By Michael Dresner & Ed Moed
Our economy has hit a rocky road. Unless you're in a recession-proof niche (which rarely exists), it's only a matter of time until your firm is negatively affected by the
turbulence. Don't you wish that your agency had the capability to create real sales and more profit for clients and prospects versus just costing them money on promotions,
publicity and more of the same?
Public relations is but one tool to facilitate strategic communication for your brand. Agencies need to think more broadly about all tools available--specifically those that
have a direct, quantifiable impact on the bottom line--yet cost clients next to nothing. Strategic brand licensing is one such tool, frequently underleveraged or dismissed--and
it's a tool that the marketing and communications personnel should be using.
The Road Less Traveled
Extending your brand to new categories via third-party license agreements can generate new awareness, increase brand impressions and reinforce the core marketing message. Most
important, it generates revenue for clients through manufacturer royalties, rather than a high upfront cost. This is the very organic and resource-efficient marketing brands may
seek in uncertain times.
Quite simply, licensing is a strategic marketing service that helps companies with appealing brands (licensors) make money by extending that brand into new categories and
industries. This is done by developing new products that current, loyal customers will be interested in--that is, if the extension is strategically designed and executed.
Licensing also can greatly help manufacturers with very little brand visibility because these companies (licensees) can license those attractive brands and use their own
manufacturing expertise and retail relationships to create their own products.
Think of licensing as a win/win opportunity for all parties involved. Traditional PR clients can create long-term brand impression generators through licensing that will result
in greater customer visibility, as well as show their business leaders that they can bring in real income to the company (thereby earning a newfound level of respect.)
Plus, those licensing clients are now able to obtain ongoing marketing support from third-party manufacturers, all reinforcing messages from the core brand.
License To Profit
Skeptical readers might be asking, "Licensing? That's a strange one. Why does this make sense, and why consider expanding into this area?"
There's an easy answer to that.
Forward-thinking communications professionals are always looking for what's next. Typically, that means developing new offerings and services to help soothe clients' pain.
Although we at Peppercom didn't have a crystal ball to see where the economy was heading, we conducted some deep analysis more than a year ago in hopes of enhancing our model. The
goal was to offer a completely different type of service that could bridge brand-building with truly understanding and impacting the business of our clients' business. Whatever we
pursued would need to be both synergistic with the strategic nature of our services as well as provide clients with an offering that could have direct impact on their bottom-line
revenues.
Which led us to licensing. There are some principles to understand and lessons to learn before jumping in:
1. Licensing isn't for the faint of heart. Like most marketing functions, it is far more complex than it seems at first glance. The business model of outreach, negotiation and
ongoing product development between brand owners and manufacturers is a unique skill set; when not managed correctly, mistakes can be made that adversely affect the brand.
2. A successful licensing practice requires senior mangers' support. Unless strategic licensing is taken as seriously by senior management as other primary marketing functions,
licensed manufacturers, as cost-efficient media vehicles, will never be leveraged as they should. Conclusively, each product category has its own unique rhythm of lead times,
buyers, trade spending requirements and competition, so initial paths to sell-through will almost certainly be outside the expectations and experience of the internal client team.
3. Licensing should not be an afterthought. Just like public relations, advertising and consumer promotion need to be priorities or the programs won't pay real dividends.
Recruiting knowledgeable experts from the function to lead and integrate it fully into your client's culture is also absolutely critical.
With that said, strategic licensing and PR can be leveraged interchangeably to create a fresh set of messages, brand impressions and revenue for clients hungry to compensate
for drops in their businesses. And, in a time when any communications/marketing services firm needs to demonstrate much more business acumen and results, brand licensing can truly
be a secret, revenue-generating weapon for clients. PRN
CONTACTS:
Edward Moed is co-founder and managing partner of Peppercom. He can be reached at [email protected]. Michael Dresner, CEO of Brand2,
Peppercom's strategic licensing division, also contributed to this article. He can be reached at [email protected]