With more than 50 collaborations in one month, can the two-dimensional world save consumer brands?

Today in 2024, we are witnessing an unprecedented wave of brand collaborations. From fast food giants to fashion brands, they are all trying to open up new market space through cross-border collaborations with ACG characters. But can this joint strategy really bring lasting growth to brands? This article will take you to an in-depth understanding of the business logic behind ACG collaborations, explore how it affects brand building and consumer behavior, and how brands can find their place in this fusion of culture and business.

This September, everyone will be bombarded with collaborations between brands and the second dimension.

According to incomplete statistics, there are KFC collaborations with Spy House, Uma Musume, Love and Space, and Honkai Impact 3; McDonald's collaborations with 5ip, Chiikawa, and Chibi Maruko-chan; Pop Mart collaborations with Loopy, Under One Person, and Love and Night; Luckin Coffee collaborations with Jimmy Liao and Xiao Liuya; Lawson collaborations with Indefinitely Lost and Love and Space; Holiland collaborations with Zootopia; Nayuki's Tea collaborations with Harry Potter; Watsons collaborations with Doraemon; Keep collaborations with Hatsune Miku; Uniqlo collaborations with Jujutsu Kaisen; Guerlain collaborations with Yuanshen; OPPO collaborations with Time Agent, and more than 50 other collaborations.

Anyway, all kinds of coffee, milk tea, fast food, cakes, trendy toys, beauty products, and fast fashion brands that people can think of and cannot think of are collaborating, and even mobile phones, convenience stores, and fitness apps are also involved.

Among them, Chiikawa is the top IP, which has collaborated with five brands in September alone, namely McDonald's, Converse, Zimoxixiong, Wutonghao, and Uno. Popular IPs also have two collaborations, such as Jujutsu Kaisen co-branded with Uniqlo and Li Ke; Time Agent co-branded with OPPO and Food Tribe; Love and Deep Space co-branded with KFC and Lawson, etc.

In short, whether you have heard of the IP or not, it has made a lot of money through co-branding. We can't help but wonder: how did this trend of ACG co-branding come about? Is it so easy to make money in ACG?

01 How did the two-dimensional collaboration become popular?

Some time ago, the library I often go to put up four human-shaped standees, which were characters from the dating management game "Love and Producer". I took a photo and sent it to a friend, who said, "This is one of my ex-husband's brothers, but the style of the painting is so vicious that I really can't recognize it."

This does not prevent players from coming to check in. For more than half a month, young girls can be seen queuing up every day just to get stamped on postcards; and many people dress up just to take photos with the human-shaped stand.

Human figure stand in the library

I don’t know since when, but human-shaped standees and long queues are often seen in life, sometimes in the atrium of shopping malls, sometimes in roadside milk tea shops, and sometimes in fast food restaurants.

At first I didn't understand this craze, until I saw Nayuki's Tea and Harry Potter jointly giving away Golden Snitch fridge magnets some time ago, and I couldn't help but buy a set meal: two cups of milk tea and a fridge magnet, a total of 53. My friend bought the whole set for more than 100 yuan, and later found out that the fridge magnet was only 18 yuan.

This aroused my initial curiosity: Why does the two-dimensional collaboration have such magic that it makes people excited and make impulse purchases?

The first brand to benefit from the two-dimensional collaboration should be Uniqlo. After all, Japan is the originator of two-dimensional culture, and Japanese brands have unique advantages.

As early as 2003, Uniqlo started to engage in joint ventures. At that time, Uniqlo's development was troubled, and its rapid expansion led to a sharp decline in performance. In addition, consumers felt that it was too tacky and could not arouse their desire to buy.

In order to break through the invisible ceiling, Uniqlo created the UT series. At the beginning, it was just a trial product of the low-price strategy. The prints were basically ordinary cartoon patterns and logos, and the sales were lukewarm.

Later, design director Kashiwa Sato proposed that UT is not only a T-shirt, but also a way of self-expression. The pattern on the T-shirt can reflect who you are, where you come from, and what kind of culture you like.

In order to allow consumers to choose their favorite patterns, Uniqlo has become a collaboration maniac. No matter whether it is the work of emerging artists or well-known writers, no matter whether it is a classic anime character, a popular game or a museum, there is always a UT that allows people to show their personality and spiritual territory.

The most popular one is the collaboration with American fashion artist Kaws in 2019, which was sold out in 3 seconds in some stores. The reason is naturally because it is cheap. Previously, the brands that cooperated with Kaws were all luxury brands, and a piece of clothing cost at least thousands, while a piece of UT only cost 99.

This grand scene will reappear in 2021. On the occasion of the 50th anniversary of the establishment of the famous Japanese serialized comic magazine "Weekly Shonen Jump", 22 classic comic characters from its series were printed on UT, including the well-known "Dragon Ball", "One Piece", "Naruto", "Gintama", "Hunter x Hunter", "Haikyuu!", etc.

