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02 May 2019 ~ 0 Comments

The Future Of Toys – Part 2, The Changing Marketing Landscape

In this latest instalment in our series on the future of toys, we take a look at marketing, how it has changed over time and where we seem to be headed. Needless to say, any predictions or forecasts we make for how toy marketing will be done in the future will be wrong in some ways, but this should at least be thought provoking for those toy companies looking to get and stay ahead of the pack…

WHERE WE’VE COME FROM

The Toy industry has benefited fantastically from a 2 levelled approach to marketing over time:

  1. ‘Hero’ items – i.e. big hit items with lots of focus and volume potential have traditionally been either TV advertised or have been licensed from a major blockbuster movie with all the resultant marketing noise that goes with that.
  2. Retail margin opportunities – those items which were likely to sell in lower quantities have typically been priced with more retail margin so that while the retailer doesn’t get the benefit of high sales volume, they do get higher margin per item. You could argue this isn’t really ‘marketing’, but last time we looked at the classic ‘5 P’s Of Marketing’, Price was one of them!

Over the last decade, the impact of TV advertising has been eroded as the media landscape has fragmented, and children move their viewing attention online via YouTube or to streaming services like Netflix. They have also moved to double or even triple screen content consumption. So whereas historically we could bang up the TV spend and be close to guaranteed to get a heavierweight impact & resulting sales uplift, things aren’t as simple today.

These days, ever major toy company is also a major content production and content marketing company. That completely changes things in many ways – it is in some ways more empowering, as the toy company now has control versus handing the baton to a TV network. The challenge is how to get ‘standout’ in an environment of content proliferation – 300 hours of video are added to YouTube EVERY MINUTE (that isn’t a typo!). There is a huge and growing array of content out there, hence companies need to be both content production experts AND content marketing experts, as well as having all the necessary toy domain expertise. Today’s global toy companies also need to know how to fully integrate a really compelling product concept into the content. Huge rewards await those toy companies that get this right, but it isn’t always easy!

Movies are not quite the surefire volume driver that they once were. While some continue to sell big volumes, there has been a tendency to over saturate sequels and prequels, and to release movies based on the same franchise so close together that toy merchandise from the previous installment may not have fully cleared retail yet, which makes things messy/less likely to be successful generally speaking.

Kids (and parents) are watching informal/self created content as much as, if not more than, professionally produced footage. Along with this has come the massive growth in ‘Influencers’. Influencers are particularly effective in toys because they show how a product works, which is really important in an industry where products come in and out so fast that it is often not deemed worth creating infomercial style content for every product – for the sake of a few boxes of free products, and comparatively cheap fees, YouTube channels/influencers with huge following can do more for your marketing in some instances than an expensive TV advertising campaign!

So that’s where we came from, and where we have got to. The big question though is where are we going, and how will that further disrupt toy marketing? Here’s our thoughts:

WHERE WE’RE (POSSIBLY) GOING

  1. The Future Of TV Advertising – we don’t see TV advertising going away. There are some types of products which TV is still really effective for. The toy industry is often quite slow moving/backward looking, so for some companies, where there is a continued audience, TV advertising will still make sense at least in terms of ‘if it isn’t entirely broken why fix it!’. The reality though is that we expect TV ad spend to wane in coming years although not disappear.
  2. Influencers/Regulation of Influencers – any new technology or media format tends to launch with hope, and should it be fortunate/good enough to achieve mass adoption, they tend to get a ‘honeymoon’ period of good will and importantly, lack of regulation. Because if you can accuse the toy industry of sometimes being slow to change, then the political system/machine in most countries is even slower. YouTube has been mass adopted for more than a decade, yet politicans in major toy markets are still debating and arguing over what level of oversight and regulation is needed! It has become increasingly clear that we, as civil society, can’t rely on these companies/platforms to responsibly regulate themselves, so further regulation is inevitable. And aside from the safety concerns of cyber criminals, unsuitable content and other negative concerns, there is a clear trend towards a lack of trust with influencers. The one prediction in this article we believe is most likely to come to fruition is regulation of influencers on social media platforms. Whereas influencers have operated in a kind of digital wild west so far, this period is heading towards a reckoning! If you are a child, a parent or other interested party, and your preferred influencer promotes a product which turns out to be crap, you are likely to lose some faith and especially likely not to buy again whatever they promote. Good influencers will begin to realise that elsewhere, long term success depends on having a good brand and a sustainable model, and at the same time will therefore benefit by a more ethical approach promoting product which fits the brand. This needs to be done in a transparent way which avoids the draconian punishments for infringing the inevitable regulation which is on the horizon & definitely coming one way or another.
  3. Toy Companies As Content Creators – we already looked at the idea that most major toy companies are now content creators as much as toy companies. The thing is though the top 10 toy companies account for c. one quarter of the total sales in the toy business. Despite all the noise, and shelf space, and marketing spend, the top 10 toy companies are far less dominant in terms of market share versus some industries. There are somewhere in the region of 15,000 toy companies in the world, so in that case 14,990 (approx) toy companies account for c. 75% of the total sales. And what we haven’t seen so far is those $5m-50m toy companies really embracing content as the driving force behind toy marketing. That inevitably has to come, as these toy companies realise that spending 10-15% of turnover on a fading media format (TV advertising) is not that prudent. If you are one of the 14,990 toy companies outside thee top 10, you do need to consider your future strategy to compete against the bigger companies with their teams of people, in-house studios and straight to cinema content production capabilities.
  4. Global (Non-Language) Content Will Become Ever More Important – Asia is set to grow hugely in importance, commercial impact and purchasing power over the next decade or two. This offers huge opportunity for toy companies, but also a major challenge – because culture is so different. Conceiving a product/content offering which can work universally is really hard. We’ve all seen those ‘funny’ screw ups where a car company launches a car with a universal name which means something rude in a non English speaking market (!). We shouldn’t be too snooty in our perception of these errors though, as there are plenty of these mistakes made in the toy business and childrens content industry. To put this in practical terms, the number 2 toy market in the world today is China, and surprise, surprise – China is culturally very different to Europe & North America. There is a reason why the genre of ‘Hollywood’ movies which tends to work best in China is action – because action needs little words! And having a fight against an evil baddie is a fight in any language, a punch is a punch, an explosion is an explosion, and a toy based on this is to most extents just a toy. There are of course some characters which are more easily understood in one country over another, and bearing in mind how many toys are based on the animal kingdom, there are some animals which are seen as revolting or not suitable in other key countries. As ever, cultural understanding and market by market insights are key.

