From royalties to GMRs, the financial side of licensing can feel overwhelming. But no need to fear! This week’s episode of The Brand Licensing Podcast has you covered with our guest, Miller Kaplan Partner and CPA, Vincent Leoni. 

Vincent Leoni is a partner with Miller Kaplan in Los Angeles. He has more than thirty years of experience performing entertainment consulting, royalty/contract compliance, and profit participation examinations. Vincent performs these services on behalf of licensors, owners of intellectual property film studios, production companies, recording artists, music publishers, profit participants, and software developers.
In addition to his work in the US, Vincent has traveled extensively throughout the world, performing a number of licensee exams on behalf of major trademark licensors in Asia, Europe, and Australia. Vincent has provided litigation support services on behalf of profit participants and licensors, and on multiple occasions has analyzed income streams in order to determine damages and the appropriate share of profits, revenues, and royalties due to participants. He has also been called upon to serve as an expert witness testifying in the Superior Court of the State of California.

Tune in below to hear the full episode, or check us out on Apple Podcasts or Spotify. Don’t forget to subscribe!

This episode is brought to you by Brainbase. Learn more here: https://hubs.la/H0G7KqQ0

Episode Transcription

Emily Randles: Hi Vincent! Welcome to The Brand Licensing Podcast. Will this be your first time on the podcast or are you a seasoned podcast guest?

Vincent Leoni: Well, first of all, thanks for having me, Emily. I am not a seasoned podcast participant, just a seasoned podcast listener.

ER: Great! Well, we’re excited to have you today.

VL: I’m excited to be here.

ER: For our listeners, today we’re speaking with Vincent Leoni of Miller Kaplan. Vincent’s here to talk to us about royalty accounting and audits. Now most of the time when people hear royalty accounting, It’s not the sexiest topic. But I am so excited to talk with you today because it’s a question we get asked a lot and it’s content that people look for on our website. And at the end of the day, everybody really wants to know about the numbers. I think this will be a great, great podcast. And I think our listeners will learn a lot from you. I’m excited to cover it. I do know that your firm covers a wide range of capabilities. I’m sure we can talk in-depth about those. But really today we’re focusing on royalty accounting and auditing. And then we can maybe jump back on another podcast and talk about some of the other services that you offer.

But before we jump into more things, can you just give us a quick rundown on your experience and your resume?

VL: Sure. I have been involved in royalty auditing and consulting my entire career, and that spans over 30 years. Initially, I spent the majority of my time in the music space, performing royalty audits on behalf of recording artists, music, publishers, songwriters, and independent record companies. And as part of that experience, kind of expanded to doing other types of consulting services in the music space, specifically assisting folks in the selling and acquisition of music catalog. Although we do continue to service those types of clients, the way music is consumed today, it’s evolved greatly in my career. We also perform these types of royalty audits mostly on behalf of licensors, although we do represent a fair share of licensees. And our clients are in the consumer product area. We do a lot of interactive gaming audits, toy audits, all kinds of consumer products, apparel, technology, housewares, and appliances. And I manage a group of about ten folks at Miller Kaplan that spent their entire day doing these types of things. We consider ourselves experts in contract compliance. We can cover a lot of different industries.

ER: You said you have ten people working with you. Tell us exactly what they’re looking for? What does an audit comprise of? Or how do they do it? Because there’s a picture of me and somebody in the back counting beans. So I know it doesn’t work quite like that. Can you give us an overview of how the auditing process works?

VL: Sure. Generally, we’re getting involved in the licensing arrangements where they’ve been quite successful. Our clients want to make sure they’re getting accounted for what they’re entitled to. So we will review the license agreements and the accountings and determine if we believe an audit is viable. And we’ll communicate that back to our client. We go through the mundane stuff like preparing a time budget and getting an agreement with our client. But once we are engaged and we analyze and summarize the licensing agreements, we compile a database of all the royalty accounting. We review those accountings and the contracts for risk areas and ultimately schedule time with the licensee to historically go onsite and perform the fieldwork and analyze all the sales data, etc. Just as a sidebar, we’ve been very successful during the pandemic of starting and completing royalty audits remotely. It’s our new reality. Since March, we have not ventured out into the field. All of this work is done remotely. And so we’ll prepare a listing of documents to be reviewed. The licensee will upload those through a secure portal that we set up. And then we reconcile all of the data that they provided. Reconcile the sales and deductions against what has been accounted for on the royalty statements and make sure that those have been accounted for according to the terms of the agreement.

ER: Okay, this is a pretty obvious question, but as a licensor, what would you want to audit a licensee? And then what are some red flags that license words should be looking for that should make them want to reach out or start thinking about it?

VL: The nature of the licensing business is self-reporting. The licensee is responsible to exploit the intellectual property range for the manufacturing and distribution of the products. The agreement between the licensee and licensor contains an audit clause, which enables a licensor an opportunity to review those sales records and manufacturing records to make sure that they’ve been accounted for properly. Just by the nature of the self-reporting, it makes sense for a licensor to engage somebody to go in and make sure that everything has been accounted for according to the terms of the agreement. From a licensor’s standpoint, they’re receiving accountings from the licensee. And there are a number of things that can raise their suspicion that there may be some issues in the licensee’s ability to account according to the terms of the agreement. If they’re receiving late accountings from the licensee and they’re getting paid late from the licensee, there may be an indication that the licensee is having some financial problems. If the licensee is not consistent in the method of accounting, they’re making adjustments to the royalty statements.

And if those statements are not mathematically accurate, it’s a huge red flag that there may be issues with the ability of the licensee to account according to the terms of the agreement. From our perspective, when we are dealing with a licensee and performing a royalty audit, some of the red flags for us are if the licensee lacks proper accounting software if they’re implementing a new enterprise accounting system. When they’re preparing the statements, there are errors in the transfer of the information from the enterprise accounting system to an excel statement or something like that. If there’s been a merger and acquisition during the audit period, that’s kind of a risk that they may not be accounting properly. And all of these things that I’m describing vary from instance to instance, but those are generally the things that will raise some eyebrows and have a licensor institute and audit.

ER: Those are some great pointers. And I know because some of our clients have asked should we consider an audit? And so just knowing what to look for or when to recommend will be really helpful in the future. If we were to recommend an audit, what does an audit cost and how long does it take?

VL: It’s a loaded question. The fees are charged depending on the scope. And there’s a number of factors that we have to consider in determining what that scope is. The number of years that are going to be audited, the number of license agreements between the licensee and licensor, the complexity of the reporting. It’s based on net sales or per unit or profit participation. Those are factors that will increase or decrease the amount of time that we need to spend. The conditions of the licensee’s accounting records will impact the amount of time that we have to spend, the number of properties that are under audit, and the number of skews. The items or articles that the licensee is distributing will impact the amount of time that we need to spend.

Now, having said that the audit is usually conducted in four stages. There’s a pre-audit stage where, as I referred to earlier, the agreements are summarized and the royalty statements are compiled. On-site fieldwork, which historically we would perform. But today all of that information is sent to us, which is the review of all the accounting records, etc. And then post fieldwork and wrap up. And then preparing the report. Regardless of the size of the audit, those are the phases that we go through. These can range as low as $5,000 for a desk audit and complex audits can run into the hundreds of thousands of dollars. And the length of time varies as well. But just to get to the answer you’re looking for – an average audit costs between $25,000 and $30,000 and will generally be completed in about six months.

ER: Okay, interesting. And a lot of, or some of the agreements that we work with, the audit states that if a certain amount of errors are found, then the licensee is responsible for the cost of the audit. Do you run into that a lot?

VL: Yes. We have clients that is standard language in their license agreements. And it’s not uncommon that we assess a damage calculation for the fees and expenses incurred.

ER: Flipping the script here a little bit. One, you had noted that you do work with licensees. I would love to understand how you can help a licensee? And then what are some best practices or recommendations that you have for licensees that they don’t run into compliance issues?

VL: We have assisted licensees in the negotiation of license agreements. There are some very large licensors that may have a boilerplate agreement that really needs the massage for the specific industry. We assist the licensees after they’ve been audited as well to assess the findings that an auditor may have raised and determined if those are accurate, and assist with the licensee to mitigate the ultimate settlement amount.

ER: And how can licensees maybe avoid audits with a licensor or make them, if maybe not avoid, if they’re in an audit, how can they make it easier on them and helpful to the licensor?

VL: Having royalty accounting software really helps in preparing accurate royalty accounting. But there’s a lot of licensees that we audit. There’s just not that large a company. It would be a huge cost for them to undertake that. But one of the things that we run into is licensee entering into agreements that they may or may not have the ability to account under. Very, very complex profit participation agreements, for example. Or net sales agreements where the deductions are limited. And it becomes a very, very manual process for them to reduce the number of deductions to the limits that are set forth in the contract. Or isolate the types of expenses that are deductible to arrive at the profit that is to be split. So entering into an agreement that makes sense for the licensee where they don’t spend an inordinate amount of time just preparing the accountant. To have transparency in the accountings that they do issue is important as well. We recommend to all of our clients that they spend some time every month or every quarter or semiannual period, whichever, however many times they get accounted for per year. Reviewing those accountings to see if they make sense.

And if the licensee is just reporting and that sales amount and multiplying that by a royalty percentage, that’s going to give the licensor a little bit of heartburn and they’re going to probably try to institute an audit. Whereas if the accountings are detailed in terms of, by skew, by territory, by distribution channel types of deductions that are being taken, the licensor may be satisfied that based on the level of detail they’re receiving, they’re willing to trust that the accountings are materially accurate and may not institute an audit.

ER: Yeah, that makes a lot of sense and that’s kind of how we approach things too. We have one licensee that is very detailed in how they’re reporting. And so, it just feels like everything’s there. But we do a double check and put it into a royalty accounting software as well. Before we tackle our next question, here’s a quick word from our sponsor.

Today’s episode is sponsored by Brainbase. Brainbase is a technology platform that helps brands manage and monetize their intellectual property. The current platform assist helps brands track their legal contracts, sales, royalties, creative, and product approval, files, analytics, and so much more. Additionally, they’re working on launching a new service marketplace. Marketplace will allow you to showcase your brand and discover new opportunities from a global network of prospective partners. We use Brainbase Assist Program to manage and track licensing programs for our clients. We love the analytics and reporting tools and are excited about the new role two reporting features they’re rolling out. Check it out if you’re looking for an online management tool for your program. We’ve linked to their site in our show notes now back to our show.

Great. So, you just touched on what a licensee should be looking for or include in the license agreement so that they can make sure they’re reporting on the license. What could a licensor ask for from a licensee for reporting sales?

VL: I think similar information that is in certain instances, the licensor has reporting responsibilities as well. They may have participants in the merchandise deals they have. It’s really, really important that the accountants they receive include sufficient details so they can meet their financial obligations as well. Things like item number territory, the sales channel, gross sales, deductions, and net sale; should give, again, would give them enough information that they can run a smell test to see if what they’re being accounted for is inappropriate. Many of these deals will cover multiple properties. And so to make sure that the leads accountings are made by the property is important as well. Some of these properties may not be cross-collateralized. So if properties are not separately identified in the accountings they’re receiving, the licensor may not have the ability to determine if the royalties are improperly crossed.

ER: You also touched on this, but the role of your accounting software. We have some licenses that just report in Excel. We also have some clients that require them to use like a royalty zone or Brainbase. Do you recommend having the licensor, the brand owner be responsible for the royalty accounting software and having licensees report in? Or you had noted earlier that licensees should maybe invest in that?

VL: So several of our clients also invest in royalty accounting software. And there are many times requirements in the contract on various fields that need to be accounted for. And whether that’s issued in a format that’s from the actual royalty accounting software the licensee utilizes, or if it’s in a clean excel spreadsheet, I find that our, that the licensors can manage both as long as it’s a readable, sortable format.

ER: What’s the recommended reporting cadence to the license, or, and does that differ depending on the program or the type of industry?

VL: It does vary based on a number of factors, including the properties and the industry. We do a number of royalty audits in the interactive space. And for mobile gaming, the licensees are receiving monthly statements and payments from the various digital service providers. So in a situation like that, monthly accounting would not be as onerous. But what we generally see are quarterly accounting and some of the older agreements specifically in the film and TV space, we see semi-annual agreements. And we’ve also run across situations where their annual accountings. And those are very, very old contracts. But as you may or may not know, some of those films still generate a tremendous amount of revenue. Certainly a license, or wants to be accounted as frequently as possible, because that means they’re receiving their royalties that a more timely basis. As long as it’s not too onerous on the licensee to account on a monthly basis, I think quarterly is a reasonable expectation not to make the royalty accounting process for the licensee 50% of their business or something like that.

One of the things that changed tremendously in my career is the relationship between the licensees and the licensors, historically, are very adversarial, or at least the situations we got involved with were very adversarial. And now on the most part, they’re referring to each other as business partners because the successful license agreement is everybody’s, benefiting from it financially. And if that’s done correctly, the IP value is also increasing. The licensor should not be too demanding in requesting the cadence in which they are getting accounted.

ER: Great. You kind of just stole my last question, which is just the role that relationships play in deals. We have found that by having a strong relationship and partnership between the licensor and licensee, your programs last longer and they’re more successful. And so we’re really wanting to touch on, there are so many pieces of the licensing program. How do relationships play a role in this area? Any other thoughts there?

