It’s largely driven by a commission model.
Agents only get paid when deals are done and/or when product sells – which can often create tension and make the focus on speed and revenue targets rather than considered, strategic brand-building activity
Brand Extension
- Creation
- Protection
- Resolution
- Monetisation
- Optimisation
We disagree with how the licensing industry operates vs. brand owners.
Approach
It’s dominated by entertainment licensing: working with non-entertainment brand owners often requires a different way of working.
Entertainment licensing is tied to content release – get as much product out as possible in all key categories.
It can be difficult for (non-entertainment) brand owners to find people/agencies who are experienced at working with corporate companies on more challenging categories and/or on a global scale and who will work on a different model (e.g. not commission).
Licensing agents are driven by the need to generate a certain amount of revenue to make spending time on the work worthwhile – so there is a pressure to ‘get deals done’.
It can cause tension between the brand owner and agent if deals are turned down, take too long to sign or are low value. It may may mean that the agent presents opportunities that are not truly in line with strategy or brand values
The agency model is often better for ‘entertainment’ companies, or for those whose strategy is to get into multiple new categories, territories and distribution channels, as quickly as possible.
The model is less helpful for companies that want to a few large deals, take any licensing slowly, or engage in more short-deals which are PR focused rather than revenue-generating – because this approach tends to cause tension with the agent.
Corporate brands who typically have higher-value, longer-term deals, can pay a disproportionate amount of commission over the life of the contract.
‘Sales people’ (people responsible for finding new licenses and negotiating contracts) who are experts in working with non-entertainment companies can be difficult to find. It requires a different way of working.
Finding entertainment licensees can often be achieved through approaching ‘the usual suspects’ whilst finding suitable licensees for non-entertainment companies requires a lot of research, investigation and due diligence, which takes much longer and requires a different mind/skill-set.
Licensing is often siloed within a business with revenue targets independent of the brand teams. This means licensing negatively can be negatively viewed by Brand Managers who often disagree with the model and the execution.
Agents become a ‘sales team’ – selling the brand to licensees. Some are offering ‘full service’ (licensing management, royalty collection etc) but essentially the task is ‘selling the brand’.
They know that if a brand owner, for whatever reason, doesn’t want to sign off on the deals presented to them, wants them to do smaller/short term deals that are really for PR purposes or brand protection, or has them engaged in a lot of admin, then their work may not be profitable. This clearly creates tension.
Systems
Brand Structuring