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!