So far we have avoided talk of bots, robots & AI, but we would be remiss not to cover this, as this area is likely to have a huge part to play in toy marketing in the future!

Firstly, there is no doubt that further automation is on the way for online marketing. Once the parameters of an online campaign are fixed, all the tinkering, testing and frankly farting about (!), can easily be done by bots these days. Hallelujah, please remove all humans from having to use those horrible online dashboards! More seriously though, the more marketing becomes automated, the less of an advantage/difference we can find.

Could AI plan and execute ALL marketing campaigns in the future? I.e. bearing in mind how formulaic the toy business can be, could AI not work out how to create a toy franchise based on a proven formula – all you need is a rough & tough animal or a super cutesy one, with a fitting content/advertising direction and an array of online marketing driving traffic to key retail partners? This is certainly possible, but I don’t think we’re getting there in a hurry.

I read an article recently about how AI can actually already do a pretty good job of analysing all movie scripts ever, and coming up with ‘new’ movie scripts based on this analysis. So in our opinion, AI will be able to conceive of and to a degree deliver toy and marketing development and execution long in advance of humans being willing to let them! Already toy companies can access a huge array of professional toy inventors and of advertising mind power, but in general, they don’t or at least they don’t do it effectively. AI will be hugely disruptive to the toy business as much as anywhere else, but I expect the inertia and intransigence of the human mind to prevent that happening in the next 5 to 10 years at least!

However you see the future though these are interesting times, and could get even more interesting in the years ahead!

Steve Reece runs a toy industry consultancy which helps people get ahead in the toy business. To sign up for our newsletters, sign up on the right hand side of this page, or go to the website below. Following the trend to toy companies becoming content creators, we offer a service producing compelling content for YouTube and other platforms. Most production agencies can make you something that looks good, but does it hit the right mark? Do they know the consumer and what the consumer is looking for? Have they interviewed thousands of kids and parents about toys? Probably not, so if you would like to discuss your content production needs with people who know both production AND toys, feel free to send us a brief or get in touch to discuss. More details can be found here: http://www.kidsbrandinsight.com/services/

17 April 2019 ~ 0 Comments

The Future Of Toys – Part 1, The Changing Lives Of Children

The last time I sat down & tried to predict the future of the toy industry was in 2013 for a presentation at the Spielwarenmesse-Nuremberg International Toy Fair. If you want to watch my presentation and take joy in how many things I got wrong (!), here’s the link to watch: https://www.youtube.com/watch?v=wF1Qdx5gwZE

One of my key points back then was that while technology is always evolving and this evolution does to some extent change the way we play, there are a number of fundamentals of play which are not likely to change. These timeless factors I outlined as being:

  1. Brands i.e. kids & parents buy into strong, proven, trusted brands.
  2. Edutainment i.e. using fun to encourage learningand development.
  3. Fantasy/Immersion i.e. children like to/benefit from getting lost in their imaginations, and toys facilitate this.
  4. Creative play – children have always loved to get messy and to create things (of varying degrees of aesthetic appeal!)
  5. Child or parent powered purchase dynamic – you typically have 2 parts of the purchase dynamic i.e. the child & their parents, grand parents, aunts/uncles etc.

Today looking back at these timeless factors I can’t see how these have really changed, and if there was anything I got right in my predictions 6 years ago, it was probably these factors. The technology predictions were a mixed bag, but hopefully I can do better this time!

As we head at dizzying speed towards the 2020s, some things have changed to an incredible degree in the past few years. There are a number of factors of change including retail evolution, the massively different media landscape, social media, manufacturing and more (some of these factors we’ll come back to in this series of articles). The start point though in looking at how things have changed and trying to predict how things will be in the future is that most vital of people – kids!

So fundamentally kids haven’t changed that much since I began in the toy industry in the late ‘90s. They enter the world fully formed but far from fully developed. Having conducted more than 1200 focus groups with kids on toys I can say clearly that most toy company people are surprised by just how basic children are as human beings when they finally get round to conducting or watching product testing with kids! At an earlier age they use touch over sight, they can’t read, or at most can read very basic letters, and they have very under developed dexterity. From when they start being relevant to the toy industry around 12 to 18 months, through to when they tend to drift off toys onto other things somewhere between age 7 to 10 years of age, they go through a dazzling transformation and development process. What an 18 month old can see and do is galaxies away from what an 8 year old can see and do. This gap in developmental stage is not going to change that significantly in the future.

Some things that have definitely changed include more social & environmental factors e.g. cultural attitudes to gender stereotyping is in a very different place now in many major toy countries versus how it was 20 years ago. What we need to remember is that today’s parents were brought up mostly in the 1980s and 1990s by people mostly born in the 1950s and 1960s. As each generation moves from being kids themselves onto becoming parents themselves eventually. So for the current generation of kids who are being brought up in a climate where gender stereotyping is no longer the standard, and where children’s entire lives are online from the earliest stages can be expected to parent differently and therefore to want different toys versus generations before who brought up in a different social climate and became adults pre-mass adoption of the internet, and before mass adoption of social media.

Clearly technology will evolve, and this will have a huge impact on the lives of children in future. We’ll look at specific technologies in later articles in this series, but for now we can be sure that while kids will still be biologically more or less the same in the near future at least, their attitudes and values will be very different versus past generations, and in turn this will need to be reflected by toy companies in everything they do.

One other are worth thinking about – the lack of physical freedom for children. Whereas past generations tell stories of being left to roam around as children, today’s children lack physical freedom for a variety of safety concern issues. What they do overall tend to have is digital freedom i.e. they can’t wander off outside the home, but they are probably wandering the world online. I believe that much more regulation/protection is needed online especially for children that it is inevitable that future generations of children will have a more restricted view of the online world, for now there is still an element of wild west, but it is most likely that will change.