Later, Uniqlo seemed to have mastered the code to traffic, and its joint products with Pokémon, Minions, Mickey Mouse, Snoopy, Marvel series, Detective Conan, Doraemon and other works would set off a buying frenzy.

In the final analysis, what consumers buy is not an ordinary T-shirt, but the spiritual value attached to it. For less than 100 yuan, they can buy a spiritual sustenance, which brings great emotional satisfaction. Moreover, due to its scarcity, they share it in a small circle after grabbing it, further strengthening the sense of group identity.

Uniqlo has changed its old “rustic” image and become a trendsetter in the minds of young people. Most of the people attracted by the joint brand have a certain purchasing power. After buying the joint brand, they can also promote the sales of other clothes by visiting the store. The joint brand is a very effective low-price traffic-attracting tool.

02 Brands that have made a comeback through ACG collaborations

Similar to Uniqlo, MINISO also rose to prominence through low-priced products and IP collaborations. Unlike Uniqlo, which was only used to attract customers, MINISO reshaped its entire brand through collaborations, turning a 10-yuan store into a toy store and achieving extremely high gross profits.

Some time ago, MINISO released its financial report for the first half of 2024, with impressive results: total revenue reached 7.76 billion yuan, a year-on-year increase of 25%; net profit was 1.24 billion yuan, a year-on-year increase of 18%.

This is closely related to MINISO's vigorous layout in the IP sector. According to incomplete statistics, in the first half of this year, MINISO has co-branded 14 IPs including Barbie, Chiikawa, loopy, Sanrio, and Minions.

Among them, nearly half of the Barbie series products were sold out within five days of being launched; the Chiikawa pop-up store achieved sales of over 8 million in three days after opening, with the average customer spending exceeding thousands of yuan.

MINISO pop-up store

The popular IP collaboration not only effectively stimulated consumption, but also increased the average customer spending and brought in extra profits. In the first half of the year, the average customer spending of MINISO in China increased by 38.5 yuan, and the average selling price increased by 14.6 yuan.

Why? As we all know, MINISO started out as a budget version of MUJI, selling mostly basic daily necessities with simple and plain designs. Not only could prices not be raised, but the frequency of replacement of daily necessities was not that high. A towel could be used for one or two years without any problems, and consumers had no reason to buy another one.

But if this towel is printed with their favorite anime characters, or designed with very cute cartoon shapes, and the price is only a dozen yuan, even if it is a few yuan more expensive than ordinary towels, consumers are willing to pay for it.

Dolls of classic IPs are also widely popular due to their low prices. For example, a Disney genuine 45cm Strawberry Bear doll costs more than 300 yuan, while a Miniso Strawberry Bear of the same size costs only more than 90 yuan, and it is also authorized by Disney.

Disney, Barbie and other IPs are well-known abroad, so foreigners are particularly likely to buy them. In the first half of this year, MINISO's overseas business revenue increased by 42.6% year-on-year to 2.73 billion, accounting for 35.2% of its revenue. Its founder Ye Guofu once publicly stated that the gross profit margin of international business is higher than that of domestic business.

Another "co-branding maniac" in China is Holiland. Founded in 1992, this 32-year-old brand has successfully turned cakes into trendy items through a variety of co-branding.

Initially, Holiland expanded rapidly across the country by relying on the "co-founder internal franchise system", that is, the founder Luo Hong owned the Holiland brand, and other partners had the right to use the brand and could operate it independently in various regions across the country.

But in 2017, Holiland introduced new operating standards, requiring improvements in store decoration, product quality, service quality and the image of store employees. This means additional costs and inevitable price increases, but some stores in less developed regions will suffer losses if they implement this, which led to the disintegration of 340 franchisees. Holiland lost the sinking market and its market share plummeted.

At the same time, the development of Holiland's high-end line "Black Swan" has not been smooth. This birthday cake brand with an average price of over a thousand yuan has a narrow consumer group and low consumption frequency. In 2019, it closed stores in 5 cities and only retained stores in 4 cities. The business scope has also expanded from catering to technical services.

Moreover, the baking industry is highly competitive, with complex processes, short shelf life, easy to spoil during transportation, and easy to homogenize. For example, Holiland's popular "half-cooked cheese" was copied on a large scale by its peers at a lower price.

Holiland, which was blocked in the low-end market, limited in the high-end market, and still stuck in the quagmire of copycats, tried to collaborate with Heytea in 2019, changing its popular succulent grapes into desserts, which was a huge success. Since then, Holiland has been running wild on the road of collaboration, and now has collaborated with more than 40 IPs and brands, including Pokémon, Ultraman, Disney Princesses, Barbie, etc.

