains. Even though the days of the physical record may be numbered, the fans are still loyal – and willing to invest.

Cult on the stands

This also applies for the area where the fan following is at least on a par with the music sector: sports. According to the statistics portal, Statista, worldwide 19.57 billion US dollars were turned over in 2014 with sport merchandising. One doesn‘t have to be an expert to work out that the lion’s share of this sum derives from football. Whether in Buenos Aires or Belgrade, Glasgow or Gelsenkirchen: There are hardly any limits to the devotion of many fans for their club and in some cases it literally accompanies them to thegrave: The columbarium of the “Camp Nou” for instance, the stadium of FC Barcelona, offers room for the ashes of 20,000 fans. Even for football fans who aren’t that fanatical, it is more or less part of the DNA to hold up the club’s flag – and a sea of followers in the colours of their team are what make the mood so unique on the stands. In the meantime, a lot of the premiere league clubs make around a fifth of their overall turnover with fan items. As far as the average annual merchandising revenues per club are concerned, in the season 2012/2013 the British Premier League topped the rankings with 10.2 mil. Euros, closely followed by the Spanish Primera División with 10 mil. In third place: the German Bundesliga with 8.9 mil. These are, of course, average values – the turnover of many of the big clubs is much higher: Real Madrid, which according to the Deloitte Football Money League 2015 was the richest club in Europe last season, sold an estimated 1.4 million kits in 2014. After the record transfer of Cristiano Ronaldo to Real in 2009, over one million Ronaldo kits were sold alone. Manchester United sold 5 mil. fan items during the 2013/14 season, including 2 mil. kits. Bayern München sold 1.2 mil. kits in the same period – more than all other 17 German Bundesliga teams together – and achieved an overall turnover of around 105 mil. Euros with fan articles. In addition to the “Holy Grail” of the football fan items, the kit, the football clubs are also placing their bets on a wide offer – there is nothing that can’t be bought in the shops of the big clubs.

From gamers through to students

Beyond this, diversity and in some cases even exotic items prevail in a further sector that has advanced into a huge market for the suppliers of fan items within just a few years: the gaming scene. The Gamescom in Cologne, the world’s largest event for computer and video games, introduced an extra hall for merchandising items for the first time this year, which impressively documented the offer that the market has in store in the meantime. Gamers love their games worlds, the costumes and above all collecting: Sometimes a limited edition of an event item distributed to the public is auctioned off on eBay the very same day for hundreds of Euros.

Merchandising is fan loyalty, branding, image transfer and a lucrative branch of business that more and more industries, corporations and companies are discovering for themselves – from breweries and food brands, to universities, museums and media companies, through to small sports clubs and bands of all kinds of disciplines or genres. In some cases, this is due to the fact that the offer of products on the market is becoming increasingly more comprehensive and diversified – in the textile sector alone: Whereas badly cut XL T-shirts dominated the market in the 1990s, today there is hardly any garment that is not available as a promotional textile version, what’s more in a variety of cuts, materials and qualities, enhanced by organic and fair trade alternatives. On top of this, it has never been so easy before to individualise textiles and other products at such realistic costs, in good quality and in such small volumes. In this way, merchandising collections can be developed for relatively small budgets. A huge opportunity – not only for the users, but also for the promotional products industry. Because whereas the “big business” frequently lies in the hands of the giants – for example, the top leagues have lucrative contracts with the major sports manufacturers such as Adidas, Nike or Puma – a few levels below there are also interesting opportunities for smaller suppliers from the promotion area. Even certain promotional products distributors take advantage of their full-service know-how and develop merchandising programmes. The business with the fans is a growth market – and offers an invaluable advantage compared to other fields of application for haptic advertising: It is relatively crisis-proof. Even in times of narrow advertising budgets, declines in the sales figures and economic discord there is a target group, who are loyal to their idols and which indeed even continues to grow: the fans. And they all want a piece.

2016-10-21T14:22:14+00:00 October 16th, 2015|