Las Vegas is a great place for a lot of reasons. It is one of those few places where the world comes to see you. Where else but Las Vegas can you get up and on a whim visit one of any half dozen major convention halls and learn about a different industry? Yesterday, manufacturing guru Philip Dahlheimer and I visited the Licensing International Expo at Mandalay Bay. I honestly didn’t know what to expect or what it was about. As soon as we entered the hall we were bombarded by vivid color graphics of cartoon characters, toys, and entertainment icons. I wanted to learn what was going on, but sitting down to a serious conversation with a representative from Ugly Dolls, Cookie Jar or Monkey Doodle Dandy just seemed anathema. And that’s when I saw the very serious looking Ducati motorcycle at the Dorna Sports booth. Phaedra Haramis from Dorna was kind enough to explain the industry in brief to us. The licensing industry is all about selling the licensed use of an entertainment image in exchange for royalties. So if you want to make a Garfield bobble-head doll or maybe a shirt or poster of “The Hoff” you need to strike a deal with the licensing agent to do so. Phaedra explains that the licensing agent’s responsibility is to first, vet the applicant to make sure that the product fits the brand’s image, quality, and reputation (Remember the Kathie Lee Gifford sweatshop scandal?). And second, review their business plan and sales forecast. The size of the royalty guarantee, immediately due, is typically based on the sales forecast projected by the business partner. This serves to ensure that the manufacturer executes the plan, and that their projections are realistic and achievable.
2/3rds of the floor turned out to be saturated with children’s characters, icons, images, toys, backpacks, games and so on. As a parent I was both overwhelmed and shocked by the volume of calculated advertising this hall held. Our kids don’t stand a chance, and neither do we if you can’t say no to them. The other third was a conglomeration of adult-oriented brands and celebrities: CBS, WWE, MGM, Dodge, Marlon Brando, and Chuck Norris to name only a few. Again, entertainment was the predominant theme; the only differences here was that adult brands tend to be represented by trade agencies rather than by themselves as the children’s product were. This says to me that children’s products are profitable enough that they keep their own licensing staff. In fact, licensing is probably a large part of their business model. Unless the adult brand has an almost religious following like Apple, Star Trek, or Dale Earnhart Jr., they tend to farm out licensing responsibilities to agencies. Licensing agencies are responsible for ensuring that their client’s image is honored by selecting partners who will maintain the integrity of the brand from production to pricing, and capture that extra revenue as well as halting piracy whenever possible. Price Waterhouse Coopers had a booth there too. They offer auditing services for any brands who want to make sure that royalty contracts are honored as agreed upon. The PWC rep said that 90% of them aren’t in compliance and a great deal of revenue can be recaptured through auditing. She emphasized that in today’s marketplace, brand imaging and licensing is global in scope, and can require representation in each market and country to earn revenue and protect the brand’s image.
Licensing is in essence, the opposite of the promotional products industry (where distributing your brand costs money). If a brand can graduate from one to the next, it has in a sense, “made it.”
To recap from a sales and marketing perspective, the power of brand imaging is incredible. Through it you can project much more than what your product or service actually does. By projecting a lifestyle, a belief, a feeling, an atmosphere or ambience your brand creates an emotional connection with the consumer. Some brands are so successful that they can command a fierce loyalty among their consumer base (think of all those Ford vs Chevy vs Dodge pickup stickers you’ve seen while stuck at stop lights,). Brand imaging and loyalty can be a powerful resource that takes hard work to grow, and careful balance to maintain. Sales and marketing professionals who know how to harness brand potential are poised to reap the benefits.
