ARCHIVE:

PERCEPTION PARTNERS SPONSORS FIRST ANNUAL CORPORATE IP INSTITUTE
Published October, 2007

PERCEPTION PARTNERS ANNOUNCES 2007 SPEAKING SCHEDULE
Published January, 2007

PERCEPTION PARTNERS PREDICTS PIVOTAL VERDICT 
IN KINETIC CONCEPTS VS. BLUESKY
Published August, 2006

PERCEPTION PARTNERS FOUNDER DISCUSSES BRAND LICENSING
Published May, 2006

INTELLECTUAL PROPERTY SURVIVES HURRICANE KATRINA
Published September, 2005


PERCEPTION PARTNERS DONATES SERVICES ON WORLD IP DAY 2005
Published April, 2005

KEEPING TABS ON COKE
Published January, 2005

CUSTODIAN OF WORLD'S MOST VALUABLE IP PORTFOLIO JOINS PERCEPTION PARTNERS
Published October, 2004

GOOGLE - IP IS MORE THAN TWO-THIRDS OF IPO
Published May, 2004

IS YOUR BUSINESS METHOD PATENT PENDING?
Published January, 2004

One Expert's Guide to Avoiding the Black Holes in Brand Licensing
Published in Knowledge@Emory & Knowledge@Wharton, May 2006

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, warns Barry Brager, founder of Perception Partners®. Brager recently spoke at Emory University’s Goizueta Business School as part of the monthly forum of the Zyman Institute for Brand Science.

Brager is a marketer, entrepreneur, and innovator with more than 12 years of professional experience in intellectual asset creation and management. His Atlanta-based firm provides research, transaction and consulting services for intellectual property (IP) owners. He is active nationally in the IP industry and currently serves as co-chair of the Atlanta Chapter of Licensing Executives Society.

In general, businesses license their brands in order to leverage brand equity in a new or related category. A brand is a product, service, or concept that is publicly distinguished from other products, services, or concepts. It can be a logo, an image, a typeface, even the colors that are associated with that particular product, service, or concept. David Ogilvy, the famous advertising copywriter, defined it as "The intangible sum of a product's attributes: its name, packaging, and price, its history, its reputation, and the way it’s advertised." In short, the brand is a promise; it lets consumers know exactly what they are getting, every time.

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 (think Mickey Mouse, Sponge Bob, and Bugs Bunny) 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. According to the Licensing Letter, worldwide licensed product retail sales were estimated at $107 billion in 2003, and licensed product retail sales accounted for $70 billion of the U.S. and Canada economies.

Since a significant percentage of the market opportunity represents royalties, Brager asked, "What can go wrong?"

Turns out, plenty of things can go wrong. Brager, a Goizueta alum, offered up his "Top Ten Black Holes in Brand Licensing," pointing out several challenges to the diverse business audience.

There has not been a shortage of bad licensing deals over the years, says Brager, but most of them could have been avoided with the proper preparation. In an ideal transaction, a manufacturer pays a fee to associate their product with the brand equity of another partner.

Real problems arise when specifics are left out while creating a transaction, 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 can run into trouble. To illustrate, Brager discussed Playboy. In the 1970s the company was in a self-described "fuzzy dice era," which diluted the sophistication originally associated with the brand. Over the past few years, he explains, Playboy has refocused on upscale merchandise and high end retailing—think "bling, cosmetics, and even, teen bedding."

Monitoring your brand

Monitoring brands is a full-time job. "Much of a brand owners time in the deal is spent working on how the relationship begins, and how it ends. Many managers don’t spend a lot of time on what happens in the middle of a relationship," explains Brager. The lawyers and the finance people tend to focus on setting up agreements and collecting the royalties, but the strength of a good licensing program is in the monitoring, which needs to come from representatives across the organization, especially those in marketing and communications whose job it is to handle the company’s image. "If they don’t have the details of the rules established in the boardroom, it’s a no-go from the get-go.

"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," Brager says. A good program will require regular product samples, which should be checked for quality as well as proper treatments. Maintaining a good relationship with the licensor throughout the life of the agreement is also important.

Brand licensing of collegiate products can be 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 most colleges will not sanction licensing their brand on any items associated with tobacco, or other "sin products."

Brager warns, "If the products themselves have problems, there can be damage to your reputation." University brands promise academic accomplishment combined with team spirit, undertones of history, culture, and sportsmanship. "The outcome of setting good brand licensing practices is that you manage credibility risks, which otherwise could harm the health of the brand."

Indeed, The University of Georgia ran up against this issue recently when it was discovered that a member of the Board of Regents’ was selling wine bottles with the UGA logo.

Interestingly, most universities deal with licensing challenges by hiring an agent. The Collegiate Licensing Company, based in Atlanta, manages more than 200 college and university brand licensing programs. Traditionally, colleges and universities handle licensing of patents and other innovations in-house, notes Brager, but the big money comes from brand licensing, which most schools outsource.

Managing the relationship

Because new product failures are high, Brager advises prospective licensors and licensees to "anticipate the consequences and have a plan in the event the relationship between a licensor and licensee needs to be terminated."

Most of all, Brager stresses, a brand should be nurtured and treated with respect by all parties in a licensing relationship. Indiscriminately licensing a brand can dilute reputation and damaging years of goodwill, which can also harm the trademarks associated with the brand. This is why Brager advises the insight of expert IP counsel be sought for such issues. And in one final example, Brager notes that thinking "outside the box" while admirable, can get your brand in trouble. "You have to fight to get retail space in most stores—especially big box stores," contends Brager. "The licensors and the licensee both must be prepared to do what it takes to meet the requirements of dominant mass merchants. This could include exclusivity, preferential distribution, or additional SKUs."

For quick reference, here are the Top Ten Black Holes in Brand Licensing that Brager says your company should stay away from:

1. Thinking outside the big retail box
2. Ignoring market behaviors and needs
3. Putting licensing in the wrong internal organization
4. Indiscriminate licensing
5. Overlooking the best options
6. Lacking trademark usage guidelines
7. Misunderstanding the risks of licensing
8. Weak criteria for selecting suppliers
9. Insufficient quality control standards
10. Poor controls for licensed products

The ZIBS Forum is a speaker series event held at Goizueta and open to an audience of forward thinking managers and faculty at Emory and other regional universities. The Zyman Institute of Brand Science sponsors advanced research, as well as holds workshops, summits, an annual conference, and various other meetings.

The Zyman Institute of Brand Science (ZIBS) is an innovation research group based at Emory University's Goizueta Business School. ZIBS fosters rich collaborations between business executives and leading scholars worldwide. The Institute supports advanced research in brand management with the ultimate goal of developing positively useful knowledge that drives superior business performance.

The Institute’s current research focus encompasses developing ‘next practices’ (vs. ‘best practices’) in brand management. ZIBS manages five brand innovation pods. These include:

• B2B brand innovation
• Services brand innovation
• CPG brand innovation
• Retail Brand Innovation
• Financial Markets and Brand Performance Management

The Institute appoints first-rate scholars with domain expertise in these five areas. Each research pod focuses on industry issues through guidance of a steering committee of consisting of executive managers. This helps insure that the research process results in viable actions.