In 2009, Spin Master Ltd., the Toronto-based toy maker that had made millions selling a line of cartoonish remote control planes under the Air Hog brand, found itself unexpectedly grounded. Throughout the 2000s, the company’s fortunes had soared on the success of its quirky, unconventional toys, and its franchise approach to marketing. But amidst the vicious brand combat of toy sector and the explosive growth of gaming, Spin Master suddenly saw its revenues declining.
The reversal came as something of a surprise for the 900-employee firm, which had been founded in 1994 by three friends—Ronnen Harary, Anton Rabie and Ben Varadi. Their first product was “Mighty Bean,” a sack of soil filled with dirt and seeds that proved to be an unexpected hit.
The fledgling firm expanded with a series of quirky products and began to generate sales in Europe and the U.S. on the strength of a quirky but kid-friendly product line, which included brands such as Moon Sand and Marshmallow, as well as the fast-selling Air Hogs. The firm did its manufacturing in China, and had retail relationships with giants such as Walmart.
By 2007, in fact, the company hit a home run with a line of boy toys called Bakugan—spheres that pop open and convert into Japanese-style action figures. The concept, says Spin Master chief marketing officer Krista DiBerardino, was to partner with Canadian animation giant Nelvana and the gaming company Sega, which could extend the brand into the entertainment and digital spheres, as well as collector cards. “It was a huge success,” says DiBerardino, noting that Bakugan received numerous toy industry awards in its first two years. “The not-so-nice story is that it was successful but then lost favour.”
Over the next two years, Spin Master made a couple of crucial changes as it retrenched. In 2012, the company’s principals hired Ben Gadbois, a Rubbermaid veteran, to take over as the new global president and chief operating officer. At the same time, the company also decided to make a much more concerted foray into the global children’s entertainment market, setting up a stand-alone division in Los Angeles with a mandate to create TV and digital content to work alongside the company’s portfolio of toy brands.
While Spin Master had operated several international sales and marketing offices to support its toy lines, the firm moved to acquire some small games developers and forge relationships with large U.S. broadcasters, says DiBerardino. “We basically shifted our global footprint.”
As intended, the entertainment properties—TV shows built around some of the company’s toy brands—allowed Spin Master not only to make inroads in new international markets, but also attract the attention of toy inventors, who would pitch ideas and prototypes to the company’s R&D team.
DiBerardino points out that the company took a cautious and practical approach to responding to increased demand in emerging offshore markets, such as France, the United Kingdom and Italy. Spin Master’s marketing officials had to weigh decisions about pursuing a direct or indirect sales model, and then build incrementally. “You start out slow, figure out where you can build and be smart.”
The company also decided to make its new L.A. office into what DiBerardino describes as a “marketing and design hub,” to take advantage of the presence of the TV and film industry talent in the area. That was critical because the company’s strategic reboot meant finding ways to closely integrate Spin Master’s toy lines with its entertainment and gaming properties. Indeed, some toy ideas now come from the entertainment group. “We’re pulling in the toy teams early on.”
Building on the original deal with Nelvana, the entertainment division established partnerships with U.S. cable channel giants Nickelodeon and Cartoon Network. One of its shows, Nickelodeon Jr.’s “Paw Patrol,” is now the top ranked pre-school program. The TV show is fully integrated with Spin Master’s adjacent products—video games, crafts, costumes and even curriculum supports.
The show and the related product lines, adds DeBerardino, are being rolled out globally, an example of Spin Master’s new franchise marketing discipline. “It’s really the linkages of those teams working together very early and figuring that out.”