So 2 years after this business launched, it appears that the corporate brandowners are finally waking up to the potential of licensing to generate serious revenue and brand equity.
Harpic's owner Reckitt Benckiser recently hired the ex-head of licensing for Sesame St. which makes you think that they've developed a business function for licensing , although from what I understood in a recent conversation with the ex-head of licensing for Kellogg's winning internal support for licensing initiatives is the hardest part of the job. Not really that surprising when you think that all resources are devoted to increasing market share and profit, not supporting licensees.
Brandowners are happy to take the revenue from licensing but loathe to support licensees but they're also desperate to maintain competitive advantage so perhaps the tide is turning.
Tuesday, May 24, 2005
Friday, May 13, 2005
The best laid plans
It's nearly three years ago that I started this business and, when I look back, the learning curve seems steep and rocky... the best analogy for my approach to learning about licensing is that each day I'd don my leotard, climb into my cannon and fire myself against a brick wall. Eventually something had to give. I'm still here.
The plan for the first three years was something like:
1) learn about licensing
2) sign licensing deals
3) represent significant brands
oh and in a very special fourth place) generate enough revenue to survive....
With these achieved, it's time to set some new goals. Interesting how our goals govern our behaviour. Deferment of gratification is supposed to be a sign of intelligence and discipline but, I wonder, isn't it time for some instant gratification? Brand licensing agencies are masochistically addicted to deferred gratification, our patience knows no bounds. The pipe dream of long term royalties whilst we sit back and count the money sustains us almost as effectively as real income....
The next three years ending June 2008.... would have to involve scaling up the business, but in my experience you've got to be careful what you wish for....
The plan for the first three years was something like:
1) learn about licensing
2) sign licensing deals
3) represent significant brands
oh and in a very special fourth place) generate enough revenue to survive....
With these achieved, it's time to set some new goals. Interesting how our goals govern our behaviour. Deferment of gratification is supposed to be a sign of intelligence and discipline but, I wonder, isn't it time for some instant gratification? Brand licensing agencies are masochistically addicted to deferred gratification, our patience knows no bounds. The pipe dream of long term royalties whilst we sit back and count the money sustains us almost as effectively as real income....
The next three years ending June 2008.... would have to involve scaling up the business, but in my experience you've got to be careful what you wish for....
Tuesday, May 10, 2005
paper of the week
Although shouldn't really blow own trumpet, but am keen to let it be known that brand channel (www.brandchannel.com) have made my latest article paper of the week. If I can't let it be known here in my private unread diary, then where can I brag?
Thursday, April 14, 2005
when it all works out beautifully
The most recently completed licensing deal we've worked on took 6 weeks from initial proposal to signed contract. There were at least 3 agencies involved between the manufacturer and the brandowner and the contract took 8 days to prepare. When a brandowner with a powerful brand understands licensing and has prepared a streamlined process with well identified target categories, the turnaround can be impressive.
Thursday, March 31, 2005
typical?
Typical virgin licensor behaviour is to welcome an approach from a brand licensing agency. It's flattering and intellectually stimulating to consider how their brand would appear in other sectors.
Then, when a large licensing deal hoves into view and people start to take a bit of an interest, the brand manager's attitude miraculously changes. At this point there's a sudden resentment that the agency should want such a large chunk of royalty - surprisingly sudden considering that up till that point it was a percentage of nothing - and every effort is made to avoid signing a long-term contract. Finally, after a protracted negotiation punctuated by long silences for various holidays and other more important work - a ridiculously low share of royalty might be agreed with a cap, no expenses and no fee. If this is agreed then suddenly the licensing agency has its work cut out to deliver huge royalties or be stripped of the account and have the whole thing managed in house.
I suppose the brand manager sees an upstart company with ideas above its station and wants to retain control, but even so the typical treatment of the licensing agency hardly augurs well for the typical treatment of new licensees.
Then, when a large licensing deal hoves into view and people start to take a bit of an interest, the brand manager's attitude miraculously changes. At this point there's a sudden resentment that the agency should want such a large chunk of royalty - surprisingly sudden considering that up till that point it was a percentage of nothing - and every effort is made to avoid signing a long-term contract. Finally, after a protracted negotiation punctuated by long silences for various holidays and other more important work - a ridiculously low share of royalty might be agreed with a cap, no expenses and no fee. If this is agreed then suddenly the licensing agency has its work cut out to deliver huge royalties or be stripped of the account and have the whole thing managed in house.
I suppose the brand manager sees an upstart company with ideas above its station and wants to retain control, but even so the typical treatment of the licensing agency hardly augurs well for the typical treatment of new licensees.