Whether it does or not though, children will continue to be less physically free than generations past, and as such they will be in the home a lot. Parents are already increasingly trying to pry their kids away from these super addictive devices, and interestingly even those categories of toys which traditionally had less parental approval i.e. cheap collectible/throwaway toys are now increasingly purchased as a sometimes desperate attempt at screen time distraction. It seems unlikely that future consumer tech will be less addictive as tech companies are very good at hooking us on their tech, so for this reason alone I see the future of the toy industry as being assured as parents increasingly try to anchor their kids in the real world versus the online world.

This is the first article in a series, the next articles will cover predictions about technology, about media, about toy retail, about toy products in the future and about toy manufacturing. Stay tuned for the next instalment!

Steve Reece runs a toy industry consultancy which helps people get ahead in the toy business. The most popular service is our brand & product management service which supplies hands on, experienced resources to toy companies for brand, marketing and product development projects. We’re normally booked for a few months in advance, but have one space just come free. More details can be found here: http://www.kidsbrandinsight.com/services/

01 April 2019 ~ 0 Comments

Robotix Learning Solutions – Interview with CEO, Ramana Prasad

We recently caught up with Ramana Prasad, the CEO of Robotix Learning Solutions, a fast growing tech toy firm, with 2 successful crowd funding campaigns under their belt for their STEM learning product – Taco Playbits, Phiro (a smart robot teaching kids to code which raised $80k+) and with a crowd funding campaign live for Taco Robobricks at the time of writing:

TOY INDUSTRY JOURNAL: Hi Ramana, please can you tell us more about your background, how you got into this business & about your company?

RAMANA: I hold a B. Tech. degree from IIT Madras and two MS degrees in Engineering from the University of Cincinnati USA. I started my career with Intel in California, USA as a New Technology Development Engineer.
I now sit on the Governing Council of Centre for Innovation (CFI) IIT Madras, a Mentor of Change Atal Tinkering Lab NITI Aayog Govt of India, a member of the Governing Council of the International Catrobat Foundation, Graz University of Technology, Austria and Managing Trustee of 6 BVM Global Schools (CBSE) & 2 BVMi International Schools (IGCSE).

The mission of Robotix is to inspire the innovators of tomorrow…
Our company has a mission to inspire the next generation of innovators and creators, create robotics & coding education programmes and robots, for children to learn STEM and develop 21st century skills, such as problem solving, creative thinking, innovation, critical & analytical thinking, communication and collaboration. At Robotix, kids and teens build valuable S.T.E.M skills and 21st century skills. through personalized and interactive learning experience. Students experience learning from world class products and tools from MIT, USA, and other places like Korea, Japan and Europe. Programmes like Coding, Robotics, App development, and DIY activities will inspire kids to be inventors and creators and develop 21st century skills. Future jobs in the STEM field are the fastest growing and it’ll be crucial for our kids to be equipped with the right skills to be prepared for the future job market.

We take a big picture approach – we are living in exciting times set to witness the tipping point of a Digital Tsunami. It is predicted that in the next 15 years, Autonomous Electric vehicles, Data science, Machine Learning, Artificial Intelligence and shared economy business will all change the complete landscape in a way that will benefit Humanity and our planet.

With such major technological advancements on the anvil and the future looking so amazing, it is important for the next generation of children to possess the requisite thinking skills. Flip side is otherwise the digital divide will widen and leave countries & societies, culturally and economically weaker. These disruptive technologies will offer unparalleled opportunities for the next generation – your child !

We got into this STEM-Robotic toy market as we saw a big potential since we had the unique expertise & experience running private schools.

At Robotix we design products, curriculum and Play Learning experiences to equip children with 21st century skills – Making them future ready!

Our first product Phiro was launched by us in 2016 and is a screen free coding robot. Launched successfully and was funded on Kickstarter with over $80,000 pledged. Intel USA recognised Phiro as one of Americas Greatest Makers.

TOY INDUSTRY JOURNAL: Please can you tell us about Taco Playbits & your successful crowd funding on that product?

RAMANA: Playbits was launched and successfully funded on Indiegogo, and was selected as the BETT 2019 awards finalist.

https://www.indiegogo.com/projects/taco-playbits-a-magical-screen-free-coding-toy/x/18963018#/

Taco Playbits is now available for sale on www.robotixedu.com

TACO PLAYBITS is a A magical screen-free coding toy, equipping your child with skills needed for the changing World: Comprised of Screen Free connected devices viz smart Wand & coding Chips, the interactive STEM toy engages the Vision, Hearing & Touch senses akin to a Montessori approach.

Research from Tufts & MIT, shows that Tangible Coding for kids ages 3 to 8 is best developmentally and most age appropriate. Simply tap on the coding Chips with the Wand to begin your child’s magical journey of self learning, Learn ABC’s, Music, Coding, Math, Memory + Logic games etc.

We believe Taco Playbits is one of a kind and probably the first in the world:

  • 100% Screen-Free | Hands-On Tactile Play
  • Backed by patent pending Technology
  • Learn in any language
  • Portable
  • Infinite play opportunities
  • Creating INVITATIONS TO PLAY

TOY INDUSTRY JOURNAL: Please can you tell us more about your new crowd funding campaign for your Taco Robobricks product?

RAMANA: Robobricks is now live on Indiegogo crowd funding platform!

https://www.indiegogo.com/projects/robobricks-screen-free-code-brings-blocks-to-life/x/18963018#/

Considering the big picture, our entire approach to designing Robobricks has been to create a toy for kids ages 4 to 9 which:
a. Enables kids to learn through Play, sharing their stories as they make their creations.
b. One which is easy to use, screen free & is tangible.
c, A block construction kit so kids can use their imagination and build their own creations.
We realised that the world was already filled with so many Lego, Duplo, Morphun etc. bricks and so we set a goal to be compatible to them. Other than that kids could make their own creations even with our smart blocks too.
d. Finally coding brings the creation to life.

We are the World’s first Screen Free Tangible coding toy compatible to Duplo, Morphun & Lego.

