I know from my many years of running AT&T’s brand licensing program that it can be tough to learn to live with the risk that is associated with licensing your company’s most valuable asset; its brand. While I was licensing AT&T’s brand to other firms to use on their product or service, I had to live with the fact that if my licensee screwed up, AT&T’s brand could be severely damaged in the marketplace. And that damage could be very visible to my senior management. I always lived under the mantra that I was one bad licensing deal away from ending AT&T’s brand licensing program. The reason I made this connection was because I knew that the royalty revenue I could earn AT&T from my licensing program paled in comparison to the monetary damage one of my licensees could do to the AT&T brand. You see royalty revenue is usually a drop in the corporate ocean of revenue and with AT&T generating $123 Billion in Revenue annually, my tiny royalty stream was less then a drop, it was a molecule. Hence, if any of my deals ended extremely badly, it would probably mean the cancellation of my licensing program entirely and the end of my career at AT&T. While I was running AT&T’s program, one of my contemporaries at a competitive company met this fate when the wife of the CEO of that firm noticed one of their licensed products in a close-out bargain bin at a Consumer Electronics retailer. She bought the product and shared the story and the product with her husband. It was the end of the brand licensing program at that firm and the end of that Brand Licensing Director’s job.
So that begs the question, why did I assume the Director of Licensing role at AT&T and bare that level of risk. The simple answer is that brand licensing done well can be tremendously successful, rewarding personally and value-added for your company both in terms of brand building and revenue generation. The problem is that it takes tremendous vigilance and hard work to do brand licensing really well. And far more deals fail then succeed. The key is working hard to build a licensing organization around you that is filled with extremely talented people all working toward the common goals of: 1) attracting only the best licensees to your brand, 2) choosing the right categories to enter into, 3) doing extremely thorough due diligence to choose the “right” licensee, 4) negotiating a thorough contract and 5) proactively managing & partnering with your licensee to insure their marketplace success. If you do all these things well, you sleep well at night. BUT you must surround yourself with the right team to make that happen. This is not to say your team always sleeps well at night. ;-) There are always going to be issues to manage, but if you pool the risk of brand licensing around a talented licensing group, everyone is better able to manage that risk appropriately and succeed. The key is how you build that organization.
More on that next time in Part 2 of this thread.
Mike Slusar
Managing Director & Owner
Brandar Consulting, LLC
email: mike@brandar.com
“Helping Brands Reach for The Stars”
http://www.brandar.com/
copyright © 2010 Brandar Consulting, LLC All Rights Reserved
My Blog is intended to provide Licensors with unique insights about successfully managing a Corporate Brand Licensing Program. It is written from the perspective of someone who managed AT&T's Brand Licensing program for many years and has consulted in the Licensing Industry for the past 7 years.