VL: Yeah, I think certainly the decisions made by licensees and licensors are not always financially driven. It may be important for a licensor to license particular intellectual property in, let’s say, food products. They may not have a food product licensee. And so that relationship that they develop with a distributor, a licensee may be more important than others that they have because they want to make sure they have representation in that space. And I do agree with you that the relationships on a business partner basis are more successful because there is an inherent cost in changing licensees. There may be six months of time for a seminal brand that there may not be anything on the shelves because they’ve changed the relay a 25-year relationship with a licensee and they have to go find a new one. And to change over every couple of years. It just doesn’t make sense unless the relationship isn’t thriving.

ER: You mentioned gaming earlier, which is just very popular these days in terms of licensing. Can you say more about how you audit for gaming versus how you audit for maybe CBG or other tangible goods?

VL: Sure. Even within gaming, there are a lot of differences between the techniques and the procedures that applied for a digital game versus a physical product that is being distributed. When you’re looking at a situation where cartridges are being distributed, there are factors that have to be looked at that don’t necessarily exist in online gaming as an example. Things like price protection that exists for cartridges need to be analyzed very closely in conjunction with reconciling, whatever was manufactured or distributed was accounted for. With respect to interactive gaming, where games are downloaded either to a mobile device or directly to a computer, the licensee will be receiving reports from the digital service providers that then they’ll account to the licensor. And sometimes it’s a hybrid of both. Like I said earlier, those accountings are generally received on a monthly basis by the licensees.

ER: Okay. I’m sure they love that. I would love monthly reporting. What are some up and coming trends that again, maybe not the most exciting, but from an accounting perspective and your perspective, what are some upcoming trends that you’re most excited about?

VL: Well, I wouldn’t say necessarily excited, but starting next year, we’ll be starting to audit agreements that were active during the pandemic. I know my clients have been very active and connected to their licensee. Some of these licensees have flourished as gaming licenses have flourished. But certain types of apparel have taken a big hit and other types of classes as well. Normally when we’d be just looking at written agreements and licenses and accountings. I have a feeling, upcoming, we’re going to be looking at a lot of emails going back and forth where licensees and licensors have negotiated payment, timetables, royalty rates, and minimum guarantees.

ER: Any other kind of impacts that you’re seeing in the industry after COVID?

VL: Yeah. Initially, we got push back from licensees because virtually everybody that we’re dealing with is working remotely. During the first two weeks of the pandemic, everybody was setting up their home office so they could securely obtain data from their company servers, etc. But after those first two couple of weeks, most of the licensee we’ve been dealing with has been very cooperative and provide the information that we need. From just an industry-wide perspective, the way that deals are being made is going to change. The various trade shows and things of that nature. Those are going to change. Whether they’re a hundred percent virtual or a combination of the two, it’ll be an evolution on how that works. And I think there’s going to be opportunities for folks that are able to adapt to that new reality, whether it be from a licensee perspective, professional services perspective, or from licensors. Obviously, folks have not, businesses have not made it through this pandemic. Other businesses have been vertically integrated into larger companies. And so I think there are opportunities out there as we move forward for new licensees to emerge.

ER: How can you advise people or help before you get to the audit stage? So, you know, what kind of services should people come looking for you beforehand so that they don’t get to the audit stage? And how do people contact you if they do want to connect with you?

VL: Sure. I think a lot of the clients that we act on behalf of, are licensing their intellectual property and industries that they’re not familiar with necessarily. You have a large entertainment company that’s involved in interactive gaming toys, apparel, collectibles, and all of these industries do business a bit differently. We have fairly broad experience in terms of negotiating the terms of an agreement, the types of deductions that should be allowed, and things of that nature, we certainly can consult as those agreements are being reached. Again, large companies insist on certain language in an agreement that a licensee may not be able to count on. And in those cases, invariably, there’ll be a royalty audit afterward. But again, companies have a fiduciary responsibility, whether it’s to their stockholders or other participants in the royalties, to monitor the royalties that they’re receiving. It’s evolving more into the monitoring of those royalties. And of course, folks want to be able to settle on amounts that are going to cover their costs. But more and more we’re conducting these types of inspections where governance is driving the inspection versus let’s go get the rest of our money.

ER: It’s interesting and a good perspective. And I think it probably helpful also for licensees to understand that. Because I’m sure you get on the defensive when it’s like “We’re coming to audit you”.

VL: Yes. And other folks that we’ll talk to, are very sensitive about the timing of putting the licensee on notice. When the folks that they deal with at that licensee may never find out that a royalty audit was conducted because it’s handled by a completely different set of folks. There are times where we talk folks out of doing royalty audits because we just don’t think it’s going to be worth their while financially to incur that type of cost.

ER: Really helpful. I think, again, this will be helpful to both licensees and licensors and our listeners. If people want to find you online and connect, what’s the best way to do that?

VL: My firm is called Miller Kaplan, so our website is millerkaplan.com. I can be reached at my email address vleoni@millerkaplan.com.

ER: Great. Well, thank you again for chatting with us today and for your time. And I’m sure some potential licensees and licensors we’ll be in touch.

VL: That would be great, Emily. I really enjoyed the conversation and I look forward to speaking with you.

Are you a brand owner who is considering a licensing program for your brand? While many think it’s a quick process to begin, they often overlook how they will resource the program.

To ensure success, spend some time analyzing what resources are needed, along with the proper funding to invest in a program. Begin by considering if you will engage an agent for partial or complete execution of your program. This choice will inform how you staff your team.

Whether you use a brand licensing agent or not, you will want to allocate a resource to manage and direct the program. Your manager will be the main point of contact for your agent and will need decision-making authority on behalf of your team. They should also assemble cross-functional teams to approve the licensing strategy and deals with licensee partners.

IMC has worked with clients in varying ways depending on their program goals and objectives, some with full-time dedicated headcount and others with a 0.25-0.50 headcount dedicated to licensing.

But resourcing doesn’t stop with this point of contact. Depending on the brand and categories for licensing, you’ll need to engage cross-functional team members with responsibilities for the program.  Below is a list of resources you should consider:

Legal

• Trademark Legal – Submits and maintains trademark applications for licensed products.
• Contract Legal – Reviews and aligns to a template license agreement. Is a point of contact during licensee negotiations and will approve final draft license agreements and submit for executive signature.  

Finance

Reviews licensee forecasts and licensing budgets. Is a point of contact during royalty collection periods.  

Brand Management/Marketing

Serves as a point of contact for licensees and shares brand updates as needed. Reviews and approves all licensee submissions for branding elements.  

R&D/Quality

These resources will ultimately depend on the brand and licensed product categories. For example, a licensed merchandise program with t-shirts, etc., will require minimal resources, but licensed products regulated by the EPA will require more involvement. At a minimum, R&D/Quality resources should ensure that licensed products’ quality matches consumer expectations and licensee manufacturing audits are performed.  

Working with a full-service product and brand licensing agent will require less resourcing from your internal team, but it won’t remove the need for their involvement entirely.  If you’re considering a licensing program for your brand, it’s important to understand resourcing considerations upfront and plan for them. Interested in hiring an agent? Connect with us here to learn how we could work together. 

On this episode of The Brand Licensing Podcast, we’re getting the inside scoop on RFPs with Luka Erceg of GEP.

About Our Guest

Luka has over 20 years of professional experience with over 14 years of procurement consulting.  

Luka leads GEP’s center of excellence for sourcing marketing and media firms and has been engaged with strategic sourcing projects across the marketing, customer engagement, and packaging categories. In his most recent engagement with a major beauty and cosmetics client, he led a team of eight associates to roll-out and run the eSourcing program and deliver synergies by developing an opportunity assessment and analysis.  

He is familiar with procurement and supply chain practices in consumer goods, automotive, and technology industries.  He has experience and worked in marketing, business development, and global strategy for the consumer-packaged goods industry. 

Luka holds an MBA from Kellogg School of Management, Northwestern and a B.A. in International Trade from University of Central Arkansas. 

Check out the full episode below, or tune in on Apple Podcasts or Spotify. Don’t forget to subscribe!

Episode Transcription

Emily Randles:

Luka, welcome to The Brand Licensing Podcast.

Luka Erceg:

My pleasure being here. Thank you for inviting us.

ER:

For our listeners today, Luka is the Senior Manager Consulting at GEP and he works with marketing and media firms, assisting them with sourcing projects across marketing, customer engagement and packaging. So before we get started, can you give us a rundown on your resume and background?

LE:

Absolutely. So my role at GEP is a Senior Consultant heading up client categories, or even overall programs. Prior to joining GEP, I have about 30 years of experience helping organizations either from the corporate or consulting side, as well as within procurement roles for marketing roles.

ER:

Great. So it sounds like you have your marketing and people skills collided, and you found yourself in procurement. For those not familiar with GEP. Can you give us a little bit of background on the company?

LE:

GEP is a 20-year firm focused on integrated sourcing procurement spend management and supply chain. We deliver all of this through software and managed services, outsourcing solutions for Fortune 500 firms. Some of our clients include companies like Catalogs, BMS, Cathay Pacific and Bayer.

ER:

Can you say a little bit more about the software piece of that and how you guys use software versus just strictly consulting to help your clients and vendors?

LE:

Absolutely. One thing that is sort of a pet peeve of mine is really a lot of big established companies still working off of spreadsheets or databases. Their documentation, I guess you can almost say, today, is archaic. But there are software programs out there such as GEP’s SMART that helps you manage your procurement projects, your whole procurement program. It’s your suppliers and spend, and they’re really just covering a lot of what you’re doing. And if you think about it, it’s really a way of managing and collecting this knowledge that you’re doing day to day for the whole procurement program through the year. Because if any of your teammates gets a promotion or he wins the lottery and moves off to an island, how do you now transfer all of this knowledge to the next person? Spreadsheets was one way and I’ve seen some really elaborate spreadsheets, but it really doesn’t do the same justice that a well-thought out program or software does. And that’s just trying to yourself and organize your program. And there’s the consulting side which takes it to another level of your procurement program maturing and moving up.

ER:

Yeah, I can imagine, too, that these data points; two things: one, helps you analyze them and use the data. I mean, you can have all the data you want in a spreadsheet, but if you’re not able to compare it easily or see it all, or kind of go back and reference that, it’s really not doing you much good in a spreadsheet. So I could see that being really beneficial to your clients in terms of really using the information that they have at their fingertips. And then the second thing is to your point about people going on vacation or changing roles. Just the person replacing them, not having to recreate the wheel and not figuring out how they formatted their spreadsheets and they can make heads or tails of it. And so just not using the historical information to be more informed and collect more data as you go, as opposed to recollecting the same data over and over again.

LE:     

Imagine if you go into the office of an executive in the business setting and you’re a new hire and you’re trying to replace somebody that’s been there before, and you’re coming up with ideas and solutions for that category that’s already been completed by your predecessor. You’re going to lose credibility with that executive at that company because he’s having to now educate you. Now we’ve done that already. No, we’ve addressed that the year before. So again, it’s that knowledge transfer. But it’s also then, like you said, understanding the data and where do I go next? Because procurement does evolve. The program evolves to where maybe in the beginning, you’re doing things like supply-based reduction or consolidations, and then picking out who the right suppliers are in the spend. But then you evolve where you’re working up on innovation. Maybe you’re even creating a brand new supply base of suppliers out there. And you’re working on many projects with your executives and the business. That’s where procurement does evolve and we start playing more of a strategic role in the company versus just being an administrative role.

ER:

Yeah, that makes a lot of sense. Going back to the data points when you’re collecting and working on projects with clients, do you guys share industry data or industry best practices based on everything that you’re collecting?

LE:

Definitely do ,from a couple of a bit of a different point of view. If you think about it, if let’s take marketing, for instance, the CMO and his direct reports know very well what’s going on in marketing and in that space. But we may bring it from a procurement point of view and seeing that maybe, we see production costs for commercials, TV production costs going up. Here are some alternatives that we see that are actually being brought so that during the pandemic, it wasn’t so much even costs. It was just how do I get a commercial out? And so procurement could step in and say, here’s some alternatives that suppliers are actually doing. So we can actually work together in finding a solution just to get something done. It doesn’t necessarily mean how we save money. The first thing you have to do with your stakeholders, align on what their goals and objectives are and how can procurement help them achieve that? And at no point, should you be using procurement language when you’re having that conversation. It’s a tough one. We always want to talk our own language, but you can’t go into a business setting, talking procurement language.

ER:

I could see that being really valuable to the executives and those, especially over the past year. I mean, wow.

Well, I wanted to have you on the podcast today because brands often execute RFPs to select a licensing agency or even sometimes a licensee. So today I wanted to cover what’s relevant to those in the licensing industry, specifically for brand owners, what they need to consider when executing an RFP and then for agents and licensees, kind of some best practices for participating in RFPs. So jumping in here, what are CPG companies looking for when selecting vendors?

LE:

From my experience with our clients, brand equity and reputation are very important to a brand. So when they’re selecting a partner, they really need to understand that the brand understands that there’s a good fit that they can express and grow with that brand. So if we’re talking to agencies or we’re talking to a different supplier in different areas, but that’s what they’re looking for in an RFP is are they a good fit with us? Do they understand what we’re trying to achieve and do? And can we grow together over time? Do they have the confidence that that partner is going to be around? And then there’s really old age thing that people work with who they like. So, is there a good fit? Can we work with them day to day?