TOY INDUSTRY JOURNAL: Now looking a bit more broadly, please can you give us your thoughts on how you see the future looking for toys featuring robotic technologies, and how do you see your future role in that?

RAMANA: We see a very bright future for SMART & intelligent toys. Parents are a worried lot when it comes to kids having so much screen time. Rightfully so due to the inherent radiation of mobile phones and damage screens can do to tender eyes. Robotix will play an important role in the future of Smart robotic toys.


The first steps towards this, Robotix is looking out for international partners & distributors in North America, UK, Europe and Middle East to expand its global footprint. Robotix will soon be approaching potential investors with a plan for 10 million dollar funding.

TOY INDUSTRY JOURNAL: Finally, please can you tell us what your favourite toy was when you were a child yourself & why?

RAMANA:

Growing up as a child in the 60’s & 70’s in India, most of the time we were outdoors playing with friends. From Cricket to Table Tennis, Football and climbing trees ! Indoors we made up our own games . These friendships last even today 55 years later.

For more information on Robotix Learning Solutions, or to get directly in touch with Ramana Prasad, CEO of Robotix Learning Solutions, please click here:
https://www.robotixedu.com/


28 March 2019 ~ 0 Comments

Successful YouTube Marketing For Toy Companies – 5 Key Steps

The toy industry has been reliant on TV advertising to drive sales for at least 60 years at the time of writing. The times they are a changing though, or arguably they already changed and we’re guilty of still looking backwards in the toy business hoping for the return of the easiest marketing ‘golden bullet’ we ever had. TV is certainly not the cheapest media, but historically it had proven to be effective at driving sell in and sell through retail.

Now we’re in this weird twilight world where some of the biggest new brands in the toy business (arguably the most ground breaking) have been launched without the traditional approach to marketing. YouTube has been set to become the number one toy marketing tool for at least a decade now, but as with all these things (a bit like how we knew how mighty Amazon would become nearly 20 years ago!), it takes a long time too go from inevitability to full reality. We have arguably now hit the tipping point where the media driving most impressions and most toy sales is You Tube.

The challenge for toy companies though is there was a simple way to play with TV advertising – write the cheque, shoot the TVC, book the media, fill the shelves & job done. Things aren’t that simple any more, but just because things aren’t simple doesn’t mean toy companies shouldn’t already have embraced YouTube and all it can deliver for us.

This article sets out our recommended 5 steps for successful YouTube content marketing, as follows:

  • Be clear on your objectives from the start
    • As the cliched saying goes – if you don’t know where you’re going, you aren’t going to get there. We have been approached by people wanting a ‘really cool YouTube video’, but who don’t know any of their fundamentals e.g. who are you trying to communicate to, what action do you want them to take/what impression do you want to make etc. If you want to effectively demonstrate a slightly more complicated product that can lead to one content direction, if you are chasing virality or the creation of super cool playground currency that directs your content in an entirely different direction.
  • Walk Like An Egyptian – build a pyramid!
    • Some people will have super viral content which hits billions of views globally, and if they have planned & executed well they may well have a super smash hit on their hands. BUT, and this is the biggest BUT about You Tube marketing – you can’t guarantee virality. You can make it more likely, you can facilitate it to some degree, but if you put up videos based on the premise that the only way they can be successful for you is if they become the next biggest thing on the internet your chances of success are probably thousands or millions to one!
    • To increase your chances of being effective & successful on YouTube, we usually recommend building up a ‘pyramid’ of activity and objectives. At the bottom are some real basics i.e. product demonstration – why should someone want to buy the product, why is it fun etc? Then you can build brand awareness on top, then you can sell individual products and direct to e-commerce platforms. And then, and only then, can you make the peak of the pyramid ‘virality’. Our constant refrain is to cover all the basics at the base of the pyramid first, then build the content/campaign up to the peak of virality once the basics are covered!
  • Create really compelling content.
    • This almost doesn’t need any explanation – if your content fails to be compelling, fun, engaging, shareable, entertaining etc., then it is not likely to be effective.
    • This by the way is not about creating really compelling content in your opinion or to the group of twenty something hipsters in your office! It is about creating really compelling content for the target consumer/viewer of your content…, which in this instance means kids and/or parents of those kids, and if you don’t have a really good handle on who you are targeting, you arguably are not ready to make any content/spend your company’s money on marketing collateral which is very likely to miss the mark.
  • Work it baby – don’t fire & forget! Need to market the content.
    • Another fundamental mistake we found toy companies making is to presume that YouTube content will be a successful sales driver on its own e.g. they think it works the same way as TV advertising, where you can ‘fire & forget’, by buying the media & placing the ad on air. YouTube is not the same as TV! TV networks are selling you focused, dedicated air time to a significant chunk of your target market. They are guaranteeing to air your TVC to a certain size of audience, and although they can’t guarantee it will be compelling or effective you can more easily claim to have hit a certain critical mass of people.
    • You Tube doesn’t work that way. As of 2018 (the most recent stats I can find) there are more than 5 billion videos on You Tube! Which means there is almost one video for every person on the planet…in fact 400 hours of You Tube content are uploaded every minute! So, this is an entirely different platform vs TV advertising. With You Tube you need really compelling content, but then you need to conduct marketing activity on your content to give it a chance of standing out among billions of other videos. The way to conduct that marketing efficiently is beyond the scope of this article (although we’ll cover that in future articles), but the bottom line is don’t expect to ‘fire and forget’ with your YouTube content – you need to really actively push it, you need to invest in both content production and marketing of the content to ensure it gets in front of enough target consumers to do what you need it to do – in short, you have to fight to get eyes onto your content versus the billions of other videos they could be watching!
  • Work with the best people in the biz – You can do a lot of simple but effective stuff on YouTube yourself, and your local video production company can make you a low end demonstration video, but to be really effective you need more high level thought & strategy in the planning stage and more quality in the production to stand out. We’ll come back to how to work effectively with influencers & other endorsements on You Tube in later articles, but whether it’s marketing consultancy or creating compelling content you definitely get what you pay for! We’ve often seen clients who think nothing of spending $30k on producing a TVC trying to get away with YouTube content costing a $few hundred. Sometimes that type of content is fine, but again that all comes back to the objectives.

