Hearst UK continues to delve further into brand licensing to diversify its revenue streams, which, on Esquire, have doubled annually, according to the publisher.
For the second year, Esquire has co-created 10 items of clothing and accessories with 10 different retail partners. The capsule collection is meant to feature all the winter wardrobe essentials, including a pair of shoes by Crockett & Jones for £420 ($513) and socks from The Workers Club for £20 ($24), all linked with a warm orange color highlight.
The collection will be on show at the Esquire Townhouse, the magazine’s annual three-day event which features panels, talks and masterclasses, sponsored by watchmaker Breitling. After that, items can be bought from Esquire and the participating brand sites for the next nine months.
“We’re leveraging all different platforms and channels, launching the range on Instagram, digital galleries and shots in the print magazine,” said Alun Williams, managing director, men’s lifestyle and health and fitness for Esquire. “This is part of our revenue diversification strategy and growing the Esquire ecosystem where we can interact on a personal, close level with our very affluent, desirable readers.”
Hearst has prioritized diversifying revenues to cater to downward pressures of print circulation, along with the volatile digital advertising market. Licensing has proved fertile ground. Hearst UK has a long history of brand licensing, some on the more creative side, like beef jerky from Men’s Health and hotels from Country Living. Having the internal systems and existing partnerships set means it has been able to increase its margins and ways of working over time.
The publisher plans to double the revenue it made from the Esquire Edit collection last year. Hearst didn’t reveal hard figures, but its overall diversified revenue streams (licensing, events, accreditation and content marketing agency) make up nearly half of its revenue; brand partnerships are its major digital revenue stream. Print is still around 60% of Hearst UK’s total revenue, according to comments from the publisher in April. Print circulation for Esquire fell by nearly 6% year over year to 59,000 copies, according to the Audit Bureau of Circulation figures from July to December last year. According to Williams, digital ad revenue is growing.
Last year, several items from the collection sold out within a few months, although the publisher wouldn’t share which due to confidential clauses with its merchant partners. The number of limited edition items it produces for the collection varies on the price. For accessories it will produce hundreds, said Williams, but fewer for a £420 ($513) pair of shoes. Erring on the conservative side in terms of production has the benefit of giving the collection a sense of elitism, he added.
The collection has been a three-way partnership between the Esquire editorial team, each retailer and brand licensing firm IMG, and took between six and nine months to create. Licensing has a longer lead time and a different cycle to selling ads in order to thrash out details like designing the product, packaging, launch and marketing plans.
“It’s fairly time intensive, but it’s a great offering for our consumers which are really engaged with the brand, those who look to Esquire as the arbiter of style,” said Williams.
The collection fits in with Esquire’s push to be a luxury lifestyle brand rather than only a magazine. This is revealed more clearly in events like the Esquire Townhouse — which hosts a diverse range of events like talks with author Salman Rushdie and interviews with R.E.M’s Michael Stipe and Mike Mills — as well as digital and print channels: Last year Esquire invested in better-quality paper, reduced issues from monthly to bi-monthly, increased the cover price to £6 ($7.33) and doubled marketing spending.
Licensing can be lucrative for publishers. In the U.S., Meredist generated $25.1 billion in retail sales of licensed merchandise in 2019, second only to The Walt Disney Company’s $54.7 billion, according to License Global.
According to Alice Pickthall, senior research analyst at Enders Analysis, licensing is unlikely to grow into a major revenue stream. “At a minimum, brand licensing clearly requires you to keep the brand prominent,” she said, “and so at most can only be seen as a small piece in a wider holistic strategy that looks to maximize their brands.”
Licensing is not yet a large part of Hearst U.K.’s revenue stream; otherwise, it would be broken out in its accounts, said Pickthall. But it’s still crucial for a balanced revenue mix, and Esquire, with a strong community of engaged consumers built through its print legacy, suits that, she added.
There are also pitfalls to be wary of. In some cases, product licensing could jeopardize existing or future advertising relationships if publishers start creating competitive products to their advertising partners. In other instances, licensing opens up more avenues for advertising partnerships. For Hearst, it’s hoping these deeper partnerships will open up more advertising opportunities.
Image: Courtesy of David Lineton via Hearst UK.