Executive Summary
Every licensing deal you win is good news that quietly bills you back. The review workload it creates scales faster than the team clearing it, and agencies absorb that cost in margin.
Brand licensing is growing faster than the teams that manage it. As deal volume rises, so does submission workload, at a stubborn 3:1 to 4:1 ratio of submissions to approvals that compounds rather than shrinks with scale. This is the invisible tax on every deal you win. Agencies feel it harder than in-house teams, and the way through is hybrid AI, configured to each agency’s own clients and guidelines rather than deployed off the shelf.
- Growth is not free. Every new licensing deal multiplies submission volume by 3:1 to 4:1, and that ratio compounds as the market grows, taxing reviewer capacity faster than headcount can keep up.
- Agencies are structurally exposed. Unlike in-house teams, agencies cannot mandate one platform across diverse rights holders, so rigid, one-size-fits-all automation fails where per-client flexibility is the whole value proposition.
- Hybrid beats off-the-shelf. The value sits in the configuration layer that tunes general-purpose AI to each agency’s guidelines, clients, and risk appetite, reserving human reviewers for genuinely borderline cases.
- The prize is reclaimed capacity. A 40% cut in approval time, proven in a comparable engagement, turns growth you currently absorb in overtime into capacity you can redeploy to win and service new clients.
Brand licensing is booming. Licensing International’s 2026 Global Licensing Industry Study puts global sales of licensed merchandise and services at $389.8 billion in 2025, up 5.45% year-on-year, with growth fuelled by sport, character/entertainment, toys and video games, and, notably, strong regional growth in North Asia. The Asia growth story is already visible. At the country level, China’s licensing market grew 15.9% year-on-year in 2025, reaching $26.2 billion in retail sales of licensed merchandise, with the number of active licensing enterprises up 5.6% and the number of licensed IPs in market up 9.2%. Grand View Research forecasts the Asia-Pacific licensed merchandise market to grow at a 7.2% CAGR from 2026–2033, driven by e-commerce, live-streaming and influencer-led promotion.
For agencies managing licensing programs on behalf of rights holders, this is unambiguously good news: more licensees, more categories, more territories = more revenue. However, it comes with a quieter problem: every new licensing deal generates a multiple of submission volume. With a typical 3:1 or 4:1 ratio of submissions to approvals, each licensee consumes time for agencies in iterating, resubmitting, and refining artwork until it clears brand guidelines. As the market grows, this ratio doesn’t shrink; it compounds. Submission volumes are scaling faster than the headcount available to review them.
The submissions-to-approvals ratio does not shrink as you scale. It compounds. That is the tax you pay on growth, and it is paid in margin.
Why This Hits Agencies Harder Than In-House Teams
For a large licensor with an in-house brand team, this is solvable with standardised processes and single-licence management platforms that can often be enforced on the licensees. For agencies, it’s structurally harder. Agencies sit across multiple rights holders, each with their own guidelines, tools, platforms and approval workflows, and, critically, none of it can be prescribed. An agency can’t mandate a single system across its client base the way an in-house team can mandate one across its own business and licensees. That diversity is part of the value agencies offer clients, but it’s also exactly what makes standardisation, and therefore automation, so hard. The result is rising cost and complexity to service the same clients at higher volume, with margin absorbing the difference.
The Agencies That Solve This Will Win
The agencies that find a way to absorb this growth in volume, without losing the flexibility that makes them fit for purpose across diverse client requirements, will be the ones that win the next phase of this market. Scale and the ability to customise for multiple clients can be competing forces in packaged software.
Also, no single platform can assume it sits at the centre of every agency’s world, or that it can natively cater for the full range of client-specific rules, workflows and systems an agency must support. A rigid, one-size-fits-all platform play will always lose out to something that can flex to how each agency and each client actually work.
Solving this properly takes more than a software package. It requires a team that understands the licensing world in genuine depth, and that also has advanced AI and engineering expertise, a combination that is rare in one place. In-house teams can be an option, but it is worth asking honestly whether they have both skill sets, and, even if they do, what else they would need to stop doing to deliver this well. Building and maintaining that capability internally is not a side project.