We have a venture producing YouTube content for toy companies. We also offer a marketing Consultancy service advising toy & game companies on how best to deploy content marketing to successfully launch and promote toy brands and products. For more information/to find out how we can help you, click here: http://www.kidsbrandinsight.com/services/

22 February 2019 ~ 0 Comments

2019 North American Toy Fair Review – 6 Key Conclusions

Here’s our review of this year’s New York toy fair:

USA Toy Market Outlook: After a really challenging 2018 the toy industry looks set to bounceback in 2019. We’re predicting that after finishing 2% down for 2018 vs 2017, that we’ll see in the vicinity of 3-5% growth in the US toy market in 2019. The mood at toy fair was overwhelmingly positive and upbeat, while there are many challenges in the marketplace our analysis suggests more reasons to be cheery than to be gloomy about 2019!

Movies – after a regressive period its easy to conclude that licensed toys based on blockbuster toyetic movies are on a downward spiral. We as humans can get carried away with a particular direction ‘things’ are going, and we sometimes calamatise e.g. begin to presume a downward trend on a long term roller coaster is the death knell. But movies have been a long term driver of toy sales and even today in this world of screen glued kids and prolific YouTube streaming content, movies still represent a major event in which tens of millions of kids or even hundreds of millions of kids worldwide are immersed in a story or adventure. While there has been some general softening of the licensed toy market in recent years, the hugely strong 2019 movie slate is likely to see licensed toy sales increase in 2019 in North America, regardless of media consumption trends.

A Great Show – This was yet another fantastically well organised show delivered by the toy association. This show remains the most efficient way to get a snapshot of the biggest toy market in the world, and to meet folks from across the U.S. and Canadian toy trade. Hats off to the hard working folks at the toy association – we’re already looking forward to next year’s show! We got a really positive vibe from across the show.

Tru Kids (Don’t call it a comeback?) – perhaps the most controversial exhibitor at this year’s show was ‘Tru Kids’. While we weren’t really concerned for the safety of the person inside the Jeffrey costume walking round, we did wonder if the Tru Kids team would need more security at their booth than is usually required. Following our last blog post featuring the news that this entity (spawned out of the ashes of TRU) will open physical stores again, we received an emotional backlash from some readers of this blog based (we hope!) as much on the still raw emotions as any genuine objection to how we tried to objectively assess their prospects and their potential impact on the toy trade in general. Overall, the mood seems to be an air of inevitability about their resurgence, but with a serious need for humility and a bridge building approach from the (not particularly!) ‘new’ management team.

Broad product mix & good innovation – we saw many really cool & compelling new concepts at New York toyfair 2019. Our favourites were Fart Ninjas from Funrise, Carpool Karaoke from Singing Machine and My Buddy Wheels from Yvolution. One of the grumbles you often hear from these trade shows is jaded cynical old souls berating the lack of innovation – countless times we hear this line, often though it says more about the number of shows that individual has attended, the reality is that every year we are still looking at ‘just another’ mix of toys made out of plastic, card and wood etc. Old hands also know all the proven formulae e.g. Yo=Yo’s, ponies, monsters, zombies etc., all of which make a comeback on an ongoing basis. There is clearly though from any objective measure far more variety of toy products/concepts coming to market now due to the fact that originators can find ways to go straight to the consumer to prove demand. As such there has never been a broader selection of product on offer, and never before have we seen so many risque products that previously would have been filtered out by overly conservative buyers or toy company execs. Finally, as per previous articles on this blog, the ongoing trend towards toy companies themselves selling direct to consumer allows for a bigger range of products than would otherwise be on offer.

Kids at toy fair – children have generally been discouraged from attending toy fair historically. The thinking was that the last thing a bunch of over tired, generally hungover toy professionals need while trying to sell their wares is a load of kids running around getting in the way. With the clear and real marketing power of many kid YouTubers/reviewers, there was a refreshing air of youthful exuberance in effect at all the 2019 toy shows, but especially in New York, as the biggest YouTube stars for toys are normally based somewhere in the U.S. As the vast majority of toy companies fail to do anywhere near enough research testing with kids, we like to see toy companies in a position where they actually have to interact with the youthful exuberant creatures whose playful enthusiasm pays all our wages!

So, as the sun sets on another round of annual toy trade shows, the 2019 North American International Toy Fair was a resounding success!

We recently launched a new brand and product management service. This service has been very popular and so far we have been close to fully booked since launch. We currently have free capacity to work with one additional client – please get in touch if you are interested in working with us.

Some of our brand and product management clients asked us to help them create YouTube content, so we recently launched a new strategic partnership creating content for toy companies. To find out more, click here:  http://www.kidsbrandinsight.com/toy-industry-veterans-launch-new-marketing-content-production-service-for-toy-companies/

12 February 2019 ~ 0 Comments

TRU Kids Inc: The Phoenix From The Toys R Us Ashes?

TRU KIDS INC: THE PHOENIX FROM THE TOYS R US ASHES?

The return of a new ‘version’ of Toys R Us is hardly surprising. Bearing in mind the latent affection consumers clearly have for the brand, the established social media following, the tooling and ready to go own brand products and the very similiar leadership still in place increasingly make this return seem like it was always inevitable.

The major challenges for Toys R Us prior to the bankruptcy were well known – massive warehouse style stores (with the hefty rents that go with that kind of space) which needed to be filled with inventory in a category which is very seasonal and where sales are dominated by the last 2-3 months of the year. The failure to keep pace with the digital revolution. The large workforce to staff the big warehouse stores etc. which created orgainsational and store by store inertia to change. These operating difficulties have largely been swept aside by the bankruptcy (albeit with significant collateral damage).

So now ‘TRU Kids Inc’ emerges free of large warehouse store leases, unencumbered by a huge workforce and with the flexibility to relaunch and reposition this evolution of TRU for the needs of today and tomorrow versus the format of the 1980’s and 1990’s.