Screenshot of Holiland's official website

The most popular one is the collaboration with Harry Potter. In August 2022, Holiland launched two Mid-Autumn Festival cake gift boxes, "Magic World" and "Monster Book of Monsters". Even though the prices were as high as 299 and 599, they were still sold out. Holiland took advantage of the victory and launched five birthday cakes including Hagrid's cake in September, which triggered a frenzy of online and offline sales.

Today, Holiland has successfully turned around through joint ventures. It has not only escaped the vortex of product homogeneity, but also gained enough popularity on social media, becoming an Internet celebrity brand in the baking industry.

03 The costs and benefits of two-dimensional collaboration

It seems that two-dimensional collaborations have the magic power to revive brands, but is this business really that easy to do?

The most important thing about ACG collaboration is to leverage the momentum and attract fans to buy. The more classic and longer the life cycle of an IP, and the more complete the worldview of the IP, the wider the audience group and the more likely it is to be favored by consumers.

Such IPs rely on stories to gain long-term vitality. Although the media forms are different, the core of the stories is the same. The co-branding, remake into a movie, and the creation of a theme park are actually the same thing. They are all cross-media narratives that give IPs a tangible carrier and allow them to interact with the audience in real life.

This also means that such IP will be more expensive. For example, Disney will not sell a single image, but will charge up to 6 million yuan for a whole IP ecosystem, including 20 to 30 images. The price of Harry Potter is close to that.

Compared with classic IPs, those that become popular only because of their cute images are not as good. For example, the licensing fee for Loopy is at least one or two million yuan, Little Liu Duck costs 600,000 yuan, and Sad Frog costs about 300,000 or 400,000 yuan.

Luckin Coffee and Sad Frog Collaborate

There are two common payment methods for licensing fees: one-time buyout and profit sharing. Generally, a licensing period is set, such as one month to one year. The brand pays the licensing fee in one lump sum and can use the IP image during the licensing period. If the product is unsalable after the licensing period, the brand will be given a period of time to clear the inventory. Some brands will set a minimum copyright fee to protect their own interests, and then share the profits with the IP according to the sales of the co-branded products.

Therefore, speaking purely from a cost-benefit perspective, the first thing to consider when doing a joint venture is how to make a profit, which should at least be higher than the licensing fee. Otherwise, it will be a loss-making business.

The licensing fees paid by the "joint brand maniacs" are also considerable. MINISO mentioned in its financial report that the licensing fees in the first half of this year reached 183 million yuan, a year-on-year increase of 24.2%.

In contrast, the 2024 annual report of IP licensing company Lingbang showed that its annual revenue was 447 million yuan, of which the revenue from brand licensing business was 152 million yuan, a year-on-year increase of 4.1%, and the gross profit margin was as high as 48.3%.

Moreover, the more popular the IP is, the higher the requirements for the brand, which are specifically reflected in brand image, popularity, supply chain, design capabilities, R&D capabilities, etc.

The reason why MINISO can collaborate with many top IPs is that it has its own unique methodology. For example, in the selection of IPs, MINISO has a rigorous process, and the investigation and research time is at least one year. It will also formulate a full life cycle development and inventory management plan for each IP, rather than just doing whatever is popular. In the IP design stage, MINISO also maintains full patience and will develop easy-to-use, fun, and good-looking products based on the characteristics of the IP, rather than simply pasting a pattern.

In terms of the pace of product launches, MINISO has a "711 principle": every 7 days, 100 new SKUs are selected from 10,000 product ideas, and an average of 530 SKUs are launched each month. A sample selection meeting is held every Monday, and Ye Guofu personally decides who to collaborate with, whether each product will be launched, how much to price it, how to market it, and other issues.

Is the ACG joint venture a sure-win business? Actually, it is not. There are so many brands doing ACG joint ventures, but not every brand makes money. Just look at the coffee and tea beverage track, which is the most popular in ACG joint ventures.

According to statistics, coffee and tea brands have collaborated more than 100 times in 2023, and the momentum is even stronger this year. In the first half of this year alone, Nayuki's Tea has collaborated 26 times, Luckin Coffee 23 times, Kudi 21 times, Heytea 20 times, Bawang Chaji 18 times, Mixue Ice City 16 times, and Chabaidao 9 times. The IPs are mainly concentrated in the fields of games and animation.

Data on joint ventures of coffee and tea brands in the first half of this year (Source: Morketing)

However, the cruel thing is that if you ask a person who loves the third dimension which co-branded products he has bought this year, the answer can probably be counted on one hand. This shows that many co-branded products in the second dimension are just for the self-entertainment of a small circle, and have not effectively broken through the circle.

