Davis ThinkingManaging intellectual property and other intangibles may seem like pure finance. Beware that dangerous trap. Intangibles can cut deep into operating issues, especially customer perception and customer service.
The New York Times is offering a platform that other publishers can use to produce their own apps for devices starting with the iPad and iPhone. The first publishers to sign up to use the platform, which The Times is calling Press Engine, are the Telegraph Media Group and three A.H. Belo newspapers: Dallas Morning News, Providence Journal and Press-Enterprise in Southern California. The publishers keep any advertising and circulation revenue the apps bring in; they pay the Times a one-time license fee for the platform and then a monthly maintenance fee.
As Playboy Enterprises considers the dramatic new options suddenly before it -- an offer from Hugh Hefner to take the company private for $185 million and a proposal from FriendFinder Networks to buy the company for $210 million -- the emphasis is on the brand much more than the magazine that started it all.
Aleksandr is one of the more prominent examples of the trend for animated characters or puppets to act as brand ambassadors. US consumers have long been charmed by the frogs that feature in Budweiser’s advertising or the cockney gecko that stars in Geico’s campaigns. Meanwhile, Domo, the saw-toothed mascot for Japanese broadcaster NHK, has gone on to appear in video games and comics, and spread virally online. But the proliferation and popularity of these creations and the merchandising they have spawned raises questions for both brand owners and advertising agencies hoping to capitalise on the value of the intellectual property.
Many media properties have started to license their own brands in addition to their programs and franchises. This trend has been gaining traction over the past several years as media companies have come to the realization that consumers can and do associate their favorite TV and magazine brands with certain lifestyle or product categories.
Some of the most familiar names in the restaurant world are moving into the grocer's freezer. P.F. Chang's, Burger King and Jamba Juice all have recently licensed their names for new products to be sold in supermarkets. They join other high-profile restaurant chains including Marie Callender's, Starbucks, T.G.I. Friday's and California Pizza Kitchen, which already have substantial presence at the grocery store.
Here on Branding Strategy Insider, Jack Trout makes a compelling argument for why not to consider licensing as a method of brand extension. Furthermore, he backs it up with multiple examples of established brands with flawed licensing programs that serve to prove his hypothesis. After reading about Pratt & Whitney and Pierre Cardin, what CEO in their right mind would choose to risk the company's crown jewels to a group of third party manufacturers which don’t have a clue about how to build a brand, let alone manage one? With so much at stake, only those CEOs that are either reckless or desperate would consider licensing. Right?
To best help you understand how to expand the licensing value of your brand, let's take a step back and reflect on why companies choose to brand their products in the first place. Companies brand their products to differentiate them from their competitors'. For example, most consumers have no problem differentiating a Coke from a Pepsi. By giving their products a brand, companies can begin a dialogue with their consumers about their products’ attributes. Over time, a consumer learns she can rely on the brand to deliver a consistent and expected value.
"How to Train Your Dragon" will not only sway the fortunes of DreamWorks Animation SKG Inc., but also Wal-Mart Stores Inc., which forged an unusually detailed merchandising partnership with the film studio that the retailer sees as its new blueprint for working with Hollywood. Wal-Mart worked with DreamWorks to design and choose the kind of licensed goods that would be sold around the family movie about a young Viking boy who tames a dragon, slated to hit U.S. theaters next Friday. It also had a hand in selecting who would make the merchandise, including putting plaything maker Spin Master Ltd. in charge of the toys.
An easy way to get started on the topic of Brand Licensing is to break the subject into its two component parts – brand and licensing. Let's start with the latter part first. What is licensing? Licensing means nothing more than the renting or leasing of an intangible asset. An example of intangible assets includes a song (Somewhere Over The Rainbow), a character (Donald Duck), a name (Michael Jordan) or a brand (The Ritz-Carlton). An arrangement to license a brand requires a licensing agreement. A licensing agreement authorizes a company which markets a product or service (a licensee) to lease or rent a brand from a brand owner who operates a licensing program (a licensor). Before we move any further, let's discuss what we mean when we use the term brand.
When you look at Oprah Winfrey’s multidecade run through daytime talk — most of it at No. 1 — it’s easy to be impressed by what she did to make it happen. But her longevity and success (Forbes estimated her net worth at over $2.3 billion) probably has more to do with what she did not do.