The challenge is the significant bad feeling caused by the manner of the way the company/those behind the company treated their suppliers. Many toy companies lost $millions, they also certainly lost faith and belief in the ethos of the company as it was. While we can ask questions about the morality of what happened before, being cycnical, the hard reality is that the toy industry really needs a national level toy specialist retailer in the USA – that is the bottom line. Specialist retailers give us more merchandising opportunities, raise awareness, stock a much broader range, take more risk on stock as they need to fill a defined store space unlike generalist retailers who can switch space to other product categories.

The bottom line here is will toy companies swallow the bitter pill of supplying this new entity to support the company with arguably the best chance of re-becoming a national level toy specialist in the USA?

Can you run a successful toy chain without the hottest toy products? Possibly you can, but it will make things harder. The reality is that any toy specialist chain needs to have both the hottest products as well as a broad range. TRU Kids Inc may be able to persuade enough suppliers to come on board to build a wide range, and they can certainly expect to pad out their offering with own brand products, but the challenge is will they get enough of the big players on board to have enough hot product to be relevant? A store full of ‘OK’ but not ‘HOT’ toys is not as likely to draw traffic into store – kids will know they can get the really cool stuff elsewhere.

There are a myriad of other factors to consider also – including where will the stores be, what will the format be, how many will they get open before Q4 2019 , how will they make their digital offering better/more keeping with the times than before, what will the trading terms need to be/how will they finance that as it appears unlikley that suppliers will want to give them much by way of credit etc.

In the end, whether this venture succeeds will depend to a fair degree on the ability of the new venture (featuring some of the old team) to win friends and influence people in their favor after all that has gone before. Business can be very cynical – retail is always a cut throat hardball sector, and while the TRU bankruptcy created a massive seismic wave of controversy, businesses want to sell more products. A phoenix from the flames is (eventually) likely to get the backing of suppliers, even if it comes with a begrudging and risk averse approach.

We recently launched a new brand and product management service. This service has been very popular and so far we have been close to fully booked since launch. We have one space coming up after New York toy fair – please get in touch if you are interested in working with us.

Some of our brand and product management clients asked us to help them create YouTube content, so we recently launched a new strategic partnership creating content for toy companies. To find out more, click here:  http://www.kidsbrandinsight.com/toy-industry-veterans-launch-new-marketing-content-production-service-for-toy-companies/

08 February 2019 ~ 0 Comments

Toy Marketing: TVCs Versus Digital Marketing: Have We Reached Tipping Point?

TVCs VERSUS DIGITAL MARKETING FOR TOYS: HAVE WE REACHED TIPPING POINT?

TV advertising has been the core marketing activity for the toy industry since not long after TV adverts came about. So career toy people and career toy retail people have known and come to depend on a powerfully effective and above all simple (if not cheap) marketing solution.                        

Retailers have to buy our products at around 60-75% (ignoring sales tax – GST/VAT etc) of the price they sell them for (on average – there are exceptions!). So they are risking 60-75% of the net retail price to gain 40% to 25% of that price, sometimes on hot products due to promotional activity and discounting they are on far less, even losing money on occasion to bring more customers into store (physical or online). They have to cover all their costs from this, and if they are highly efficient operators they may be fortunate enough to earn 5-10% operating profit, but especially in today’s turbulent times, achieving profit is ever more difficult.                                    

Understandably therefore retailers are risk averse with regards to product selection. Historically, they looked for licensed products or TV advertised items with a known formula to reduce the risk of products failing and leaving them with an inventory problem, leading to no or at least low profit.  

TV advertising has historically been a big sign of investment and commitment from the toy company to give retailers comfort that we are equally as focused on selling products off of their shelves/e-commerce stores as we are getting them in. Therefore generally speaking the old model necessitated a big TV spend commitment to persuade retailers to take enough stock on our typically long lead time items to deliver the year both sides need.         

Fast forward to today, and the challenge we now have is that TV advertising is nowhere near as effective as it once was. The trend is ever increasingly towards kids watching streaming e.g. Netflix and informal/user generated YouTube content for hours on end. Theoretically this should not be a major problem. We should be able to utilise social media and content platforms like YouTube to market our products…but there are some real challenges for toy companies and their retail customers with this evolution:                   

Firstly, the major benefit of TV was that it was simple, broad reach, targeted and highly scaleable. With Youtube, Google, Instagram/Facebook etc it is harder to create predictable critical mass like TV used to deliver – to put it bluntly, TV was like pressing one big, effective albeit expensive button. Digital marketing on the other hand is like trying to press dozens of buttons at once while hoping/encouraging many other people to do the same – it is innately more intricate, more intensive and to a degree less systematically scalable. OK, we can do PPC, but can we reach enough of the right consumers? Maybe, but it was easier with the old TV focused model.  

One of the major factors in effective ‘digital’ marketing and especially ‘content’ marketing is the viral effect whereby people share or imitate/replicate content which encourages people to buy the producy features. BUT virality is not guaranteed, the hit rate on trying to create viral effect is poor – so you have to keep on grinding out new content to finally find something which works and delivers the desired effect – so it is not guaranteed that such an approach will lead to a viral effect in the key selling windows.

Secondly, retailers and toy companies are trying to effectively and prudently manage inventory. This is made difficult by the long lead time whereby product typically leaves the factory in July/August for sale months later. TV was far more (although not entirely) predictable. With a (non-TV) digital approach to toy marketing the challenge is how to make the impact equally guaranteed i.e. tangible and high impact. We need to give retailers this comfort early enough for us to order stock. Going forward, we can expect a growth in direct to consumer sales from toy companies, because if we have to drive each customer on an individual basis to buy, why not drive them to our own online channels where we don’t have to pay retail margin? Even then though, stock ordering/forecasting is the big risk, and as such I therefore see retailers part in the toy industry protected by the major opportunity they offer – stock commitments in advance of selling. We can though expect a vast array of direct to consumer businesses/brands/sites springing up over the next decade.             

A major part of the solution to these challenges is to build really firm foundations for digital marketing i.e. we need to create a virtuous circle of activity across platforms/media with a clear, consistent and motivating campaign. Some companies have or recruit the know how to do this in house, some will utilise outside resources and expertise. In the end a degree of trial and error will be required as different approaches will be needed by category, product, target audience etc.                                    