ER:

Yeah. So on that note, ‘cause I think that is really important and something we look for when talking with potential clients is just having that connection with them and making sure that we’re on the same page and kind of styles of working and ways of working. But when we’re going through an RFP, typically our first step in the process is to fill out a bunch of questions on a form and submit that for review, or maybe even submitting a PowerPoint that’s about IMC or about you yourself as an agency. But how would you differentiate yourself or how would you recommend that a licensing agency or a person going through an RFP differentiate themselves in the first step to make that connection with a potential new client?

LE:

The one recommendation that I would have is it goes out to the procurement folks that are out there. This goes out to the brand teams on how to maybe urge that procurement person to do something like this. But if you do get to the presentation stage and you’re going to present your proposal to the team, the evaluation team is the marketing team. It’s also procurements in there and then maybe some other executives. But you want to take that first 5, 10, 15 minutes to develop an icebreaker. I always love to do something fun, really, just please introduce yourself. And as you do so tell, us what and pick a funny topic that we’ll all have a chuckle out of as they respond, too. But it also gets us to get to know each other.

Back when we were doing in-person presentations, I would actually have the meeting have a bumper at the very beginning to where we actually socialize. It’s a meet and greet session at the very beginning. I want to be able to get to know these guys before we actually sit down in front of a PowerPoint. And also that bumper is really good, so that that procurement person can work with maybe one other person, if there’s technical difficulties. So there’s a lot of different reasons why you do this, but for the most part, it’s so that the room can network and circulate and get to know each other. As a supplier, I would urge you to ask the procurement person, can we just have that 5 or 10 minutes at the beginning? If they don’t give it to you officially, build it into your presentation, have something fun, or that you basically introduce everybody on your team there and be cognizant that you just ate up 10 minutes of your presentation. So now you have the remaining minutes to present who your company is and how you’re going to present, deliver the solution and why you’re a good fit. But it’s just that little subjective part right at the beginning is fun.

ER:

No, that makes a lot of sense. That’s a great suggestion. In terms of executing an RFP. Are there different levels that one can execute? Does it have to be a really big, long extensive process or can you keep it simple?

LE:

Yeah, you can and it really depends on what the objective is. And we say RFP and people have different acronyms. There’s a request or an actual proposal. There could be a request for a quote. It’s just a quick turnaround. We don’t need a full capability. Maybe the engagement’s short-term. So maybe it’s just for our particular event that we’re looking for somebody, and we just need to know an RFI. And we’re looking for information on, do you have a capability to support us for this sponsorship or this event? Yes. No. Great. We just need a quote for that one event. Versus the longer term relationship. I’m looking for somebody who’s going to be with us for the next three to five years before we ever consider looking at the contract again, then yes. That’s going to be a longer drawn out process. So it really depends on what the end result is. I’ve seen some things go turn around in two to four weeks. I’ve seen some things turn around in two to four months in RFP. So different links.

ER:

Okay. If it is the longer term, what would you recommend in terms of timeframe?

LE:

My recommendation is always to the marketing team, because the marketing team doesn’t want to burden themselves with this process. A lot of times, they still have to do their nine to five job in addition to the RFP. And that’s why procurement, if they’re doing the right role, they’re taking most of the bandwidth and burden on them so that the marketing team is there just to make decisions. But you’re still looking at a lot of the work that goes behind the scenes before that RFP event even gets to the supplier, to be honest. We have our meeting at the beginning of understanding the goals and objectives. The timing. We start doing research on the market, who are the best suppliers to fit what we’re looking at. We may run a quick RFI at the very beginning just to qualify some people. Making sure they don’t work with a competitor, things like that.

So we do have those screening questions before we act, but then we have to start building the questions, some general questions. What are very specific questions to the scope of what we’re looking for and that you have to line all of this, everybody that’s a decision maker internally. There’s a lot going on before you actually see the RFP. Then the RFP gets launched. Now, once it’s launched, I generally like to give, depending on the scope, two to four weeks for the questions to go out and come back in. And in that time, having the clarifying Q and A can just be an email that goes back and forth with the questions and the responses. Sometimes the Q and A’s just a lot more detailed or complex. We actually have to have a phone call to address them again

That’s where it would take it more to the three or four week mark. But two to three weeks, generally, questions out, questions back in internally. Regroup on those questions. Be able to read through all that material. Again, we don’t want a large number of suppliers bidding because one, it does take time to go through a hundred plus questions, four times, five times, ten. If you think about it, if you have 10 suppliers, that’s just ridiculous. It’s a ridiculously big RFP. We just can’t get through all that. So again, a nice small three to five suppliers at most so that we can get through all the material consolidated. Maybe on black and white, some people just fall out of contention right away. They don’t have the capabilities. We didn’t understand it until the RFP came back in. We’re looking for them to have this or that.

If they don’t, we’ll clarify it with phone call. If they aren’t, sorry. No, we have to dismiss you. Now, you have a good sample size of two to three that’ll come to the presentation stage. And then from there, you’re going to hear them out. In the past, it would take longer because now we had to schedule to travel for each group to come in. Now it’s actually virtual. So it does happen quicker. So there are pros and cons in the RFP process, the turnaround’s quicker. It’s easier to schedule that presentation versus travel, but you do miss out on that human interaction and seeing if we just personally fit.

And then really after the presentation, it should not take the decision makers too much longer. Maybe another two weeks, three weeks at most to make a decision. There could be some qualifying questions afterwards. I have seen some mini RFP go right after that. We have five more questions. We’ve got to ask everybody, but not too often. Usually it’s one or two qualifying questions, and then we make our decision. So yeah, I would say roughly around six to eight weeks, right? Typical, long process RFP. If it goes beyond that, it’s really something complex and it could be two rounds of presentations, or maybe on the submittal of a type of a proposal or project that goes along with it.

ER:

Have you ever seen where someone steps out of an RFP? I know you said you guys have to review information. You may kick someone out, but are there instances where people step out themselves?

LE:

Absolutely. It does take a large burden on any supplier to participate in a full RFP. Agencies, sometimes they are asked to present a little mini deliverable. Come up with some ideas that you have and this and that. That takes a lot of time on the suppliers and I am very aware of that. I feel for the agencies. I hate giving agencies the news at the very end, after two or three months of battling through the RFP and then telling them, I’m sorry, you didn’t win. And I know how much time they’ve actually put into it at the end. There’s always just one winner. But yes, at times, it just isn’t a good fit. It could be timing. As I mentioned before, they may be working with competitors of theirs, or they just may not feel that they can deliver and do justice for the brand or the industry that they’re in. Maybe read through the scope and said just isn’t us. We’re not there yet where we don’t have the bandwidth to support a client like this yet. And rather than ruining our name in the industry, we’re just going to step out.

ER:

Interesting. That makes a lot of sense. And I think, as a smart move, if it’s not the right fit for somebody, for whatever reason. So when going through the data points and making a final selection, what is typically one of the top weighted factors for companies when selecting partners? Is it like price, prestige, work, experience, partnerships and relationships?

LE:

It’s going to depend on RFP by the RFP, brand by brand. And the reason I’m saying that is it depends on the reason that they are having the RFP. If it is for something quick turnaround, yes, they are looking for somebody who’s going to find a good fit and understand the brand equity of their brand and protect it really. So I think that’s first and foremost. Pricing, it’s not necessarily always front and center. And they’re all saying that I used to always say optimizing marketing investments isn’t always about spending more. It’s about spending more efficiently with the right partner. So here I think the key word is the right partner. Can we find somebody with the right experience? The brand feels very competent that this partner can execute what we need them to do. They understand our strategy, our goals for our brand, and that’s who we can actually see growing with over the next three to five years or longer.

ER:

I’m nodding along as you’re saying this, it’s just making the connections to me of how we can kind of apply and know that if it’s about the partnership and you’re the right partner, then my guess is the pricing is not any standard, but you’re not going to get that much of a variance. So it’s about who’s going to do the best job and work with you the best, not who is going to be the cheapest.

LE:

At the end of the day, to be honest, the pricing is not that drastically different when I look at them in the RFP. There could be some that are way low. It could be some that are way high. Those are both ends of the spectrum. My guess is when they are doing that, either they’re really trying to lowball to get in the door on either spectrum or they just didn’t understand what the need was. So you almost either have to go clarify with them. Again, did you understand what we needed? This was the scope and this is what we’re looking for you to deliver. Yes, absolutely. Okay. Maybe it’s not a good fit if you’re on both outline spectrums. Then you’ve got those guys that are right in the middle. That’s why I say if it’s five that you invited, two or on the outliers. Those other three are going to be priced right within each other.

You can almost use that as your benchmark to say, okay, the one that’s a little bit on the high side, can we fine tune that when we get to the contracting phase and be at a comfortable place for both of us? Yes. Great. So again, pricing, I kind of used that as a factor of did they understand what we needed. But really the other part is that partnership experience – can they deliver? That’s the key factor that they’re going to always look at. Pricing is going to be that part that they leave for procurement, just to say. Is that ballpark? Does it fit our budget? Is this what the market is demanding for this type of service? Yes. Great. We’re happy. Let’s move forward.

ER:

When helping clients go through this and revealing answers, what is the biggest mistake you see companies make when they’re executing an RFP?

LE:

There were always stories guys tell at happy hour on things like this. And I think the greatest ones are mistakes that I see is, sometimes, not always, but sometimes the bigger firms will have their canned answers that they use for their RFPs. They’ve seen these questions so they just copy and paste these canned answers instead of really doing their homework to understand the correct fit and need for the client. I think that’s the first and foremost. Marketing people can smell that a mile away.That’s what these guys do. They live for how to present something. So if they see that it just doesn’t look authentic, they sense it right away. You’re giving it that safe standard sales pitch versus delivering a solution. Those are kind of hand in hand. And the other one that I actually have seen quite a bit in my career, and it’s more of the incumbent thinking they have this one, procurement’s just making them go through this process. We’re going to get re-upped again for another five years. I’m not as worried about it. And so their effort is just minimal. And then when we’re talking behind closed doors, everybody’s like, this is surprising. They didn’t bring their A game. Their interns are running this, and you kind of chuckle about it. Yeah. But then they’re out. And maybe there’s a good reason. They just got too comfortable with the relationship.

ER:

That was actually one of my questions: did they typically ruin the business in your perspective, or do you base it on your story here? It’s like there is some bit of turnover.

LE:

There is. And I would say for the most part, if you really had to put it on a percentage spectrum, a large majority do get renewed. You got to understand, switching out any of your partners, whether you’re talking about office supplies to your chief creative office, agency, media, whatever it is, if there’s disruption and that disruption does take manpower and timing to put somebody new in place and onboard and get them into the process, some onboarding and transitions is painless. Sometimes it really is painful. And these companies will bring in a consulting firm like us, GDP to help minimize that transition. But yes, for the large majority, it is. But again, I think at the end of the story, I always told as far as incumbents, Coca-Cola and McDonald’s founders shook on their agreement years ago when those guys were still around. And Coca-Cola has always been in McDonald’s, but there’s never been a contract between the two of them. Coca-Cola is reminded all the time, there’s no contract. We can replace you with Pepsi at any time. And Coca-Cola works hard to maintain that relationship every day. And I actually used to consult Coca-Cola and I have seen the McDonald’s team there. These guys are just hell bent on winning that relationship every day. It’s amazing, actually.

ER:

That’s a great way to think about it. When a client came up in client services. And that really is how you should be thinking about your servicing clients every day.

EL:

Yeah, absolutely.

ER:

One other thing we’ve run into is just kind of the investment that is required in participating and completing an RFP. And we’ve had RFPs that they’ve asked for almost like a full strategy, something we would charge people for and they’re asking for this information within their RFP. So what’s the balance or what would you recommend? Is it worth it? I guess, it just obviously, it depends on the potential clients and resources and what an agency or what somebody is wanting to jump into. But have you seen that and where would you guide a client if they’re asking for too much?

LE:

It’s kind of hard. I actually have seen, I think on the interview side, when people are interviewing creative people and they’re actually asking them to deliver certain samples of their work. And then there’s always that fear from that person being interviewed, are they going to take my ideas and use it themselves? Same thing when you’re in the RFP, especially if you’re trying to deliver some type of strategy and direction, what would you do for this brand if you won the business? There is a risk there. But at the same time, I think the way when play favoritism to the vendor. You have to look at this individually and see, is this the right client for you? Do you see a fit here? Do you feel that you are capable of doing what they need? Can you grow this brand and grow with it as well.

Is there value there that you perceive the value being here? They’re not just from billing and invoicing, but maybe there’s a prestige of having this client on your roster. Is there something where you can both innovate and develop that supplier relationship management program? A partnership versus being a vendor, you become a partner. If you see all that, then yes. Investing the time, putting the right people in the RFP and again, not giving the canned answers. And you’re actually thinking through what is the actual pitch that we want to make here a solution. But it’s hard to say for me to tell if I was advising the agency, those are the things I would actually look for, even if I say yes, I want to participate. I wouldn’t participate unless I’m willing to actually go the nine yards on it.

