Barbie buzz and brand value. Is it real?

In this business school-style teaching case study, lecturer and marketer Vanessa Errecarte considers the role of the digital ecosystem in creating brand value from intellectual property rebrands such as Mattel’s Barbie. Read the article, and the suggested FT stories at the end, then consider the questions posed.

With his background in television, Mattel chief executive Ynon Kreiz knew that the deal he announced with Warner Brothers in 2019 provided a powerful proposition for a rebrand: a Barbie movie. But would it be enough to recast the iconic doll brand and revive sales in a volatile market?

Barbie is 65 this year having hit the market in 1959. Its creator and Mattel co-founder, Ruth Handler, once stated: “My whole philosophy of Barbie was that, through the doll, the little girl could be anything she wanted to be. Barbie always represented the fact that a woman has choices.”

Mothers and daughters, worldwide, seemed to agree. By the 1980s, Barbie sales exceeded $1bn; by the 2000s, they had topped $3.5bn. But sales started to suffer with the launch of Bratz dolls by former Mattel designer Carter Bryant in 2001, featuring different skin tones and styles — and, later, the realistically proportioned Lammily dolls in 2014. A controversial appearance of Barbie on the cover of the 2014 Sports Illustrated Swimsuit edition, also harmed the brand.

In response, in 2015, Mattel rebranded Barbie to include “petite” and “curvy” dolls with varying ethnicities and hair colours. There was also a revamp of its “Fashionistas” line, with more diverse ethnicities, which met mixed reviews. Mattel persisted, releasing the ad “Imagine the Possibilities” on YouTube. Girls were shown role-playing with Barbies with the voiceover: “When a girl plays with Barbie, she imagines what she can become.” It received millions of views in the first week but had a muted impact on sales.

But it was a different story when Barbie, the movie, was released in July 2023. Director Greta Gerwig was praised for her ability to reflect the brand’s history while creating a more diverse vision of what the brand and its consumers could be.

The movie made more than $1.5bn at the box office and became the highest-grossing release of 2023. Barbie mania spread worldwide. In China, the number of showings increased more than threefold in the week of its release and demand for bootlegged copies in Russia was strong. In the Middle East, despite criticism over its feminist and LGBTQ+ ideals, cinemas in Saudi Arabia showed it up to 15 times a day to meet demand from movie-goers clad head-to-toe in pink.

Mentions of Barbie rocketed on social media ahead of its release, propelled by the strategic and targeted release of information by Mattel and Warner Brothers. Consumers responded in droves to digital initiatives including tie-ups with influencers and an interactive selfie generator.

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Mattel and Warner collaborated with more than 100 brands to create a flow of positive third-party social media mentions. Meltwater, a social media and consumer intelligence provider, counted 7mn social media posts about Barbie ahead of the premiere, which led to 277mn engagement actions — such as shares, likes, mentions — with the potential to reach 9.5bn people.

In the final quarter of 2023, net sales at Mattel were up 16 per cent year-on-year. In the company’s earnings release last month, Kreiz said: “2023 was a milestone year for Mattel. We extended our leadership in our key toy categories and gained significant share overall, achieved extraordinary success with the Barbie movie, and further strengthened our financial position.”

Yet Kreiz was subdued about sales predictions for 2024. Is his caution misplaced? Would a more accurate way to measure brand value allow Mattel to bet more confidently on its intellectual property rebrand well into the future?

There are four industry-standard ways of measuring a brand’s financial or market value: cost-based, income-based, market-based, and formulary. And there are five to 10 unique ways to measure brand equity (among them, awareness and digital third-party mentions). However, none of these measure the profit in relation to brand equity.

Furthermore, the brand valuations they come up with are often as variable as the methods used to calculate them. For example, there is a $6bn variance in the brand value attributed to Apple by three different valuation companies.

Kreiz plans to bring IP-based rebranding to more of Mattel’s lines and recent research from McKinsey suggests that digital third-party mentions and brand communities can be significant indicators of future success. Mattel’s own brand value rose from $588mn in 2022 to $701mn after the Barbie movie premiere, according to consultancy Brand Finance.

Kreiz told CNBC in an interview last week: “The idea was to create multiple touchpoints, to build strong toy brands. And, once you have the established fan base and cultural resonance around brands, this is where you extend them to other experiences, other products, other opportunities to connect with your fans.” He added that Mattel was “now thinking of people who buy our products not just as consumers, but as fans.”

IP-based rebrands also offer vast potential without requiring significant design, supply chain or product innovations. Powerful “social listening” software and predictive AI technology can project online excitement and clicks almost directly into sales conversions — unifying profit and third-party mentions. These could connect brand valuation and equity directly to financial forecasting, helping managers to make both strategic and economical rebranding decisions.

Vanessa Errecarte is a lecturer in marketing at the UC Davis Graduate School of Management and owns a branding and digital marketing consultancy, Marketing Simplified