One thing is for sure, we may want the simplicity of the old TV driven approach, but kids viewing habits are not moving in that direction. TV may still be part of the picture – throughout toy fair season this year, marketers have been telling me that right now they feel they still need to do both – TV plus the digital stuff – but the %age of marketing funds being committed to off TV activity is increasing every year, and those who don’t move with this trend will be left behind.

One thing I have learnt as a foundational business principle over time is that we may make too many mistakes/lose money by being at the front of the pack, taking all the risks and making all the mistakes, but being at the back of the pack is not typically a winning formula either based on today’s trends.     If your company is spending £$€ on marketing, you will get best return by following your consumer, and in this case their viewing habits are ever moving away from traditional TV.

We recently launched a new brand and product management service. This service has been very popular, but we have one space coming up after NY toy fair – please get in touch if you are interested in working with us. Some of our brand and product management clients asked us to help them create YouTube content, so we recently launched a new strategic partnership creating content for toy companies. To find out more, click here:  http://www.kidsbrandinsight.com/toy-industry-veterans-launch-new-marketing-content-production-service-for-toy-companies/

04 February 2019 ~ 0 Comments

2019 Spielwarenmesse-Nuremberg Toyfair Review – Llama’s, Lizards and Electronics!

2019 SPIELWARENMESSE-NUREMBERG TOYFAIR REVIEW – LLAMA’S, LIZARDS AND ELECTRONICS!

The 70th Spielwarenmesse-Nuremberg International Toy Fair has drawn to a close. As ever, this show offers the biggest and best opportunity to connect with toy people from all around the world. Just like usual, this equates to a massively stimulating and somewhat exhausting experience!

Whatever your business, if it is toy business this is the most amazing show to visit in terms of scale, breadth and array of international visitors.

There were some changes this time, some halls and some companies had changed or shuffled round – most people I spoke to found the new arrangements to be better, or at least no worse.

In terms of the mood, as I’ve written elsewhere, heading into 2019 there is a definite feeling of uncertainty, and of changing times. There are 3 major areas concerning the toy business which appear to be in flux:


1. The consumer – kids still love toys, but are playing with them less as they are ever more addicted to screen time. Parents are using toys to leverage kids off screens and kids are increasingly ‘collecting’ vs ‘playing’.


2. Kids are therefore watching more user generated/informal content and less formally produced programming/movies – this affects both our licensing path and our marketing approach (more on this in my next article, and yes, I will take the liberty of mentioning in the meantime our venture which creates compelling YouTube content for toy companies!).


3. Retail – retail has never been easy, but now things seem so uncertain. Where are our ‘anchor’ listings coming from, which retailers will commit to sufficient stock early enough to allow us to push the button on inventory production and marketing execution? More companies are working on direct to consumer initiatives in the face of increasing uncertainty post Toys R Us and forecasting/inventory management is ever more tricky.

Back to the show, on a personal note this was my 20th Spielwarenmesse and every year I have a few more friends to catch up with, and find myself giving out less and less business cards as I meet established contacts. The show itself has changed quite a lot in my 20 years of attending, for instance, 15 years ago we British toy people refered to ‘the smoky halls of  Nuremberg’ as smoking was still allowed inside in those days. Today that seems like a distant world away. The size of the show has grown significantly in this time, as has the international audience. So many things changed, but some things remain – thousands of companies featuring great products for instance! Also, the old adage that many of the best meetings are in passing definitely rings true. One year I really want to arrange no meetings and just stand in the aisle and compare productivity between the usual approach of shoehorning in as many meetings as possible and meeting people more casually in passing!

In terms of trends, I always find it hard to take a top level view among so much detail while rushing around to meet people. But there were some common themes:

Plant based plastic style materials

Many in the toy industry seem to be utilising the ‘ostrich head in the sand’ approach to the threat of plastic backlash to the toy industry. Thankfully some are working hard to use plant based ‘plastics’ and other materials. It is possible that we could see a plastic backlash against toys, and as the saying goes: ‘failing to prepare is preparing to fail’. I would like to see more companies tacking action on this.

Robotics

I saw numerous iterations of STEM & pure fun Robots, seems like this is a growing category.

Non-tech STEM

Non-tech stem continues to be prominent & growing.

Llama’s & Lizards

I saw numerous Llama games & toys walking the halls. Also, I spoke to one leading industry sales guy who was adamant that Lizards are ‘the new unicorns’ for 2019. In fairness, the toy industry does tend to cycle through the animal kingdom looking for the next year’s trend, so between Llama’s & Lizards we may have the next big thing.

The B Word
Surprisingly for me as a British guy hardly anyone mentioned the looming doom of Brexit – looks like overall the toy world outside of the UK are not indulging in non-stop Brexit backstop navel gazing to the degree Britain is (thankfully). Speaking as a proud remainer, thinking about the days before the €uro when we had to calculate pricing in multiple currencies as one gives me a sharp pain akin to toothache! I have been fortunate enough to work across Europe since the beginnings of my toy career, and have many friends and much respect for the peoples of all nations in Europe. While the UK walks towards the edge of the unknown like an early explorer trying to see if the world was flat or round, I remain a proud European and look forward to a lifelong association with people across Europe & beyond.

Overall

The 70th Anniversary Spielwarenmessee did not disappoint. As ever the show was extremely well organised. Obviously there are some issues to address in setting up & running such a huge gathering of people, companies and product – but yet again the organisers delivered to the global toy industry a highly effective opportunity to do toy business…I’m already looking forward to the 71st Spielwarenmesse!

#2019trends #llamas #lizards #electronics
#spielwarenmesse70notout

25 January 2019 ~ 0 Comments

2019 UK Toy Fair Review – The Times They Are A Changing

2019 UK TOY FAIR REVIEW – THE TIMES THEY ARE A CHANGING

As the sun finally set (at last!) on a tough 2018, the UK toy trade gathered at Olympia Exhibition Centre in London this week for the BTHA UK toy fair. In my opinion, this is one of the best organised trade shows of all the 12-15 I visit each year, and hats off to the BTHA & the industry as a whole for putting on such a great show year after year.