ER:

You talk a lot about relationships and building partnerships, which is really key for us, when we think about working with clients, that’s kind of how we think about it is we’re building long term partners and building not only a partnership with a brand that we’re working with as a client, but then, we actually help facilitate partnerships. And that’s really important for us to kind of think about it that way, as opposed to a vendor or transactional when working in licensing. Because if your partner isn’t successful, then you’re not successful and you can do brand damage. But again, it’s hard because I feel like when you’re going through this RFP process, you’re kind of at arm’s length with the brand. How would you recommend making that connection from a partnership perspective? And my other kind of second half question to this is, are people that already have connections internally with companies that are going through the RFP with, do they tend to have an upper hand or does that not usually affect an RFP?

LE:

Well, is it somebody with a relationship?

ER:

Yeah. That already has a relationship.

LE:

I would say from experience, the second part of your question is that somebody within a relationship with the COO automatically wins the business? No. What I have actually seen is your relationship with somebody in the organization, a CMO or a VP will get you invited to the party, but does it automatically win you a seat at the table? No, absolutely not. It won’t. And I’ve actually seen CMO recommended vendors not make it past the RFI stage. So again, they’ll get invited, but then through the screening process, they may or may not be a good fit. And I’ve actually been at one where the CEO’s kid was interning at an agency, but they didn’t win the RFP. So, everybody was like, are we allowed to turn them down? Yeah, we are actually. Okay. Because again, at the end of the day, marketing has to deliver on what they’re responsible for. And the first part of your question, I’m sorry, can you just remind me what that was again?

ER:

Like again, how can you make that partnership connection?

LE:

Ah, yes. Especially with the pandemic and everything, we’re not meeting anymore. So, the interesting thing there is it goes back to the question earlier when I said do you have a really good procurement person leading the RFP? The thing that I love building in right now is what is that icebreaker? If you wouldn’t get to the presentation stage. And let’s say your presentations, I usually advise them to be about 90 minutes to maybe 120 minutes. That’s a very first. Let’s take 10, 15 minutes at the very beginning. Let’s ask an icebreaker. And I’ll always say, okay, I’ll ask the vendor as they’re coming in, everybody that’s there. Great. Would you please introduce yourself? But also tell me, what would it be a theme music that I could actually play? If you had the opportunity, what would be your theme music?

And so they kind of chuckle and they laugh. And okay, hey, I’m the vice president of business development. And I would have the Rocky music playing, and this is why. It’s just that icebreaker, you have to have it. Let me tell you if you don’t have a good procurement person and they’re just sort of running this thing, like a very rigid program, and there’s just no personality to it, build that personality into it. You’ve got your presentation. You’ve got 90 minutes to present everything that you have. Take that first 10, 15 minutes, build into your RFP introduction. An icebreaker. Make it fun. Do it as it reflects your firm. If your firm is very fun, build something fun at the beginning of it. If it’s very personable, whatever it may be, they kind of just show the people that they’re going to work with on a day-to-day basis whether they’ll fit or not.

And again, if you’re a very fun agency and your client is not fun at all, that fits not going to be there. You may not want to work with them. They’re just going to slave drive you. You’re not going to want that either. You’re going to be dealing mostly with procurement person all the time. You’re not going to want that either. I think if you actually build that ice icebreaker, it may actually answer on both sides. Is this a good fit?

ER:

That’s great advice. You’ve just touched on this a little bit, but so are people moving forward with procurement processes or are they sticking with current partners given COVID and kind of that I know, I guess it probably depends, which is always the answer. But depending on the industry, some things are a little bit more rocky than others. But are you seeing in general people still moving forward with this?

I think a year ago, people just didn’t know what was going on. And I was actually involved in a major RFP with a big CPG company at the time. And things were getting shut down and we actually had to do the presentations by online, Zoom and WebEx, Teams. So people, I think have gotten comfortable with that. I’ve actually seen a lot of people getting hired now where they’ve never once stepped foot in the office and the interview process. So I think companies are also getting comfortable actually now running RFPs and trying to find that right partner, again. Given the pandemic, given a lot of changes that are happening, I am seeing a lot of focus on digital. I’m seeing a focus on retail, those types of partners. But branding, brand licensing is still a thing out there. It’s just that you have to be creative. I’m not going to be able to license them maybe on a sporting event or a concert because those aren’t happening like they used to. How else am I licensing my brand and where they’re looking for that creativity or maybe that shift? So yes, we expected to see things ramping back up in the RFP process there.

ER:

Great. Well, before we go onto our next question, we’re going to take a quick pause to hear from our sponsor

Sponsor:

Today’s episode is sponsored by BrainBase. BrainBase is a technology platform that helps brands manage and monetize their intellectual property. The current platform assists, helps brands track their legal contracts, sales, royalties, creative, and product approvals, files, analytics, and so much more. Additionally, they’re working on launching a new service, Marketplace. Marketplace will allow you to showcase your brand and discover new opportunities from a global network of prospective partners. We use BrainBase assist program to manage and track licensing programs for our clients. We love the analytics and reporting tools and are excited about the new role reporting features that they’re rolling out. Check it out if you’re looking for an online management tool for your program. We’ve linked to their site in our show notes.

Now back to our show.

ER:

What are some questions that people should ask when participating in RFP or what should you make sure that you know before moving forward and starting?

LE:

I think understanding who you’re going to be working with. So I think that should go on both things. Sometimes, vendors will actually show up with their CEO and such to really try to show we were really serious about this. So we brought our executives to the RFP and the presentation. Well, that’s great, but I’m not gonna be working with the CEO on a day-to-day basis for most companies. So actually you can have your team there. But on the marketing side, you want to know all of the marketing side am I going to be working with? The CMO? Maybe they’re making a decision on the brand licensing partner, but you’re not going to work with the CMO necessarily every day.

So again, I think knowing who the brands are. Definitely, understanding the process and the timing. I think the biggest thing is not even just advice to the brand licensing people out there in the vendors, it’s for procurement. Understanding the goals and objectives of that brand, of that marketing team. That’s what they’re looking to do. That’s what they’re measured on at the end of the year by their bosses. Did you meet your goal and objective? Yes or no? Yes. Well that’s because our vendor understood it and helped us deliver that goal and objective. So I think that’s the biggest thing. Understanding who the budget holders are, because that’s going to be ultimately some of your decision makers as well. You may not be just one person. You may not just be the CMO of this budget, maybe a variety of people. So understanding that.

ER:

Yeah, that was my next question is who are our typical decision makers in an RFP process?

LE:

I think first and foremost, it’s always going to be the brand owner. So the brand managers, the brand director, first and foremost. They may or may not be the budget holder. So understand that because that person’s going to have a say in the decision. Marketing executives. Again, if it’s a big brand that we’re talking about, I alluded earlier, your biggest brand licensing people are Disney and publishing companies. So I’m sure that those guys have their executives at the table a lot of times when they’re licensing their brands out. But yeah, the one thing I will tell you is it’s not procurement. Some people may think that procurement is actually trying to make this decision like, oh, don’t hire, these guys are super expensive. I don’t hire them. I’ve worked with them in another company. Never, I will never make a decision. I can make recommendations. I can pose certain questions to the marketing team, but I’m never influencing them one way or another. It’s their decision. GEP is going to make sure that they have all the information they need to make that informed decision. And then I’ll always say that when I teach even the young ones coming in through the ranks. You’re not a decision maker, your procurement. Marketing is the decision maker and let them make the decision. But we’re going to do everything that a trusted advisor needs to do to get that information in front of them.

ER:

Any other advice that you would give those going through, either going through an RFP or thinking about executing an RFP to find a partner?

LE:

I would definitely just reiterate what was said earlier. Make sure that you do your homework to understand what it is that the brand is looking for. Make sure that it fits both ways. That you fit that brand and that client fits you as well.

If it does, you’re going to have a long-term working relationship. It’s not going to be something where in three years, they’re gonna look to replace you again. In three years, hopefully, it’s just going to be a renewal if it’s a good fit. I love actually doing RFPs and selecting that winner. But once I select that winner, I can’t wait to see what they’re going to actually produce for my brand, my company. And that’s the exciting thing, the RFP that I just did for my client, CPG for E-retail, I love getting in there and just seeing what changes I can see on the platforms that they’re in. And I’m like, wow, I may have had a small hand in that. I was in that RFP process, but now I can start seeing what the execution is. And that’s the fun thing, really. The end goal is to really find that good fit and just see the good work that comes out of it. Procurement’s not worried about changing out that supplier afterwards. Now we’re looking at developing that relationship into what we advise our client afterwards. Okay. We’ve now helped you find that right partner. How do we now build that bond and grow? What’s the next level of procurement? It was building that supplier relationship management, innovating together and growing together. That would be my parting thought is just make sure that you’re putting in the effort to understand before you answer.

ER:

Got it. So GEP does stay involved even after an RFP. They help with those things. I didn’t realize that they can provide those additional support services.

LE:

Absolutely. GEP can come in and just execute certain projects for clients. But for the most part, one of the things I also preach about is there’s new procurement, old procurement. Old procurement is just your buyers. So if you think about somebody just running an RFP and just buying pencils all day, that’s old procurement. New procurement is you’re an actual strategic sourcing advisor. You’re helping the marketing department find that right partner to have. And then how do they grow with that partner? It’s really taking that procurement to that next level where you’re not a buyer anymore. Now, it’s how do we work more efficiently and get more out of each other? And is that, do I want to get more out of my vendor for the same amount of money, but what is the vendor getting in return? Otherwise, they’re going to fire you as a client.

And I’ve actually seen that before. And back in my days, when I was just getting into procurement at Kraft Foods. One of the VPs who later became a CMO there, she actually told me, look, we have to help improve ourselves as a client because we’re not getting the top agencies anymore. And that was one of the things that actually worked with her. It was one of my new things to learn and do it when I got into procurement. And it was a great experience. Dana Anderson was the executive. Then she was the CMO at Mondelēz as well. Fantastic stakeholder, super smart. But those were one of the things that she actually taught me. We have to make sure that we are a good client. That way we can then earn the right to have top agencies working for us.

ER:

It just like what you said. Is just that partnership mindset versus that approach. And that sounds like what you’re helping guide your clients to and kind of how people should be thinking about this, because that’s where you find success.

LE:

When you’re saying, does GEP actually help companies with this? You know, what’s amazing thing is you’d be surprised how many Fortune 500 companies are still in that process of doing digital transformation. Maybe working from spreadsheets into a tool like GDP smart or taking their relationship with their agency to the next level or developing that ecosystem with their agency, but they just don’t know how. How to build this working relationship with all of my suppliers, working in unison together. A lot of times people keep their suppliers at arms length from each other, right now, six feet, social distancing. But we’ll still need to be working together. There’s gotta be that communication plan. Otherwise, I’ve just seen it’s painful when you walk into a marketing program and everybody’s in a silo, nothing’s working harmoniously. And you can just see that it’s this square wheel turning down the road. It’s painful. And the GEP actually helps them work through that and make sure that they have the right partners. And then from there, how do they work together in that ecosystem. This RFP process that we talked about, that it could be one of the vehicles they use. And then after that it’s developing the strategy overall to make it fit. So yeah, the RFP could be like one little cog in that big wheel at the end.

ER:

It makes a lot of sense to me because there’ve been clients where we’re like we should talk or we should work with your advertising agency or your PR agency, so that licensees can work with them. So there’s a cohesive message. And they’re like, nope, we don’t want anybody talking to anybody else. And it’s just the arm’s length that just doesn’t seem to work. So really, what you’re saying, bringing synergies and bringing companies and efficiencies together.

LE:

I think that goes back to the question you asked earlier, what should the brand licensing vendor ask of the client during the RFP? What other vendors or agencies of yours would we be working with to understand that? They’re like, no, you’re not gonna be working with anybody. You’re just gonna be working with our marketing. And everything goes through our marketing department. Okay. Now, you know what kind of relationships that’s going to be versus them coming in and saying, you know what, our AOR is this agency and our media company is this agency and our event agency is this company. And this is what you’re going to be working with as well, along with our full marketing team. Understand that. If you see that, that’s a big happy family. And yes, I can’t wait to start sharing ideas with all of these guys. The AOR is going to set this direction and strategy for the brand. You want to work with them if you’re going to be the brand licensing company. It’s a hundred percent, it’s a fit. Yeah. So I would say that that was one of the misses I had earlier yet. Definitely make sure you know who all the partners are that you’re going to be working with.

ER:

Great. Well, if people want to find you offline and connect, what’s the best way to do that?

LE:

Yes. I’m hoping that you definitely have a link to my GEP email (luka.erceg@gep.com). Happy to answer any questions for anybody there or through my LinkedIn as well.

ER:

Yes. Well, we’ll make sure to connect to everyone online. Please listeners, if you’re looking with how to connect with Luka, check out our blog posts and our page on this episode. All right. Well, thank you so much for your time and letting me kind of get the inside scoop on how to think about RFPs and even just think about our partnerships in a broader scope and working with clients. So I really appreciate your time and insights.

LE:

My pleasure, happy to be here and give some advice and hopefully make RFPs a lot less painful and more enjoyable for everybody across the board.

ER:

For sure. Well, hopefully we can connect again in the future and work together.

LE:

Sounds good. Looking forward to it.

This week on The Brand Licensing Podcast, we’re sitting down with digital marketing maven, Natalie DiBlasi. Bringing her brains as the co-founder of LACED agency, Natalie talks through her top tips for leveraging digital marketing in brand licensing programs.

Listen to the full episode below, or check us out on Apple Podcasts or Spotify. Don’t forget to subscribe!

This episode is brought to you by Brainbase. Learn more here: https://hubs.la/H0DYVcG0. 