There’s a real argument for keeping this in-house: it means you own the IP, know-how, and data associated with licensing management outright. That ownership will increasingly matter as this capability becomes a source of competitive advantage. However, you don’t need an in-house route to preserve the IP. Specialist technical partners bring the licensing expertise, AI, and engineering skills, with a business model that automatically transfers this IP to your agency once built. This delivers the ownership benefits of an in-house build without requiring your organisation to assemble and retain this rare combination of skills from scratch.
The Answer Is Hybrid, Not “AI Out Of The Box”
AI, correctly deployed, is genuinely transformative here, but only when it’s configured around each agency’s specific client knowledge, guidelines and risk appetite. Off-the-shelf AI doesn’t work. Rights holders are (rightly) cautious about brand risk, and every agency’s set-up is different. The value sits in the “glue”: the configuration layer that adapts general-purpose AI to a specific agency’s guidelines, clients, and workflow.
What this looks like in practice:
- New licensee submissions are captured quickly and consistently, regardless of the channel or format they arrive through.
- An initial AI screen, trained and configured on each client’s specific guidelines, performs first-pass checks automatically.
- Where a submission falls short, the workflow doesn’t just reject it: it gives the licensee constructive, specific feedback on what needs to change to pass next time.
- Human reviewers are freed to focus on genuinely complex or borderline cases, cutting time-to-approval and enabling a responsive, 24/7 service for licensees and licensors alike.
- Existing agency teams can absorb market growth without proportional headcount growth, improving both service levels and agency margin at the same time.
The Size Of The Prize
These outcomes aren’t hypothetical. In a comparable engagement, a centralised approvals hub built for a Fortune-scale rights holder cut approval times by 40% and reached 70% adoption across global offices within six months. A separate direct-licensing hub built for a major sports and education ecosystem now manages compliance for 1,200+ universities and over 50,000 athletes. It has processed more than 50,000 agreements without adding headcount to the team running it.
Applied to an agency operating in a market growing at 6 to 8% a year across multiple geographies, the arithmetic is straightforward. A 40% cut in approval time, set against a submissions-to-approvals ratio of 3:1 or 4:1, doesn’t just clear the current backlog; it reclaims a meaningful share of the team’s capacity. That’s the capacity an agency can redeploy to win and service new clients, rather than having it quietly absorbed by growth in submission volume alone.
The Takeaway
The submissions-to-approvals ratio is not going away, and market growth is not slowing down. Agencies that pair the right hybrid AI configuration with the flexibility their clients already value will scale profitably. Those relying on rigid platforms, or on manual processes alone, will find the economics of servicing this growth increasingly difficult to sustain.
Frequently Asked Questions
It is the review workload every new deal generates before a single product reaches shelf. With a typical 3:1 to 4:1 ratio of submissions to approvals, each licensee consumes reviewer time iterating, resubmitting and refining artwork until it clears brand guidelines. Win more deals and that workload scales faster than your team does. The cost never appears on the deal itself, which is why it stays invisible until margin starts absorbing it.
Because an agency cannot prescribe. An in-house team enforces one platform, one set of guidelines and one workflow across its own business and its licensees. An agency serves multiple rights holders at once, each with their own rules, tools and systems, none of which the agency controls. A single mandated platform would strip out the client-specific flexibility that is the agency’s actual value. Scale and per-client customisation pull against each other in packaged software, and that tension is the real problem.
Off-the-shelf AI does not work here. Rights holders are, correctly, cautious about brand risk, and every agency’s set-up is different. The value is not the general-purpose model; it is the configuration layer, the glue that adapts that model to a specific agency’s guidelines, clients and risk appetite. A rigid, one-size-fits-all AI product will lose to a solution that flexes to how each agency and each client actually operate.
Let's Continue the Conversation.
If your submission volumes are climbing faster than your review capacity, that is a conversation worth having in person. Meet Andrew Jackson-Proes, Chief Revenue Officer at Net Solutions, to talk through what a hybrid AI approvals model could look like for your agency, your clients and your margins.