As we entered the show the BTHA & NPD announced a 7% decline in the toy market year on year, which is obviously bad news. Although to put that in context they did highlight an overall market size of a still fairly hefty £3.3 billion, or $4.3billion USD at the time of writing. Online share of market grew (again), to represent 34% of all sales, which is both a stunning statistic and a major ongoing challenge to bricks and mortar retail.

Understandably then, the overall mood was one of ‘battening down the hatches’ against a number of major headwinds: an even tougher and less predictable usual retail environment than usual; an ever imminent and still hard to predict ‘Brexit’; and a fast accelerating transition in marketing models from the traditional reliance on TV advertising to more digital and content based marketing.

The feeling I got from across the UK toy trade was one of uncertain times and of an industry coming to terms with significant challenges to the long established traditional ways of doing things. For some companies these circumstances seemed like a threat, but to some changing times are clearly offering lots of opportunities.

On the product side, I would say that there was no shortage of new product or innovation. Uncertainty does not seem to have lead to slashing of new product development overall. There was a point in summer 2018 when we wondered if 2019 would be a year of austerity for the UK toy business…but that was not reflected in the product on offer. From that perspective as someone who did laps of the hall (upstairs and downstairs) most of the day, I saw so many new items that I was left feeling like 2019 has all the new product needed to return the market to growth.

I have heard much talk about traditonal licensed toys being less of a surefire bet than in the past, and there is no doubt that kids are viewing media very differently versus previous generations and that seems to suggest a move away from the traditional blockbuster movie model for toys, but nevertheless with a strong 2019 toyetic movie slate – Toy Story, Lion King etc., it’s hard to see how movie related toys won’t be up year on year come the end of 2019.

These are interesting and challenging times for sure, but there will be plenty of winners in 2019, and come December 25th, children across this ancient and venerable island won’t be disappointed by what the UK trade is delivering this year.

On we roll to Nuremberg, see you there next week – safe travels!

We recently launched a new brand and product management service. This service has been very popular and our capcity is now full at the time of writing. Some of our brand and product management clients asked us to help them create YouTube content, so we recently launched a new strategic partnership creating content for toy companies. To find out more, click here or drop us a line: http://www.kidsbrandinsight.com/toy-industry-veterans-launch-new-marketing-content-production-service-for-toy-companies/

18 January 2019 ~ 0 Comments

Toy Industry 2019 – Reasons To Be Cheerful

Having arrived back this week from Hong Kong toy fair, it is clear that the global toy business is still managing the aftermath of the failure of Toys R Us in the USA & some other markets. While many of us are natural optimists, the mood in general was one of digging in and riding out uncertain times.

There is no reason for doom and gloom though. Uncertainty and consolididation often lead to bigger and better things. So by way of presenting an optimistic view of the toy business, here’s some reasons to be cheerful about the global toy industry as we head into 2019:

  1. Parents recognise the value of playing with toys more than ever – as the human race tries to come to terms with devices and screens that are more addictive than the strongest narcotic, toys are offering a genuine alternative to excessive screen time. When I first conducted consumer research interviews with parents about toys and what they thought of toys (going back 20 years or so), mums/moms often labelled toys as ‘plastic crap’. They generally just saw toys as something the kids wanted and which could keep them quiet for a bit! Fast forward to today, and parents will seize on anything which can leverage their offspring away from screens. This is a fundamental demand driver for toys that is not going away.
  2. Kids still want to purchase/play with toys – overall, kids play far less with the toys they own vs 30 years ago. I identified a trend towards ‘toy stockpiling’ 5 or 10 years back, whereby kids would end up with so many toys they were literally falling out of their bedrooms, and they were effectively collecting versus playing. Despite the low usage per toy, kids still want toys. They demand and get hundreds of toys throughout their childhood. They play with them to varying extents, dependent on product category/play pattern etc., but they still want and demand toys.
  3. Product development in toys has never been more vibrant – there will be those cynical old souls out there who think back to olden golden days with the rose tinted haze of nostalgia. But in terms of product output, we have never had more platforms for product launch before. We may have a less simple model than in the past, but for creators and originators, the ways to market are so much easier and more accessible. There are still some formulaic old style products out there, and kids often still love them, but niche and far out products are much more common in the market, which is healthy for our business.
  4. 2019 is a strong toyetic movie year – we have new instalments of several proven toy selling movie franchises in 2019 including Toy Story, Frozen, The Lion King, Avengers, Star Wars etc. Historically, whether the toy industry was up or down 3-7% would depend on the strength of the movie slate. By this old school measure, 2019 should be good. OK, the impact of movies is somewhat diluted by YouTube & other content distribution fragmentation, informal content etc., but movies at this point still remain a major driver of the toy business, and 2019 looks good from this perspective.
  5. Marketing no longer needs to cost $millions – once upon a time, the way to drive high sales volumes was to tell retail you were TV advertising the product. Nowadays, as we leave 2018 where the Number 1 product was not TV advertised things have changed. Going back a couple of years, Hasbro’s huge success with Pie Face came from social media trends (along with great distribution and marketing). While the change in marketing model makes things far less certain than when we could just TV advertise everything, the good news is that there is another, cheaper way which should further broaden the range of toys on offer and drive more vibrancy in the toy business.
  6. Retail diversification/consolidation can offer opportunity – the loss of Toys R Us (in some key markets) shoudln’t be under estimated in terms of impact on the toy business. But, change can also lead to opportunity – can you find alternative distribution channels/models? Some company’s will seize the opportunity to build new business, some will sit & moan about how hard things are without TRU. This is a time to refresh and renew, and we can be quite certain that a national scale toy retail specialist will return in the USA before too long.

So times have been easier, but there are considerable bright spots. Business growth is out there and waiting for those bold, fearless and relentless souls who will reach out and grab it.

We recently launched a new brand and product management service. This service has been very popular and is now full at the time of writing. Some of our brand and product management clients asked us to help them create YouTube content, so we recently launched a new strategic partnership creating content for toy companies. To find out more: http://www.kidsbrandinsight.com/toy-industry-veterans-launch-new-marketing-content-production-service-for-toy-companies/

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