Episode Transcription

Emily Randles: Hi Natalie! Thanks for joining us today for The Brand Licensing Podcast.

Natalie DiBlasi: Hi there, Emily. Thanks for having me today.

ER: I’m speaking with Natalie DiBlasi, co-founder and executive director at the LACED Agency, and we’re really excited to speak with you today about your digital marketing experience and really how licensing plays a role for your clients and their approach to growth. But before we get into all those fun details, can you just give us a quick rundown of your resume and background?

ND: Awesome. This is the part I dread talking about myself. Let’s see, I’ll make it brief. I have a little over 20 years of experience in Advertising and Marketing. I learned so much during that time. Obviously, lots happened in the last two decades. I’m a digital strategist. Critical thinker. Someone accused me of being relentlessly positive. I try to be a patient communicator and problem solver. I am definitely a self-described coffee junkie, a movie buff, and I absolutely love to learn. But my job is mainly to connect the dots and make things happen within the realm of strategy, digital marketing, and advertising at our agency. I co-founded it with Michael Walsh in 2002, it’s called LACED agency. We set out to create a different kind of agency. One that’s balanced between strategic thinking, creative and great design, and technically and data-driven. So far, so good. We’ve been successful since then. Privately owned, award-winning, data-driven, still full service. I always say it’s a lot of math and magic, if that makes sense. And we’re just incredibly grateful to be here doing what we do.

ER: Yes, no, that makes a lot of sense. And I think for us sometimes when we have a problem, the answer’s in the data. I bet if we look at the data, we will know and figure out our answer. So I totally understand what you’re saying. A hundred percent. I am really intrigued by the work you’re doing at LACED, but before we get into those details, I would love to understand what role relationships play in your day-to-day work and how they can either make things better or worse.

ND: That’s such an interesting question – relationships, right? Well, being on the agency side of things and being in a service-based industry, relationships are obviously paramount to my day-to-day work, certainly to everyone at our agency. But definitely, I would say for mine, they’re built on trust and great communication. But for me personally, I’d say, you know, I work both on the business and in the business as the co-founder partner. So this means I’m literally speaking to clients, potential clients, and the team members internally who are executing those various campaigns or projects that are ongoing and that’s pretty much happening day in and day out. So great communication in my field really means a lot of patience because they’re putting on different hats all day long. So it’s really being a great listener, having the ability to use the whiteboard well, to break down complexities into simply digestible, informational chunks and actionable to do’s, both for our clients and our internal team members.

Let’s face it, digital marketing has really become complex and relationships, they start and end with communication. So you really just have to build them from there. I would say the way that relationships play a role is, you know, the better the relationship, the easier, the communication and faster that our team can work on different initiatives and projects. So for example, clients we’ve worked with for several years, we almost have a shorthand with, so we’re able to accomplish more. We’re very mindful that when we hire new staff, or we bring on a new client, that we always try to allow a little extra time in order to really concentrate on building up that trust at the beginning stage and building a solid relationship. And that’s through automated tools. A dashboard that’s login password-secured where they can always see all the progress of what’s going on. Weekly pulse check meetings. Regular email communication. And basically having my mobile number on speed dial.

ER: Oh no, that makes a lot of sense. We have just found in licensing, relationships are really key especially with clients. And as you said, kind of I’m in the same position as you, in terms of speaking with clients and working internally. And we really, as a middleman in licensing, we really talk about how our clients can have a good relationship with their licensees and how that’s really important to making the partnership successful. So everything you said really resonates. So tell us a little bit about how you connect your digital marketing with brand licensing.

ND: Well brand licensing’s literally about extending the brand’s value and growing it further from mutual revenue sharing between the licensor and the licensee. So the digital marketing space is one of the best places to do this because the cost of entry to participate, it’s relatively affordable and the overall tactics are extremely measurable. So it’s advantageous that brand licensing and digital marketing would kind of collide over the last couple of years and really start to become one and the same and become very important to each other. But for us as an agency, we really work with both retailers and brands. And among those, we have a handful that generates a sizable portion of their company income through licensing. And because we really act as one part strategic consultant, one part creative agency, one part technical data-driven house, it’s important for us to understand the intricacies of their businesses. So if licensing is an important part, it becomes an important part of the digital marketing that we provide to them. So what we’ve done over the last couple of years is really provide digital marketing packages that meet the needs of both a direct-to-consumer marketing message and that of a B2B marketing where it’s providing the value of the business and the brand to other businesses or in this case for a brand owner to their retail partners.

ER: So are some of your programs like a direct-to-retail where the retailer’s the licensee?

ND: Yes. And that’s the cool thing about what we do. We work with a lot of different people. So we’ve worked directly with the retailer where the retailer’s trying to add value, I would say, in the opposite direction, back to the brand owner, but also is diving now into a direct dialogue with customers. So it’s being able to come up with different financial packages that meet these needs with one campaign or one package where we’re creating evergreen mar-comm. And when I say evergreen, I mean creating mar-comm that can last a brand for several years versus paying for something and you only use it once. And then in addition to that, throwing in a 30-day package marketing, a full marketing campaign, handling it from soup to nuts, walking that client through it every step of the way. So they’re learning. And then at the end of that, being able to turn the keys over to them and say, okay, you guys can run with it now.

Sometimes we have customers that say we’re not ready, can you just hang in there and manage it for us for another six to twelve months while we generate more revenue? And then we bring on other staff and then turn the keys over. So we’ve worked from both angles of the brand owner, launching brands where it becomes an important part to develop marketing campaigns and evergreen mar-comm that provides that value to retailers. But also from the standpoint of bigger retailers working backward in that dialogue. I would say in Q1 of this year, we are seeing a lot of clients requesting to rebrand and/or refresh their current offerings and brand look. And that’s really on a fixed budget because obviously everything that happened last year. So what we’re really focused on is developing cost-effective ways to look at a company’s current service offerings, whether they’re a retailer or a brand, and trying to find a new angle to uncover fresh value. And then the challenge for our team starts, which is to visualize that value with creative marketing and data driven solutions that create renewed audience interest and drive those sales. Right now, we’re developing something called LACED brand refresh kit, which is a value package to really meet these specific needs for both retailers and for brands.

ER: Nice. So when you’re working with clients, do you also, specifically this retail, do you help them create the licensed product? So you have your clients would have the bare core products, but then they’re extending their brand through this partnership, particularly with a retailer. Are you guys as the licensor’s representative, helping them say, okay, here’s what the product should be and working closely with retailers to do that?

ND: If the brand owner asks us to, we do. As I said, we function as a strategic consultancy, but I would say it’s a rarity. Most of the time we’re working with brand owners to help them identify buyer personas their audience. All the potential ways that they can add value either directly or through the retailer or point of purchase partner. So we’re really focused on bridging that gap of digital marketing between the two where we’re adding value so that both can create revenue and build their businesses and their respective spaces.

ER: In our role, we’re the middleman between the licensor and the licensee. And the licensee is responsible for taking and launching products with the retailers. And so a lot of times our licensees will be like, I don’t have the budget for marketing, or I’m not as big as the iconic brand that I’m licensing. And so they’re more hesitant to do a marketing campaign for a licensed product. So would you recommend this to a potential licensee? And the other obstacle that we run into is the brand owner is not comfortable with their licensing, creating the digital marketing, and while they’re the products approved and they have to get all the digital marketing approved. And that kind of just makes them a little bit more wary in terms of allowing the licensee to use their brand. So just any suggestions or kind of thoughts around that.

ND: Yeah, absolutely. One I would say, yes, I understand the brand owner, that’s their baby. So trust is obviously key here and just telling right back to your initial question about relationships, plays a factor. Trust is the number one way to get a brand owner to say yes to a licensee to run a social media marketing or digital campaign for their licensed brand products. But how would you go about doing that as a retailer manufacturer? We talked about a few things, but the first obstacle I think to Claire is trust. The relationship part. And these things started the contract negotiation signing stage of that relationship’s early days. I think it’s really important for manufacturers, retailers, the licensees to really speak up and pitch the brand owners their vision for not only driving sales together, but how they’re going to be using digital marketing and social media marketing, and really lay out that process of how they’re going to extend the brand value and put it all out there upfront and early stages.

This really means knowing the value that you can bring to the brand owner and organizing that, organizing your vision of that, and getting their buy-in to say yes, and even agree in some cases to be the active participant. And by doing so, yes, it’s a lot of extra work up front, but if you think about it, it sets everyone’s mind at ease, right? It defines clear boundaries of where the retailer manufacturer is going to live, the licensee, and where the brand will operate. And it also identifies ways the two can cross collaborate together on say exclusives or limited time licensees. I just think that retailers need to evolve. And you’re starting to see that to really articulate more of the marketing vision for the brand, in addition to all the regular day-to-day items, once the brand’s under their care so that brand owners really buy into that and collaborate with them closer because ultimately that’s what it is.

It’s a relationship and partnership. And your goals have to be invested in the same thing, which is shared revenue and growing this brand community. And I just think that there’s ways to evolve the brand owner into the marketing for the licensed product at the same time and make it easy for them to do so without much effort. And the licensee really needs to kind of roll their sleeves up a little bit, like I said, in the early stages and be more organized, clearly defining the marketing and the rollout as well as the value offering of taking on the license. And it’s a shift in mindset for away from short-term sales to thinking, okay, I’m building a long-term customer base and a long-term brand community. And that’s going to get more collaboration with the brand owners involved than ever before.

ER: Yes. I know you can’t see me, but I’m nodding like yeah.

ND: It’s exciting!

ER: You make a good point about doing the work upfront and really working to collaborate and then identifying the value to the brand owner. And I think sometimes our licensees kind of want to jump over that step. So I think to your point, you just start at the beginning and really put the work in. But can a small initiative make an impact? Is it worth it? And I guess maybe say more about how socially things have changed and made a difference.

ND: Small initiatives can make an impact, especially if they’re focused and data-driven. And, you know, I would argue that having a bigger budget isn’t necessarily the recipe for success. I mean, sure a lot of money is great for advertising marketing. I don’t think any agency will debate that. But you know, we do see a lot of larger brands inadvertently missed their targets and spend thousands, if not millions, on campaigns that barely registered with the audience more than a day before that same audience just quickly move on to the next shiny object. And you have to ask yourself why nine times out of ten it’s because they lead with something that maybe it was creative and got the attention, but it wasn’t really based or founded in something that would really resonate with their key customers. And that’s where the customers moved on and it happens more often than not.

I think what’s great for the small guys is you have all these social platforms and marketing tech that’s really available today and even more advanced stuff still coming out, that’s accessible to everyone. The price points have all come down. Everything’s really, really become much more open in the business space. And because of that, you can really dig in and define your specific buyer personas in a way you never really could before, unless you had a lot of marketing research budget to do that. You can get to know exactly who your customers are and what gets them excited on an emotional level. It’s so easy to see what’s resonating with people because people are sharing like never before on all these channels. You can look at their shopping and purchasing habits and glean actionable insights from those to drive greater sales and better marketing campaigns.

I truly think small budget, big-budget, what matters is with the data and insights, both brands and retailers can better tailor their digital marketing and social media campaigns to meet the emotional needs of their customers in order to ensure the smaller targeted campaigns are really resonating and launching that new product offering to them. We saw this with micro-influencers years ago, where they started taking over the big influencers for more small targeted campaigns. And these were getting up five times the ROI on micro-influencers compared to bigger names like Kylie Jenner. Why? Because they were resonating with a very specific audience.

If that audience matched up with the brand or the retailer, I mean, you’re just tapping right into that. And getting customers to resonate with your campaigns is what we like to call sticky in our agency, meaning that customers stick better to a brand or retailer because the smaller campaign took the time to actually get to know them and then offered a lifestyle value with that new product or brand offering. And so a great example, so let’s say you have a home retailer launching a new line of the exclusively licensed kitchen where, you know, so you’ve got pots and pans and all kinds of great stuff. Working with the permission of the brand owner, the retailer can create short-form videos or maybe contextual tips that can be sent out via email as well, cooking with the new line of products, sponsored by the brand owner themselves, but designed to really drive sales with the retailer exclusively on their marketing channels and build that brand community.

You see it time and time again. There’s just so many ways that you can do it and work in tandem with the brand owners. And I think a lot of these digital channels provide tons of different ways that you can do it on a small scale, very focused, or you can do it on a larger scope if you’ve got greater budget. If you’re smaller, I would say a tip would be to downsize our social presences to focus on just a few channels, maybe even just one, and make sure that whatever it is you’re doing, you’re doing it to the best of your abilities. Because it’s better to be on one channel doing everything right than to be spread thin and getting no results.

ER: So kind of thinking through some of our licensees and examples, a lot of times our brand owner will say, well, we’ve already got our social strategy and posts and everything set. Let’s just say that because they plan really far in advance, six months a year in advance. So licensee will sometimes say, well, can I build my own specific, going into your kitchenware example, kitchenware brand on Instagram, instead of just, you know, solely the brand. Would you think that that would have an impact or would be successful or does it need to be in sync totally with the brand?

ND: Ultimately, I think the retailers are at the mercy of the owners. Like I said, the kind of the early stages sets those boundaries and sets those expectations. And that’s why it’s difficult if you didn’t do that in the early stages to kind of come back, you know, I hate to say it, but you’re kind of up against a wall where your options become fewer. Not necessarily that you can’t do it, but you always want to do it with the blessing of the brand owner. But I truly believe that yes, social media can be used by both the retailer and the brands. And the reason is that there’s plenty of room in the market for both. And I really look at it in terms of each brand has a story. Now, the brand owner, they’re always going to be telling the core story. Why? Because it’s their baby.