In a recession, marketers and institutions with strong brands may be tempted to license their names and trademarks. But while licensing can generate easy revenues, those royalties come with a potential risk to the brand. Consider Harvard University's recent ten year licensing arrangement with Wearwolf Group Ltd. of New York to develop and sell a line of preppy apparel bearing the "Harvard Yard" brand and crimson trim. The University, presumably mindful of possible negative reputation effects, carefully avoided licensing the Harvard University logo or name. However, no matter how carefully written the agreement, the licensee will likely be straining to exploit the Harvard association.
Burger King is taking its French fries beyond the fast food counter with a new product launch, in partnership with ConAgra Foods. Retailers like Walmart will carry the BK-branded fries, which are produced via a licensing agreement with ConAgra’s Lamb Weston brand. Lamb Weston frozen potatoes and appetizers are sold in both retail and foodservice outlets.
The local youth theatre troupe recently put on a performance of Grease. It was a high-spirited outing, with terrific performances and it was a great way for them to spend a month or two over the summer. I was amazed to discover, though, that the budget for the rights to the play were $3,000. That's pretty steep for a high school production of an old, not particularly wonderful musical script that was only going to be seen by the local community. Should it really cost $7 for every person who watches the play? The reason fees for licensing plays are so high is that almost all plays and musicals are licensed by just a few firms and the purchasers have no power whatsoever. The sellers have signalled each other and created an artificially high pricing floor. "Take it or leave it" is their motto. Here's the opportunity that the net provides (in this case and so many others): someone should organize the customers and negotiate on their behalf.
From the early strains of "Revolution" by Nike, marketing has increasingly co-opted the soundtracks of popular culture to create emotional resonance. And, boy, has the dance between marketers and music changed. No longer are brands and agencies willing to "crutch-up" their advertising with simply a popular song. In fact, the practice of slapping a song in at the last minute is moving into the Ice Age. What continues to thaw and thrive is the shared-values model, that fertile area where what the brands want us to experience and what the bands want us to experience is the same place.
In these difficult economic times, chief marketing officers seeking to help their companies grow revenue and remain viable in an unstable market need to pull out all the stops. One often overlooked and underused yet highly effective tool is brand licensing. Brand licensing can help provide some real financial relief during tough times and help marketers replenish and energize their brands, positioning them for even greater success when the economic engine starts whirring again and we start using the word "upturn" instead of "downturn."
If I were a betting man, I would say this is finally going to be Strawberry Shortcake's year. It seems like at each Licensing Expo, American Greetings unveils a "new" Strawberry Shortcake to licensees in the hope that the 1980s children's phenomenon can compete against more recent children's powerhouse brands such as Hannah Montana, High School Musical and Disney Princesses. And this year is no different. Yet again, Strawberry Shortcake has a new look, a new world and a new story line for licensees.
Ailing news organizations seeking to make money from both online readers and the Web sites that republish their stories are looking at the way music publishers collect a fraction of a cent for every song played in public, from the corner bowling alley to the stage of "American Idol."
There are two reasons joint ventures fail. The joint part and the venture part.
Step into an Office Depot these days and you'll see crayons, markers, glue sticks and other items from Scholastic. Best known as a publisher of children's books and educational materials, Scholastic initially linked with Office Depot for an exclusive branded product line of schoolbooks for teachers, but now it's a sort of house brand for the chain. "Sort of" because such licensors are expanding the definition of private label and, along the way, providing a bright spot in the otherwise moribund licensing industry.
In light of rising childhood obesity rates and the general confidence in supermarket sales, Disney, the world’s top licensor, is steadily making the push to realign its brand with a healthier image, targeting kids with fruits and vegetables instead. The savvy marketing move appears to be working too, as sales of the Disney Garden line were up 70 percent in 2008, a trend that can at least partially be attributed to consumer attitudes about the products.
Character licensing is nothing new to the Disney brand, dating back to Walt Disney licensing the Mickey Mouse image for use on a children’s writing tablet in 1929. Eighty years later, Disney says it has shifted from a strictly licensing business model to a consumer products firm capable of multifaceted strategies for innovation, quality and integrated branding efforts.
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