Does having more joint ventures mean that products will sell well? Not really. Let's take a look at the financial reports of various companies. Nayuki's Tea's revenue in the first half of the year fell 1.9% year-on-year to 2.544 billion yuan, with a net loss of 438 million yuan; Luckin's total net revenue in the first half of the year reached 14.681 billion yuan, a year-on-year increase of 38.0%; Cha Baidao achieved operating income of 2.396 billion yuan, a decrease of 10% from the same period last year, and a net profit of 237 million yuan, a year-on-year decrease of 59.7%; Bawang Chaji's sales in the first quarter were 5.8 billion yuan.

Why is there such a huge gap in revenue and profitability among these brands even though they are all doing 2D collaborations?

04 Is it difficult to make money in the two-dimensional world?

First of all, the two-dimensional collaboration is just a marketing tool, not a life-saving medicine. No matter how good the marketing is, it cannot guarantee that the brand will be successful.

A brand’s ability to generate sustained profitability is a reflection of a range of comprehensive capabilities, such as R&D capabilities, organizational capabilities, channel capabilities, supply chain capabilities, etc., rather than just because of a single joint venture that became popular.

No matter how popular the sauce-flavored latte is, it cannot guarantee Luckin’s long-term prosperity. Luckin’s digital capabilities, refined operations capabilities, and continuous research and development capabilities are all invisible parts underwater, which ensure that Luckin can still make a profit even if it sells for 9.9 and launches new products every week.

If you just follow the trend of Luckin Coffee’s collaboration, you will easily fail. Only when the brand foundation is strong enough can the collaboration help. Otherwise, it will only be a black-red and will be backfired.

Some brands have even fallen into a vicious circle where they rely on joint ventures to boost sales, but when the joint venture ends, sales plummet, and they have no choice but to look for new joint ventures to survive. This is actually a reflection of the fact that they have not even done a good job with their own signature products and do not have a stable repeat purchasing customer base.

Secondly, the core audience of the two-dimensional world is limited, and most people have only watched a few classic cartoons. On the surface, it seems that there are many two-dimensional IPs co-branded, but in fact, they are all pleasing the same group of people. In addition, IPs can be repeatedly authorized, and it is easy for popular IPs to be aesthetically fatigued after being repeatedly co-branded.

If the two-dimensional joint venture is not handled properly, it is easy to fail. The two-dimensional culture is a self-contained system. If the brand does not understand and respect the two-dimensional culture, it will only lose its goodwill.

The audience of the second dimension often has very high requirements for design materials. If you don’t fully understand the IP, are not familiar with the mentality of fans, and the copywriting or packaging design is not professional, you will easily be besieged. In addition, the surrounding products are now highly homogenized. Milk tea joint names are almost all paper bags, cup sleeves, stickers, posters, small toys, refrigerator magnets, etc., which are increasingly difficult to arouse the interest of consumers.

Moreover, the brand collaborations are becoming more and more perfunctory. Uniqlo has been criticized for its crude and simple design, with just a pattern printed on the chest; the T-shirts themselves are ordinary in style and low in quality; and it is very easy to have the same clothes as others. Now Uniqlo's net profit in China has dropped significantly, and it has begun to close stores at an accelerated pace.

Holiland's cakes have also been criticized for looking good but not tasting good. A birthday cake that costs 299 yuan is much more expensive than many cakes on the market, making it difficult for people to make impulse purchases.

Some brands like to use hunger marketing. For example, in the collaboration between Nayuki’s Tea and Harry Potter, consumers paid a higher premium to buy the co-branded package, but the materials promised by the brand were not complete. If you want to buy more package cards, you will get a bunch of duplicate cards. In addition, the co-branded cups are of poor quality and easily exploded.

The last heartbreaking fact is that pure two-dimensional business has also become difficult to do.

Guzidian, which specializes in selling ACG peripheral products, also lost its bubble after a round of aggressive expansion. Some media reported that a boss invested 500,000 yuan to open a store, but had a backlog of 700,000 yuan of goods. The main reason for not being able to sell them is that the IP and peripheral products are highly homogenized. Some peripheral products have even been sold at sky-high prices, and ACG fans don't want to be ripped off.

In short, the two-dimensional joint venture is just a one-time emotional or sentimental consumption. Brands still need to think clearly about how to attract this customer group through a joint venture and make a compound interest business. This requires putting in enough effort in products, design, services, etc., finding their core advantages and then showing them to others.

A brand that frequently collaborates with others is like a person who often borrows other people’s clothes and gradually loses his or her own personality and style.

The most important thing is, no matter which subculture group you want to do business with, respect comes first. One thoughtful collaboration is better than dozens of collaborations full of flaws.

Author | Akong Editor | Haoran This article is written by the operator author [Shangyinshe], WeChat public account: [Shangyinshe], original/authorized to be published in Operation Party, and any reproduction without permission is prohibited.

The title image is from Unsplash, based on the CC0 protocol.