They created it. They’re passionate about it. Their marketing campaigns are going to focus on building a community around those core values, their inspiration, the passion, the X factor if you will. So you think about it in terms of the story begins. The story is this Because the story moves me. Because the story grows and evolves to a new chapter. That’s really, I feel like the field, the brand owner kind of plays in now, retailers have a unique position because they have purchasing data so they can focus their digital campaigns on more of co-curated experiences that are an extension of the core brand. So you think of it more as the story and/or adventure continues. It’s an extension of the brand, but it’s something different. And it’s in that core wheelhouse. It’s like a specific adventure with that retailer. And so marketing campaigns run by retailers can promote licensed brand products, almost have to take that approach of extending the brand story further another chapter or venture with the brand. I think that’s the easiest way to explain it if that makes sense.

ER: It does. Yeah. That’s very helpful when thinking of working with a manufacturer and they’re questioning, should I license a brand, you know, traditionally. Or in the past manufacturers have looked to license a brand because the retailer would say, well, I don’t know your brand at all. Go get a brand or to put on your product and we’ll put you on the shelf. But now that it’s easier to get to consumers directly to consumers, would you recommend to manufacturers to build their own brand and go direct, or is there still value in licensing an iconic brand that already has a brand presence and brand awareness with consumers?

ND: I am definitely going to go out on a limb here and say, yes, there’s absolutely still value in licensing brands. If anything, I think it’s more relevant than ever, as I just said, the marketplace is big and there’s room for everyone, a brand can sell direct and a manufacturer and or retailer can license that brand and also drive store sales using e-commerce and social commerce as well. Because I think they just have to approach it as an extension of the brand story as another brand adventure. And there’s a lot of value in that because it creates a deeper connection with the brands. If people are truly passionate about the brand product they’re going to want to not only have all the items that the brand owner is selling direct, but all the special new adventure items from the retailer that are limited time only as well.

If you think about it in those terms and you look at it, you say, oh yeah, well, it is definitely just as relevant to license products. I would say for retailers too. They have lifestyle incentives, right? Combining offers with free shipping is always going to be great way to drive interest. I think I saw a statistic for, like, 60% of online shoppers find free shipping, the most compelling incentive to purchase. So that’s not going away by any means, you know, spend this much, you get free shipping, but yeah, retailers have an obstacle in the sense that, brands like, well, we already have all these things. We have that, what else can you offer? I think a retailer’s offering is we can offer the next adventure for your brands. We can offer scalability. We can build out a new community that you’re not touching yet.

There is something called only so many hours in the day. So as good as brand owners are doing it, retailers just have to approach it as that. Look, we’re an extended brand representative for you. And we can tell a unique but complementary story of your brand and find new people to bring in through that. Instead of people think about it this way, instead of coming through the front door, they’re coming in through the back door, the kitchen door, maybe even the window upstairs, who knows. But the point is is that there’s many points of entry. And to think in terms of, well, we already have brand awareness and we have an active community, I think is a very limiting approach when it’s so obvious that we’ve seen the evolution of so many brands over many years and decades. When you create something, you just have to let it keep growing. Period.

ER: I just like your approach there in terms of, or the analogy of kind of how people are getting inside and to the consumer.

ND: Yeah. And I’ll add this too. You know, I do think that all those things said that the future is clear on where things are going in the very near future, certainly this year and beyond that to 2025. And that includes for both brands and retailers is that we are starting to evolve beyond the age of just personalization. When we’re interacting with a point of purchase and we are entering an age of personal commerce when consumers want to co-create their experience with brands to reflect their preferences at any given moment and they expect brands to understand everything that they’ve bought in the past. And help to determine what they should buy next based on all that data that they’ve consciously shared. And often into, and for them to engage with all these sites and channels, you have to be able to mine that data. And this isn’t just a matter of brands, meaning consumers, where they’re at. It’s literally the shift where brands need to tell them and retailers what they want when they want it, based on the data, actionable insights, and taking steps to move your organization both on the brand side and the retailer together tackling what is going to put you in the right mindset to set you up for success not only this year but leading up over the next couple of years. Because that’s a big undertaking. And I think a licensee and a licensor can really work together to tackle both sides of that challenge.

ER: So you’ve talked a lot about the data and how you’re using it. Can you say a little bit more about how you use data or what types of data that you’re using to help the clients? Because again, some licensees feel almost overwhelmed. There’s so much data, how am I going to use this? Or what do I need? So can you just say a little bit more about how you guys are using the data and what types of data to get those insights?

ND: Yeah, absolutely. For us, we typically look at whatever data a customer has, you know, whether it be Google Analytics or the purchasing data on the back of their e-commerce platform, anything that they have available to them, and email marketing that they’ve done.

Then we take that and usually try to make sense of it. Our data department, and then start making recommendations for marketing tech that they can implement that it’s affordable, that they can basically put everything in one place. And if that’s not feasible, we usually do a phased approach where we can start moving them towards that as a long tail strategy. And in the meantime, in the short term, we take that data and we look at it and we start identifying, as I mentioned earlier, the buyer personas and start identifying trends from month to month. Because that’s the thing, too, is that depending on the day, the month, the season, behaviors can change with shoppers and consumers. So sometimes you can see that in the patterns very easily with the data, once you kind of lay everything together. And then I would say from there, we start trying to build out their often data that they 100% own day one, meaning we put data capture programs in place for them so that they’re constantly mining and collecting opt-in data so that they can learn more about their customers in order to provide a better value experience for them and work their way towards these co-curated, more advanced shopper experiences because you can’t do it without data. That’s the thing.

ER: How did you see things shift in 2020 with COVID and what impact do you foresee that having this year and really into the future of digital marketing?

ND: Oh, the loaded question. Well, there’s no question 2020 was a year to remember. I would say the pandemic really shifted five years of digital marketing trends and just crammed it all into one summer. That goes for connected TV, goes for social commerce just really boomed, and many other tactics to be perfectly honest. For retailers and brands specifically, at least, our client roster on that side, I truly believe that’s the biggest shift in 2020 was, we all went direct to consumer overnight. And suddenly, your e-commerce store became the most important channel for point of purchase and keeping your business alive and surviving and moving to thrive.

So, you know, taking a look and going, oh, wow, that doesn’t look so great on mobile. Oh, look at that. The data says 85% of our traffic’s mobile fix that, you know, and then rushing to fix that so quickly. But I think a lot of my colleagues would agree that 2020 is really ushered in the era of that agile marketer. And that’s to say, you know, it’s the marketers who rapidly were able to adapt last year, recognizing opportunities and then execute quickly who were driving that growth and momentum for their brands and for their customers. And unsurprisingly it’s the brands that really had that strong core architecture for the marketing data analysis and engagement that I feel are really able to adapt quickly to the change than those that spread themselves across multiple different software infrastructures that were incompatible.

Let’s say they had something for marketing cloud, different for services, tools, tech, but being agile has become mandatory. And I really think that this year in 2021 will be all about tackling all the challenges that we have covered in 2020.

ER: Yeah. It’ll be an interesting new year on that note. What are some like up and coming trends that you’re excited about?

ND: There’s a couple, for sure. There are so many as I always like to say, it’s fun and I even have this on my LinkedIn. I’m like, we live in an exciting time. No joke. I had somebody contact me one time and said, what’s so exciting about it?

I say that because in the digital marketing space we are changing, it seems, like every 30 days. it’s an exponential change that’s happening. And so one of the trends I’m most excited about – the digital transformation of organizations and businesses – digitizing every aspect of your business structure through marketing, tech, operations, and every other division, product development. 2020 was a big proponent of driving this trend and it will continue and is continuing in 2021. I’d also say I’m really excited about the evolution of video marketing, mainly because it’s limitless and presents a huge growth area in searchable content on the internet between now and 2025. Small brands can focus on this channel and even get a win in certain categories by implementing these strategies now. And that’s to say, you know, video marketing is nothing new, but it continues to be a huge trend each year because there are more and more channels digitally and socially that are supporting them in different ways. To be able to tell a brand story visually optimizing your video for visual and audio search, which is going to be huge over the next couple of years.

It’s huge now. And in particular, the rise of short-form videos is predominantly being driven by influencer marketing and social media marketing. And when I say short-form videos, I mean the short digestible video content that’s been extremely popular over the past few years. But in 2020, you know, it really started to take center stage. And we’ve seen huge success with branded short-form video for before and afters, short tutorials, all kinds of them. From makeup to food prep, to recipes, to DIY projects, huge DIY projects. Now that people are really remaking their homes into also their workspaces, workouts, fashion, you know how to work out, from home fashion, the inspiration for the backyard. I don’t know, you know. And just anything else you can imagine. There’s just so much opportunity there. And these short-form videos can be created by the brands themselves, by agency partners like myself at LACED or even influencers now.

And because brands no longer really have the big budgets to invest in long-form video marketing, and they’re also production challenges, of course, creating traditional length. And the market is saying, well, look, we want things on-trend. We need time-sensitive messaging. I mean, the answer is clear: short-form videos are really filling that void. So I’m very excited about the ways that will continue to develop from a marketing technology standpoint where it will give other opportunities to better target your specific audience or buyer personas.

And then I think the last trend, I mean, I have so many, but I am trying to narrow them down that I’m excited about would have to be all the sponsorship opportunities potentially that can come out of social commerce. Because we saw social commerce really come to its full fruition and say, I am here and I’m not leaving last year and it’s just continuing to evolve. But I really think the next thing is going to be sponsorship opportunities. Cause we’ve seen shoppable posts, videos, especially on Instagram. Seamless transitions from influencer content to brand-owned channels. Deeper integrations between platforms and e-commerce solutions and storefronts. Once we clean up all those e-commerce storefronts to make sure they’re all good to go, but all of those are really paving the way to more of these sponsorship opportunities on social commerce. And I’m just excited to see where it’s going to go.

ER: Yeah. They’ve definitely made it way too easy for me to purchase things on Instagram.

ND: Oh yeah. I’d have to say I’ve discovered the majority of all the new the product that I have purchased in the last 12 months on Instagram easily.

ER: Yeah. And it’s funny. So when you first had video, I initially thought to YouTube and then you were talking like short-term video, and then it really is more of that TikTok, Instagram, Instagram Reels that are shifting. As I said, I bought new skincare stuff in less than three minutes the other night and I was like…

ND: You know, your point is that it’s such a great entry point for smaller companies and mid-sized companies. Because now it’s like you don’t have to have these huge multimillion-dollar budgets to create commercial level stories like we used to see a decade ago from brands like Chanel and whatnot. And now the production quality can be a lot less so long as the creativity, the authenticity, and the story is there and the lifestyle usage like the value. It’s so easy to just get quick information. The other reason that’s driving this is that honestly, we’re just getting, we’re more ADD than we’ve ever been before. And it’s not really a generational thing. It’s because we’re taking in more information than we ever have in previous years, in previous decades. And we have become short attention spans. We don’t have long attention spans any longer. So short-form videos. Yeah. I’m very interested to see the evolution of storytelling and where we can take that as an agency for our clients.

ER: I think just the barriers to entry. I know you said this, but the barriers to entry are lower and quality. And to your point, people are wanting quick digestible stuff. So it doesn’t have to be that high-end 30-second commercial. It has to be authentic.

What are some best practices, your top three best practices that you would recommend to clients?

ND: These do change from time to time, but yeah, I will try to categorize some evergreen if you will, something that you can take for a year. So one would be data capture. I would say the number one best practice is data capture. No matter how big, how small, how midsize your organization is, you should always have an ongoing program to mine and own opt-in customer data. A hundred percent. Whether it’s the point of purchase or a lead form, or hopefully both. It’s imperative that brands and retailers know exactly who their customers are and that they control that data outside of digital marketing and social media platforms. And that’s important because you want to control the dialogue, the interactions, and engagements because those customers are sacred to your business and your brands. And if you’re really building a community, you need to make sure that you’re not outsourcing your strategy for engagement entirely to social media servers or their platforms because you know, they’re evolving and changing and they’re not invested in your business.

So it’s really unwise to do that. I think again, like a balanced portfolio, you just want to make sure that you’re utilizing them, but you’re also taking steps to own that dialogue yourself so that you can do some great email marketing when the world opens up again. You’ll have that data to be able to focus event marketing if that’s something that’s in your strategy. So there’s a lot of reasons to do ongoing data capture. Also, it just makes all your marketing campaigns so much more relevant for your customers. So really, really important to do that. The second I would say is nurture programs, right? Once you worked so hard to get a customer, you want to ensure you keep them. So if you have a solid nurture program, you can keep that dialogue open. And there are so many great marketing tools that can help your team with that. We like HubSpot, but there are tons that are out there to choose from that are equally just as good. Nurture programs can be engagement-focused, meaning you’re sending them content that keeps your customer interested. They can be educationally focused, where they can even be active funnel programs, where they’re literally designed to take fans through a buyer journey and help them become customers and community members for your brand.

