Brager: Top Ten Black Holes in Brand Licensing
your company's brand may seem like an easy way to generate revenue
while gaining marketing exposure, but there are multiple risks
inherent in the licensing of brand, trademark, and copyright assets.
Successful companies invest heavily in their brands, so if the
parties involved in the licensing agreement don't align their
objectives, it can be costly, says Barry Brager, founder
of Perception Partners.
a marketer, entrepreneur, and innovator with more than 12 years
of professional experience in intellectual asset creation and
management, spoke at a ZIBS Forum sponsored by the Zyman Institute
of Brand Science at Emory University's Goizueta Business School.
His Atlanta-based firm provides expert strategic, marketing, and
business development services for high tech, biotech, and consumer
goods enterprise. Brager is currently co-chair of the Atlanta
Chapter of Licensing Executives Society.
license their brands in order to leverage brand equity in a new
or related category. When things are working correctly, licensing
can boost sales and profits for the licensee, while generating
royalties and marketing benefits for the licensor. In fact, the
greater benefits of the match lie on the marketing side. Entertainment
and cartoon characters are by far the most popular type of licensing,
but brand and trademark licensing is found in nearly every industry
today: music, fashion, sports, arts, and of course, colleges and
universities. It is $7 billion of the U.S. economy. At an average
royalty rate of five percent, it's a big opportunity. "So,"
Brager asks, "What can go wrong?"
out, plenty of things can go wrong, as Berger describes in his
"Top Ten Black Holes in Brand Licensing." For quick
reference, here are the 10 things your company should stay
Thinking outside the box
2. Ignoring market behaviors
3. Putting licensing in the wrong organization
4. Indiscriminate licensing
5. Overlooking the best options
6. No trademark usage guidelines
7. Not understanding the risks
8. No criteria for selecting suppliers
9. Insufficient quality control standards
10. No criteria for licensed products
has been no shortage of bad licensing deals over the years, Brager
says, but most of them could have been avoided with the proper
preparation. The real problem is usually something that hasn't
been done, such as setting criteria for the quality of products
or developing a useful application for the proper selection of
suppliers. Even brands with strong licensing programs have trouble
making sure graphic standards are met.
of our time in the deal is spent working on how the relationship
begins, and how it ends. We don't spend a lot of time on what
happens in the middle," Brager says. The lawyers and the
finance people set up agreements and collect the royalties, but
adequate monitoring of the program needs to come from representatives
across the organization. "It's important to have [a set of
rules and regulations] developed ahead of time, and update it
on a regular basis as products and licensees are added,"
he says. Auditing of sample products is essential.
licensing of collegiate products is a good example of the sensitivity
associated with branding. It's not unusual to see branded items
as diverse as toilet seats, chocolate, license plates, and can
openers, to name but a few. But there are rarely any items associated
with "sex, drugs and rock'n roll." Brager says, "If
the products themselves have problems, there is damage to your
reputation." The brand promise is of academia, combined with
team spirit, undertones of history, cultures, and sportsmanship.
"The outcome of dealing with strong or good practices
that you manage credibility risks." Most universities deal
with this challenge by hiring an agent.
the consequences" and have a plan for failure," Brager
continues. "A good what-if tree is a decision tree. It a
good planning tool when you are trying to estimate what's the
potential outcome here. Too many times the decision tree comes
in after the litigation. These risks need to be assessed constantly
as new relationships enter the fold." Issues with one brand
can touch all the brands it deals with, as Kathy Lee Gifford,
Wal*Mart, and ABC learned when it was discovered that garments
baring her name were made in a children's sweatshop.
of all, Brager says, a brand should be nurtured and treated with
respect. Indiscriminating licensing dilutes a brand's reputation,
damaging years of goodwill. Thinking outside the box, while admirable,
can get your brand in trouble. "You have to fight to get
retail space in most stores," Brager says. "This is
not the place to get creative."
Sarah Banick is a freelance writer based in Atlanta.