The Power of Licensing
The Power of Licensing. When we changed our name from MODA International Marketing to MODA Licensing, it wasn’t because we suddenly became cheerleaders for licensing, we always have been! We explained in our press release (see In The News, March 29, 2010) why we switched out “international” and “marketing” with “licensing” in our name. At the core of the change is highlighting our expertise, which is licensing; and elevating the perception of licensing as a very attractive model for business growth.
Too often licensing is viewed as a short lived opportunistic venture with a sole focus on marketing benefits. It is not always understood as a powerful and innovative means of leveraging an existing intangible asset (e.g. trademark, brand, patent) to develop new and enduring businesses. And yet, many long-term and profitable businesses operate under a brand license agreement. According to The Licensing Letter (April 19, 2010), retail sales of licensed trademark/brand based merchandise was $24.37 billion in 2009.
Licensing should be considered as an option for business growth in the same way organic, JV, merger, acquisition, or divestiture are evaluated as strategic approaches. Licensing allows the door to remain open to transition to another model if and when appropriate. Of course the option to continue a mutually profitable licensing partnership may be the most attractive long term solution. Additionally, licensing allows the IP owner to maintain control of the IP which is often not possible in other business models. For the licensee, the cost of creating and developing a new brand business can be prohibitively expensive and risky. Leveraging the licensor’s intangible assets and brand equity fast tracks and reduces overall risks to the licensee.
IP owners may have developed and built value for their IP over 25, 50 or 100 years or they may have recently acquired valuable IP as part of an acquisition. In both cases, the IP owner already has made an investment in the brand. If the desire is to monetize the IP, then why not go the route of licensing? Why not partner with an expert in the industry, territory, and market to develop, build and grow a new business rather than make another financial investment in a JV or merger? Statistics show that 70% of JV’s fail. This may be due to a myriad of reasons including poor planning, undercapitalization, cultural differences, and poor management. Licensing on the other hand allows the parties to work together, test synergies, profitability and economies of scale to determine if a merger or acquisition is a logical next step, without making a premature irrevocable commitment to one another.
MODA has always approached licensing with these factors in mind. Licensing IP is a flexible structure that conforms to specific circumstances and leverages IP in the most appropriate manner to deliver ROI to licensor and licensee.
MODA changed its name to highlight LICENSING and to advocate on behalf of this uniquely attractive model which too often is underleveraged.
High Point
High Point, April 2010
This was a good market. Let’s start with the fact that the sun was shining. (Moving from building to building in High Point when it’s raining dampens the shoes and spirits!) Overall the showrooms were busy and there was good energy – a feeling that the worst of the recession is behind us prevailed.
We attend this market for many reasons: to spend time with Hammary, our furniture licensee for The National Trust for Historic Preservation, to stay on top of any trends in the industry and to focus on particular categories of interest, including area rugs.
Hammary is launching a new collection, La Valenica, for the Design in America – The National Trust brand. Like all previous collections, the designs take inspiration from one of The National Trust sites or places. La Valencia evokes the old world charm of the famous hotel located in La Jolla. The collection embodies the elegant Spanish style of the hotel and features substantial forms and warm wood tones. Wrought iron details, bold carvings and intricate inlay patterns provide a handmade feel that adds character and a feeling of luxury. La Valencia was showcased in the new Hammary showroom. Hammary and Anerican Drew, divisions of La-Z-Boy, are now sharing showroom space. This is good news for Hammary since the opportunity for distribution has now been expanded.
The area rug showrooms that I visited were very active and there was a lot of licensed product to be seen. Jaipur, a company that focuses heavily on design, had live models posing on rugs lining the Showplace walkway. It certainly captured everyone’s attention but I’m not sure if they were focusing on the models or the rugs!
In all, I spoke with a lot of people. What will develop remains to be seen but the good news is that, in general, everyone was open to hearing more.
Toy Fair
Toy Fair, February 2010
Toy Fair 2010 felt a lot better than it did in 2009. The aisles and booths were busier than last year and the exhibitors seemed happy. The noise level at the show was not as deafening as it had been in previous years. Overall, the tone of the show reflected the economic forecasts – a slow but steady recovery.
I was at the show representing our new client UNICEF. The UNICEF organization is extending their brand to children’s toys, apparel, optical, first aid, safety and juvenile products. We are really excited about this assignment since UNICEF’s global brand awareness, credibility and link to children is virtually unmatched. Extending the UNICEF brand to toys is seamless. We’re exploring product categories such as arts & crafts, plush, mini-vehicles, puzzles, games, infant/preschool, games, and more.
Jakks Pacific had one of my favorite toys. “Real Construction” uses a durable foam material that looks just like real wood and allows children to create wood configurations safely. It looked like a toy that children could really enjoy.
One thing that seemed lacking in the products I saw was creativity. Considering the industry this was a bit perplexing and disappointing! It’s clear that the retail environment isn’t necessarily inspiring risk (at least in the toy industry), but for those willing to take the chance, is the potential reward worth the gamble? We hope so!
America’s VetDogs®
MODA Takes Non-Profit America’s VetDogs® To Branded Consumer Product With Their First License
“We selected MODA to represent America’s VetDogs® because of their successful track record and immediate understanding of our Organization and its licensing potential. They embrace our mission and act as our licensing dept, working as close partners of our marketing team. They have succeeded in making America’s VetDogs® into a consumer brand during a challenging economic time. We look forward to a long partnership with MODA, working together to grow our licensed business.”
Wells Jones, Chief Executive Officer Guide Dog Foundation for the Blind, Inc.® and America’s VetDogs® – The Veteran’s K-9 Corps®, Inc.
The New York Times
Via licensing, MODA extended The New York Times authority to a wine club. An innovative integration of traditional and new media, marketing and direct mail has resulted in a critical and commercial success. The New York Times Wine Club provides wines from the top regions of the world accompanied by Tasting Notes that includes related articles from The New York Times archives and is rated by an independent blind testing as having best wines of competitive wine clubs.
LYCRA®
MODA took the ingredient brand LYCRA® and made it a consumer brand in cosmetics on behalf of its client INVISTA (formerly DuPont). Licensed to Coty Cosmetics, this successful business is now entering its 8th year. LYCRA® products feature the benefits of LYCRA® (e.g. strength, resistance, last) and are available throughout the world where Rimmel and Astor cosmetics are sold.