And then my third best practice would probably be something called back to basics. And what that means basically is don’t get lost in tech. I know it’s super cool. It’s so easy to do. And I probably preaching more to myself because I love technology and I get lost in it pretty easily, but every now and then, you know, I always tell myself, listen, it’s time to turn the computer off and really get back to basics so that I can reflect on the business of my customers, the buyers and their customer base and what their future growth is. It sounds simple, but it is something that’s often overlooked. And I have the saying “make the easy, easy”, which really means for us at LACED Agency, getting back to basics. It’s really important when you hit a wall with budget or you hit a wall with timing, or there’s a market fluctuation, that’s causing a challenge on a particular project. And sometimes just reflecting on what really matters in a group session, or even by yourself with a whiteboard, why someone’s purchasing it. And really leading with humanity and empathy can help you discover the next great marketing campaign to drive millions of new customers. Because the technology component of it is just the tool you use to get there. But I think getting back to basics is an important thing to remember, especially as we are being kind of inundated right now with a lot of really cool tech.

ER: One hundred percent. And let me think, gosh, I’m like taking a note for myself and really thinking about that for our business as well. Just really important, as you said, to use the tools for social but make sure you’re hitting the right message points.

ND: Don’t let the tools use. You use the tools!

ER: That’s perfect. One thing I want to just note is I noticed on your agency that you guys are doing those kits. I think you even mentioned it before. But I really love that idea of like, here’s what you need, maybe to your point of the basics. And here’s what we can, how we can help and execute that versus trying to maybe build something customized for everyone. So I just wanted to call that out. I’m really impressed with that approach.

ND: Yeah. We find each client is, is so complex, and typically nine times out of ten have both a B2C and a B2B need but then they also have a marketing campaign need. And they have an educational need. And it’s like how can we financially come up with a package that can meet all these for them and then give them the option to turn the keys over at the end of 90 days. Or if they want us to continue to manage it for a while, we’ll do that so that they can scale up. But ultimately I think it’s really important that brands or retailers have a basic to a mid-level understanding of this advanced digital marketing because ultimately they’re the ones in control. And they should learn these things, too. So we really approach it from that standpoint. That’s the one part of strategic consultancy.

ER: Nice, great. Well, really, really appreciate your time today. I enjoyed speaking with you. If people want to connect with you online, what’s the best way to do that?

ND: I would say the best way to do that is nataliediblasi.com and don’t get scared. It will redirect to my LinkedIn page, but that’ll give you all the contact information that you need to get in touch with me relatively quickly.

ER: Great. Well thank you so much again, and we will stay in touch and I know our listeners are gonna really enjoy the insights that you share today.

ND: Awesome. You too. Thanks Emily.

Demands on new product development have greatly increased over the last decade with increased need for speed to market, lowering risk, and increased revenue. But innovating and creating new products through partnerships such as licensing, while effective in addressing these challenges, can be even more complicated and fraught with pitfalls than innovating from within.

Licensing requires two companies from different industries, with different expertise, different processes, different values, and different…..you get the picture…to come together in order to deliver for consumers. In order to successfully cut through that added layer of complexity, partners need a strong collaboration framework to guide their work.

With some key adjustments for the elements licensing throws into the mix, the Stage-Gate Product Innovation Process,[1] created by Robert G. Cooper and Scott J. Edgett, is an incredibly effective way to navigate a collaborative product development process.

Retail Trends Upping the Pressure to Deliver Innovation

Consolidation in the retail space has made it more difficult to reach consumers and the rise of e-commerce has increased the pressure on retailers to bring innovative, differentiated products into their stores. Retail consolidation in virtually every sector (food, drug, furniture, electronics, apparel, etc.) resulted in the loss of major names such as Circuit City, Linens N’ Things, and Borders and has left distributors with fewer channels through which to move their product. Fewer outlets mean increased competition to get products placed and more difficulty in reaching consumers on a significant scale.

At the same time as scale is becoming increasingly difficult to achieve, pressures are mounting for retailers to differentiate themselves in order to compete not only with each other but with “brandless” e-commerce. Recent partnerships between Target and Neimann Marcus, for example, and retail exclusives such as TopShop at Nordstrom and Martha Stewart at JC Penney, underscore the pressure on retailers to stand-out. Underlying that pressure is the rapid adoption of e-commerce as a retail channel:  Providing consumers with innumerable choices while diluting the impact of retail brands. In his blog post Al Farrara of BDO notes: “Today, consumers are finding that many retailers offer essentially the same product and the same shopping experience, simply with a different name on the door.” In order to stand-out, retailers are partnering with new brands or integrating innovative brands into their catalog.[2]

The advantages of licensed products:  (1) increased speed to market, (2) lower risk, (3) price premium, and (4) consumer loyalty to the property, combine to make strategic licensing partnerships part of a winning strategy to compete with mounting retail pressures. The disadvantages, added complexity and the potential for increased licensor liability, demand a disciplined framework for navigating the relationship in order to keep both parties focused on bringing excellence to market.

Stage-Gate® Product Innovation Process

The Stage-Gate model was established in the early 80s to describe a systematic approach to developing new products. It is now in use, according to their Web site, by 80 percent of North American companies. While the basic underlying principles of the development process have long been established, Cooper’s innovation was the framework that includes “Stages” or activities, and “Gates” or decision points. (See Exhibit 1.)

Stages are where the work gets done. The project team completes the activities needed to advance the project to the next Gate, or decision point. Each Stage is cross-functional (R&D, Marketing, Finance, etc.), with activities in each specialty undertaken along parallel paths to increase the speed at which the organization can move through the process. At each Stage, each function gathers the critical information the entire team needs in order to manage risk and make careful decisions. Because each stage is incremental, costs and resources are committed incrementally. As a result, there are no multi-million dollar, year-long R&D studies that go sideways. Broken into short phases, with incremental funding for each, this phased approach lowers risk.

Gates are where Go/No-Go and prioritization decisions are made. You can imagine multiple projects moving through the process and at any Gate moment, the priorities can be reset so that a particular project gains or loses resources. The Gates are focused on three fundamental issues:  (1) quality of execution, (2) business rationale, and (3) the quality of the action plan. In other words:

Can we be world-class in delivering this?

Does this align with the revenue, brand, and other company objectives?

Are we getting the critical information out of each stage that we need to have a detailed, achievable action plan?

Applying Stage-Gate® to a Licensing Collaboration

Stage 1—Ideas

As Julie Andrews sang in The Sound of Music: “Let’s start at the very beginning, a very good place to start” and talk about Ideation. Licensing relationships throw a kink into the Ideation process by mashing-up what should be an open and collaborative brainstorming process with the need for clear boundaries about how ideas will be evaluated and who has responsibility for generating them.

Establishing boundaries for the brand, what is “in-bounds” and “out-of-bounds” for new products and brand extensions, lays crucial groundwork for an effective partnership strategy. Having a well-articulated framework for where the brand can go allows the Licensor to be proactive in identifying the right partners and establishing constructive boundaries within which to operate. That’s a much more effective way to bring new products to market than being reactive and responding to ideas tossed over the transom! Rather than the Licensor dictating the specific direction development should head (which might leave opportunities on the table and expose the licensor to down-stream risk) the organization can leverage internal and external resources to identify potentially fruitful directions first.

The following are excellent ways Licensor’s can establish parameters for the brand without proscribing the result:

¾    Consumer Research:  Focus groups, concept tests, brand appropriateness, and extension studies all help to identify the brand equities consumers value and provide insight into possible directions to extend them. From the Licensee’s point of view, these insights help establish creative boundaries. For the Licensor, it helps ensure that the ideas that come back align with the core elements of the brand.

¾    Ideation Firms/Immersion:  A third-party facilitated session that draws on broad expertise within the organization to brainstorm new channels, products, consumers, and categories to extend toward based on brand equities, experience, and available capabilities.

¾    Retailer Feedback:  Retailer impact is not as obvious as direct-to-retail licenses or retail exclusives. A single buyer’s affinity for a brand or product can lead to featured or preferred placements. Direction from an influential category manager can produce a lighted path to a spot on the shelf.

¾    Market Research:  Objective analysis of the market segment in which the Licensee might operate can open up otherwise overlooked opportunities while maintaining fidelity to the brand. Rather than a Licensor saying “we want to do scales,” market research on the weight management industry might show that weight monitoring devices are the largest potential market. That insight might translate into scales but it might also open up other opportunities.

In addition to tapping external resources, Licensors also can look internally to identify good ideas that have foundered within the organization. Often, these are great ideas that don’t fit the execution model of the Licensor. Strategic partners, operating in their own business model, might be better suited to delivering on them. The following are resources Licensors can look to internally:

• Abandoned R&D projects
• Innovation groups
• Business units/product lines that have been shelved or are about to be
• Plussing—taking something developed for one area of the company and translating it to other products in other categories.

The goal of the Ideation phase is to identify “sandboxes” within which Licensees can leverage their own expertise and experience to identify specific solutions that will align with the brand.

Stage 2: Business Case

With licensing in the mix, the Business Case step of the Stage-Gate® process takes on the added dimension of building the business case with a particular partner rather than a particular product (because those specifics likely come later in the process, at this point, it’s all about the right relationship and structure). With clarity on where the brand can extend or expand to accommodate new products, the hunt is on to identify the right partners and build the business plan.

Solicitation Plan

Development of the solicitation plan provides an outline of the types of solutions being sought and gives the potential partners a clear understanding of the brand and its boundaries. Executing a good solicitation plan is much like the role of the very best matchmaker or seasoned recruiter at work:  A great match isn’t only about the knowledge but creating an alignment of likes and dislikes, wants and desires, and preferences and aversions. Tackling these things early on can lead to a higher likelihood of success downstream. In evaluating partners, five key areas of “fit” should be evaluated:  (1) brand fit, (2) philosophy and vision, (3) licensing experience, (4) category experience, and (5) competitive landscape. If a potential licensee matches up well on these key areas, due diligence comes next. Following the Stage-Gate® rubric, you could think of the output from the solicitation plan and initial evaluation as a Gate or a Go/No-Go. At this point, the Licensor may need to tweak its parameters if it’s not finding the right partner.

Due Diligence

Time invested on rigorous due diligence will yield substantial returns especially when the organizations begin discussing the business terms of working together. Due diligence allows the Licensor to dig deeper on the items assessed in the initial evaluation. The key items for due diligence include:  licensee background; potential conflicts; financial health; sales, marketing, and distribution capacity; manufacturing capability; social accountability; quality, and safety standards performance; and reference checks. Due diligence requires detective work and mining of industry relationships to get a full picture. There are publicly available sources such as Hoovers D&B, SEC filings, CPSC, annual reports, legal databases, etc. that can be tapped. The potential partner will need to supply sufficiently detailed financial statements (unless they are a public company) and references, including bank, retailer, and other partner references. In the due diligence process, it also is important to get an understanding of the partner’s approach to new product development. This can be done by pulling together key pieces of information from sales and marketing, social accountability, quality and safety, and recall procedures.

At the end of the Due Diligence process is another Gate. At this point, the Licensor may decide to pursue its next choice of partner if the first didn’t perform well. Coming out of the Due Diligence phase we move onto Business Terms, so the Licensor wants to ensure they are moving forward with a great potential partner. Taking a pause at the end of the Due Diligence process to ensure that all parties agree on the fit and caliber of the Licensee will save time and effort at later stages in the process.

Defining Business Terms

In the Terms phase, the Licensor and Licensee begin a discussion in earnest on process and financials. On the process side, the Licensor will get a detailed understanding of the new product development process and the partners should agree on which process, the Licensor’s or Licensee’s, should govern the project. In the case of a sophisticated, experienced Licensee, its development process might be the most appropriate. Additionally, this is the time to understand the decision making process and key decision makers on both sides. Understanding how approvals are accomplished and who is involved in achieving approval will prevent “gotchas” from happening in the Development stage. In general, the Terms phase is the time to unearth all the potential pitfalls so they can be addressed in the planning stages, rather than in the production stages.

The Terms phase also produces an understanding of the financial framework for the relationship, the classic “Business Case,” that documents assumptions about potential market share, royalty rate, market acceptance of the new product, and price. This is another Gate – if the financials don’t make sense for both parties, it is back to the drawing board. But, assuming everything is on-track, the hard work of getting a new product developed begins.

Stage 3: Development

Defining the Roadmap

In the Business Case stage, Licensor and Licensee got to know each other and learned about each other’s processes, key players, and approaches. In the Development stage, it’s time to get specific. A good place to start is a Kick-Off Meeting with all of the right stakeholders (decision makers and influencers) and any and all facilitators (outside agencies, third party consultants, advisors, etc.) in one room. The goal of the Kick-off is to build a single, shared understanding of contractual procedures, submission guidelines, quality documentation procedures, and the role of specified third parties.

In that meeting, IMC’s experience has been that spending time to develop a detailed map of the process from this moment to Launch is a productive use of time. The process that’s developed is not intended to be memorialized in the final contract, it often requires some degree of flexibility in execution and rarely happens exactly the same way twice, but it does ensure that everyone is clear on the Gates to come. The net result is mutual awareness of expectations, understanding of priorities and sensitivities, and mutual agreement and alignment on next steps. In short, the kick-off meeting wraps up with a roadmap for the partnership. (See Exhibit 2.)