Tuesday, March 22, 2005
Brand Licensing
Just been invited onto the advisory panel for this year's brand licensing conference so must be doing something right. A bit of a jolly and a free lunch. Went to see Pentland today, very impressive offices... table footballs, pool tables etc. The sort of place I can imagine people get very intense about the meaning of certain sports brands....
Wednesday, March 02, 2005
Last Minute Culture?
We live in a last minute, opt-out culture. Don't want to meet up with friends because you've got something better to do? Call and cancel, last minute. Leave all of your options open because something better might come along and when it does mass-communicate your change of heart in the blink of an eye.
Translate this to a professional setting and the pernicious effects of last minute culture translate into: noone listening at meetings because things will get mopped afterwards via email, a large number of first drafts sten-gunned out before any real thinking's been done, the finishing process getting later and later in the project development path.
Isn't it time for a 'First Time' movement featuring a manifesto of:
Thou shalt not send any internal emails
Thou shalt prepare a first draft that is as good as possible
Thou shalt schedule meetings and not cancel them
Thou shalt prepare project plans and carry them out
more to follow, this is only a first draft....
Translate this to a professional setting and the pernicious effects of last minute culture translate into: noone listening at meetings because things will get mopped afterwards via email, a large number of first drafts sten-gunned out before any real thinking's been done, the finishing process getting later and later in the project development path.
Isn't it time for a 'First Time' movement featuring a manifesto of:
Thou shalt not send any internal emails
Thou shalt prepare a first draft that is as good as possible
Thou shalt schedule meetings and not cancel them
Thou shalt prepare project plans and carry them out
more to follow, this is only a first draft....
Wednesday, February 23, 2005
The power of community
Word of mouth is an interesting phenomenon. Although the internet is a close second, there's no substitute for a friend's recommendation that a certain school offers excellent tuition or any other supplier for that matter. Similarly, the brand licensing industry depends on word of mouth to underwrite the reputation of licensees and licensors.
Once a licensee has a bad name - for not paying royalties, for example - word spreads quickly from the licensor via agents through to the agent's contacts. Obviously licensing newbies don't know who to ask for a referral but once you're in the know you become a stakeholder in the reputation network and, as long as your own reputation stands up, your opinion can make or break a deal. Such is the responsibility of being a brand licensing consultant...
Once a licensee has a bad name - for not paying royalties, for example - word spreads quickly from the licensor via agents through to the agent's contacts. Obviously licensing newbies don't know who to ask for a referral but once you're in the know you become a stakeholder in the reputation network and, as long as your own reputation stands up, your opinion can make or break a deal. Such is the responsibility of being a brand licensing consultant...
Thursday, February 17, 2005
Money for nothing....
Because many agencies only charge fees as a percentage share of royalty generated, it is tempting for brandowners to use licensing consultancies as a cheap way to investigate licensing opportunities. As Kirk Martensen points out in his paper on Licensing Dyslexia, there are many other factors to be taken into account when measuring a licensing strategy, and the worst licensing deals achieve high profile, huge royalties but bad fit with the brand's values. See paper on this....
The agency's goals must be aligned with brand fit as well as revenue generation to avoid the motivation to adopt a short-term mentality on both sides. Licensing agencies/consultancies need to think long-term to achieve brand fit ie: planning a brand licensing strategy, researching target markets, talking to key players and gathering and co-ordinating the flow of information between the brandowner and targeted licensees.
An initial investment from the brandowner shows commitment to a long-term licensing strategy, aligning the agency with the brand, and recognises the value of the agency's initial costs and strategic input. That's my argument and I'm sticking to it!
The agency's goals must be aligned with brand fit as well as revenue generation to avoid the motivation to adopt a short-term mentality on both sides. Licensing agencies/consultancies need to think long-term to achieve brand fit ie: planning a brand licensing strategy, researching target markets, talking to key players and gathering and co-ordinating the flow of information between the brandowner and targeted licensees.
An initial investment from the brandowner shows commitment to a long-term licensing strategy, aligning the agency with the brand, and recognises the value of the agency's initial costs and strategic input. That's my argument and I'm sticking to it!
Wednesday, February 16, 2005
Sudden Delays
It always surprises me when a conversation goes suddenly quiet. For example, I've recently been in the thick of negotiations on a potential deal when suddenly there was a deafening silence from the other side. It turns out my correspondent had booked two weeks holiday. Can you imagine if domestic life mirrored the business world:
“Honey, would you put the rubbish out?”
(Silence for two weeks)
“Honey where were you?”
“Oh, I went away for two weeks. Shall I put the rubbish out?”
“Honey, would you put the rubbish out?”
(Silence for two weeks)
“Honey where were you?”
“Oh, I went away for two weeks. Shall I put the rubbish out?”
Monday, February 14, 2005
On Valentine's Day make a match...
The interesting thing about being in the middle between brand owners and manufacturers is trying to find brands and licensees with matching promiscuity.... I suppose in some weird way that makes me a dating consultant?
The reason that few companies have a brand licensing strategy is that once the wrong licensing mentality has taken hold of a brand, it can lead to a slow death. Big fashion brands like Paco Rabanne and Yves Sant Laurent used to be the worst offenders (I remember an Yves Sant Laurent that was so poorly made it actually burnt my nipples). Like a lot of previously over-licensed brands, YSL’s owners are now attempting to reinvigorate the brand by killing off licenses and restablishing a high quality mentality. One thing’s for sure, at some point in the process the company stopped looking at licensing as anything other than the chance to make a quick buck. The reality is that licensing requires as stringent a new product development process as any other brand extension.
Licensees are no better! A typical new product development process is to identify a gap in market or some new technology that gives a competitive advantage, design a suitable product, market research the product, develop a marketing plan, market research the marketing plan and then execute a sales & marketing strategy. The majority of licensees circumvent this process by sourcing a product, looking at brands they'd like to license, attempting to license in a brand and, if this attempt is successful, adding the new brand to their existing product and relying on the product’s new design to convince retail buyers and consumers that there is a market opportunity.
The difficult role of the dating consultant is to convince both sides to make the necessary effort to make the other party feel valued. Given that we're paid on results it's tempting to advise our clients to take on every deal possible, however, the only way to gain credibility is to be honest. We've all seen what happens when a licensee just slaps a logo on something- it's no fun and the money's no good - so my advice, for what it's worth, is stay chaste and keep waiting for Mr Right, even if I get nothing for saying this (at least I don't have to be the one chasing down the bad date who abused my client and didn't even pay for the privilege). Choosing the wrong partner leads to tears before bed-time.
The reason that few companies have a brand licensing strategy is that once the wrong licensing mentality has taken hold of a brand, it can lead to a slow death. Big fashion brands like Paco Rabanne and Yves Sant Laurent used to be the worst offenders (I remember an Yves Sant Laurent that was so poorly made it actually burnt my nipples). Like a lot of previously over-licensed brands, YSL’s owners are now attempting to reinvigorate the brand by killing off licenses and restablishing a high quality mentality. One thing’s for sure, at some point in the process the company stopped looking at licensing as anything other than the chance to make a quick buck. The reality is that licensing requires as stringent a new product development process as any other brand extension.
Licensees are no better! A typical new product development process is to identify a gap in market or some new technology that gives a competitive advantage, design a suitable product, market research the product, develop a marketing plan, market research the marketing plan and then execute a sales & marketing strategy. The majority of licensees circumvent this process by sourcing a product, looking at brands they'd like to license, attempting to license in a brand and, if this attempt is successful, adding the new brand to their existing product and relying on the product’s new design to convince retail buyers and consumers that there is a market opportunity.
The difficult role of the dating consultant is to convince both sides to make the necessary effort to make the other party feel valued. Given that we're paid on results it's tempting to advise our clients to take on every deal possible, however, the only way to gain credibility is to be honest. We've all seen what happens when a licensee just slaps a logo on something- it's no fun and the money's no good - so my advice, for what it's worth, is stay chaste and keep waiting for Mr Right, even if I get nothing for saying this (at least I don't have to be the one chasing down the bad date who abused my client and didn't even pay for the privilege). Choosing the wrong partner leads to tears before bed-time.
Hello and welcome
Hi there,
welcome to my attempt to chronicle the growing pains of a new business. Well, when I say new I mean 2 years old, but it still feels new to me. This blog is intended to be a collection of thoughts and ideas about branding, brand licensing and what it means to be a brand licensing consultant. I hope that you find it interesting and stimulating. Personally I look forward to consulting this blog in about 3 years time and laughing my socks off at the naiivety it contains and regretting not actioning the things that turn out, with hindsight, to have been just the thing to do. Anyway, enough pre-amble and on with the blog...
welcome to my attempt to chronicle the growing pains of a new business. Well, when I say new I mean 2 years old, but it still feels new to me. This blog is intended to be a collection of thoughts and ideas about branding, brand licensing and what it means to be a brand licensing consultant. I hope that you find it interesting and stimulating. Personally I look forward to consulting this blog in about 3 years time and laughing my socks off at the naiivety it contains and regretting not actioning the things that turn out, with hindsight, to have been just the thing to do. Anyway, enough pre-amble and on with the blog...
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