Landmines

In the Product Development stage, there are a few landmines that can be avoided with sufficient anticipation and planning. The ones that seem to pop-up regularly include:  flavor matching, fragrancing, stability, children and infant/American Academy of Pediatrics guidelines, Environmental Protection Agency and Federal Drug Administration registration, foreign regulations for packaging and products, and language translations. None of these is a deal-killer but anticipating them and determining an approach for addressing them up-front in the development process will ensure the program isn’t derailed downstream. The murky waters surrounding Prop 65 regulations of food supplements are challenging enough but even more so if they’re being navigated for the first time by a brand or manufacturer with no established experience in a particular product space.

Communication and Project Management

Once roles and responsibilities are clear, the roadmap is defined and work begins, project management can become an epic challenge. There is a simple, elegant solution:  third party collaboration software. There are many tools available, including Sharepoint, Basecamp, ProofHQ, Google Wiki, Dependable Solutions, CTI Solutions, Royalty Zone, and others. Several companies have built software custom-tailored to the licensing industry. The genius of third-party, Web-based software is its ease of implementation and use. It can be implemented outside of corporate IT infrastructure and becomes a tool that everyone can use, providing consistency and transparency to the project, at a very low cost.

Stage 4: Testing and Validation

Coming out of Development, the next Gate is Testing. This is an opportunity for the team to pause and ensure the product meets the brand’s definition of “in-bounds” developed in the Idea Stage. Similarly, the product is evaluated to ensure it meets the quality and safety requirements and any other agreed-to parameters from the Business Case Stage. Assuming it meets the brand and production requirements laid out in the previous stages, the product moves to the Testing and Validation phase.

Testing and Validation is an opportunity for external feedback from consumers and retailers. During the Development phase, the market appetite that informed the initial approach may have changed. Market pressures shift. Or, perhaps, the concept migrated farther than expected based on initial understandings. There are many reasons why additional testing and research at this stage is valuable. Advanced research at this stage can help answer quantitative questions, such as price sensitivity, purchase interest, and competitive analysis; and qualitative questions, such as brand positioning, features and benefits, and marketing support. In-home and online testing are effective techniques to evaluate product and packaging features. Nielsen data, discrete choice modeling, and market/category research can evaluate the more quantitative questions.

Market Validation is the last check-point before launch and allows a Licensee one more opportunity to tweak the product. In-store tests allow for “real-world” experience on a focused basis. Trade promotions, in addition to the brand, can assist with getting the product into stores. Once in stores, the experience is evaluated in order to shed light on key questions such as:

• Can the licensed and core product reside together on the shelf?
• Is this an opportunity to “reinvent” where the brand can reside in the store?
• Is the price point correct?
• What are the consumers saying about the product?
• Is the product’s sales performance meeting category manager’s or buyer’s needs?

Stopping to evaluate now isn’t a diversion, it’s a strategic evaluation of whether it’s time to “Go Big or Go Home” on the idea. Once the organization decides it is ready to Go Big, the full force of distribution and marketing are unleashed. Those are expensive, precious resources that should be employed for products that have been thoroughly vetted, and redeveloped, if necessary.

Stage 5: Launch!

The research is done; product is ready; homework is ready to turn in …. It’s time to go to market! Given that all or some of the money normally budgeted for marketing support is going to pay royalties, Licensees operating on that reduced budget will most likely be drawn to social media and marketing tie-ins with the core brand, as opposed to traditional marketing such as print, FSI (free-standing inserts), and television. As a licensed product proves itself, integrating it with the core brand marketing is the absolute key to a successful program.

Marketing message integration occurs on all levels including online, bricks and mortar, social media, database, and direct marketing. Integration also applies to customer analysis so that in-bound feedback channels such as customer feedback and online product reviews are providing input to both the licensed and core products. There is a common (mistaken) assumption that because a product is branded, it is “marketed.” Without marketing behind it a licensed program will underperform, or at worst, fail entirely. Just having the brand behind it in retail isn’t enough.

An example of a successful marketing effort with a licensed product is Cub Cadet’s use of their licensed ride-on lawn tractor. Before rolling out the product to mass market, Peg Perego and Cub Cadet developed a promotion for their dealer network, giving that important part of the business special treatment and recognition. Any customer who bought a Cub Cadet piece of equipment at a dealer (generally paying closer to an MSRP) got theirs and their kid-sized equivalent delivered to their home at the same time – imagine the joy on the little one’s face when their mower rolled off at the same time as Dad’s. The promotion created great buzz and delighted consumers.

And, relaunch!

Improvements and adjustments are a continuous process. Minimally, Licensees should expect a brand refresh, packaging updates, and messaging updates every two to three years. The closer Licensee and Licensor can get their production schedules to align, the more efficient it is for each party and the better effect it will have in the market—appearing seamless to the consumer.

Conclusion

The Stage-Gate® Product Innovation model, tried and true in the industry, can accommodate the additional layer of complexity that licensed products bring to the mix. The discipline of Stages and Gates is that much more critical when two organizations are working to blend their visions, processes, and business models to achieve incremental revenue and consumer loyalty.

The advantages of a well-implemented Stage-Gate process are many:  increased speed-to-market, greater probability of product success, discipline, efficiency and thoroughness, clearly defined roles, and mitigation of risk.

IMC is a top global product licensing agency. Reach out to schedule an introductory call.

Published October, 2012 in The Licensing Journal.

Today, we’re welcoming Timo Olkkola to the podcast! As CCO and Co-founder of Flowhaven, Timo will be sharing his insights on international licensing and how our listeners can manage licensing programs in multiple markets.

About Our Guest

Timo Olkkola is CCO and Co-founder of Flowhaven. Built on Salesforce, the world’s #1 CRM—Flowhaven, is helping companies around the globe gain control over their licensing operations. Our intuitive software is the only licensing relationship management platform to cover all aspects of licensing management from nurturing to scaling with the help of data. 

Timo has extensive knowledge of the licensing industry and the market forces that drive revenue for organizations of all sizes. He firmly believes that empowering companies to organize their operations and communicate more effectively is the best way to move the licensing industry forward.

Passionate about media and entertainment, Timo understands how well-executed licensing programs build bridges between brands and fans—Harry Potter and Star Wars are two prime examples.

Tune in below to hear Timo’s episode, or check it out on Apple Podcasts or Spotify. Don’t forget to subscribe!

Episode Transcription

Emily Randles: Hi, Timo. Welcome to The Brand Licensing Podcast.

Timo Olkkola: Thank you so much. Great to be here.

ER: Today we’re speaking with Timo Olkkola, CCO and Co-founder of Flowhaven. He’s passionate about improving items and efficiencies through software. Now more than ever, technology is changing how we work and shop and interact with one another. Today’s conversation is going to be relevant in terms of licensing, and we want to talk with him about how licensing works in a global market and how licensees and licensors can work together to create licensed products that are sold all over the world, and what role technology plays in that collaboration. Before we get started, can you give us a rundown on your resume?

TO: Yeah, definitely. Thank you so much. I grew up in Helsinki, Finland in a small suburban area in north Helsinki. I learned English from playing video games. I fell in love with the entertainment industry then when I grew up, I went to join a heavy metal band. It was a small but pretty terrible career as a heavy metal singer when I was 15 to 18 years old. I realized that, well, okay, this is my passion area, but, you know, I need to make some money in my life. I went to university and found my passion in sales. I did B2B and B2C sales, and I also did retail work with multiple different brands to see how they operate on the retail side. Today, I’m traveling between our Flowhaven office as much as possible to meet our lovely colleagues but also great customers around the world. There’s still a huge passion for me regarding entertainment. So I consume everything basically from anime, manga, film, TV, and video games. I spend too much time on that, but it’s a passion that helps licensing professionals.

ER: It’s really interesting that your background and your passion came up learning through retail because retail is just a key piece of the licensing business. And then also interestingly, I feel like gaming is just becoming huge.

TO: Yeah. And games have that fantastic way where the immersion time is pretty long. If you look at movies, movies are two hours, maybe three hours long, but games can be hundreds of hours long. Even now with Battle Royale type of games, thousands of hours can be spent by one fan. We kind of win that universe and that just opens fantastic possibilities for licensing opportunities. We still haven’t achieved maturity on that market. So it will be very interesting also to see where it’s going to go regarding licensing products in gaming, especially the next 5 to 10 to 20 years.

ER: I hadn’t thought of it from a time perspective in terms of how much you’re spending in front of something, but you’re right. What a difference between the time you spend in a movie and the time you spend playing a game, and the impact that might have.

TO: Yeah, exactly. That’s one of the reasons, he may have been so popular recently also in the Western world is that you might have 500 episodes in some series that it just takes you to a whole different journey. And most often, you know, there is time to explore with the character’s backgrounds, of course, a lot of feelers, but usually, fillers work to exactly tell different angles of that character in different angles of how they developed as a character.

ER: No, that makes a lot of sense. Well, jumping into kind of how you guys work, how does Flowhaven collaborate in multiple markets?

TO: Fantastic question. We have offices around the world nowadays, of course, when we started the company five years ago, it was just, you know, we started in Finland. It was just, you know, taking the flights, going to Vegas for Licensing Expo, just trying to knock on every door like, “Hey, do you want to buy stuff” or “what do you value in software?”. Today’s much easier. We have an office in LA, London, and of course, Helsinki. We’re working in Japan, Hong Kong, and Korean markets, along with South America.

ER: Has being in different markets made it easier or harder to transition to the virtual landscape and cope with the effects of COVID and the shutdowns and travel restrictions?

TO: So it has forced change. It depends on how the licensing team, what is their dynamic? How do they work together? How are they used to working? And together, some licensing teams do much more creative work than some others. This is the same, whether you are a licensing agent or a licensor. So it’s hard to say, is it easier or harder? But it has forced companies to work virtually because it’s impossible to otherwise keep the communication going.

ER: And I can imagine in the gaming entertainment space that things got even busier in terms of keeping things going. But then from an entertainment perspective, I think they paused a lot of movies and launches because people weren’t going to the theaters. But with that, I guess you also saw the uptick in Netflix and your Amazon and those types of movies and entertainment. So did you guys feel that with the clients that you work with?

TO: We were very lucky. Some areas of the industry were more affected negatively by the COVID industry, but the best case is what we solve, even though like some of our customers, industries were affected negatively, actually they were able to still find those loyal fans that were buying. And they were more focusing on collectibles and limited edition products and stuff like this that still had a huge fan base. It was more about just finding the right channels and the right product categories that created the interest.

ER: That is interesting. And I think even with our business, just kind of across licensing, in general, are that some licensing maybe even helped a lot of industries that were feeling the impact from their core business, but they had licensed items and properties that to your point, loyal consumers can go and find. And so just having that royalty revenue and generation and not having a pause when maybe their core business was taking a beat was important.

TO: Yeah, exactly. And also like the level of operational capability in licensing was extremely critical and that’s what we saw, not just our customers, but all around the industry is that how long it took to survive from the shock of, you know, what’s happening right now. And I think that’s where we also saw based on the financial results from 2021 and 2020, that who has been able to really survive the shock.

ER: Yeah. And I think that just highlights the importance of utilizing technology and people that had the technology and the processes in place when you did have to go virtual right. To your point, maybe it wasn’t easy, but it wasn’t a shift. And so I can imagine that helps people either adapt and improve their processes from a digital perspective.

TO: Yeah, exactly. That is why licensing is so great of the industry that if you don’t have time to do the creative things, it’s very hard to do the job, right. When we started the company back in the day, we saw that licensing daily work became these manual tasks that nobody anymore enjoyed, just because they were just repeated it. And they didn’t, you know, people who come to liaising or kind of find themselves in dialyzing industry. At some point, they are passionate experts in the industry. So that was for us, was like a most important thing that these professionals should find and use their time to make in the creative deals, finding those best partnerships. Because like we have a saying at the office that licensing is kind of only win-win-win-win business model in the world where if a brand owner finds a great vice as C with the help of a great agent, for example, and, you know, the licensee finds a great sales channel also for the product. The fans were thinking and both with the wallet. So actually everybody wins in the lions or the brand owner wins, the agent wins, the licensee wins and the fans win. Then the retailer wins. So it’s one of those only models where that’s possible, but it needs that creative time. And that’s sometimes has been harder to define, especially people working at home. And how do you find time to brainstorm to be creative? And that’s what we’re trying to support our customers all the time.

ER: Yeah. That resonates with me. I mean, when I started in licensing, I started in product development 15 years ago and I was printing everything that was emailed to me. Then I was comparing the hard copy to hard copy and I had binders and approval forms and I would mail them to the licensor for their review and approval. It’s a very manual process. And then even the contracts were the same way, right. So I think implementing a technology solution because it was possible, right. You guys did it. And so I think just leveling up and making licensing as an industry more efficient was changed the game.

TO: Yeah, exactly. Professionals have the best tool in their hands and the best kind of visibility on understanding the consumers. Because right now, the only way allowing professional, if you’d understand their fans is either do a survey either by a somebody, a pack of like the market study of what’s going on, how our consumers behave, but it doesn’t tell you what products your fans are buying. What do they love? What do they care about? And that’s when kind of obvious thinking is like, follow the money, follow what are the top 10 SKUs that are being sold last two years? And then you could break it down, like, all right, I want to see out of those skews, you know, how do they separate between the brands? If we have the main IP, then those have stopped IPS, whatever it may be, your brand structure, you want to understand that, are you seeing certain trends? Are you seeing that you’ve fast left something more than the other and are there differences between the territories also, and that serves not only the brand owner but also the licensees because when the brand owner understands their brand well and understand what it works and it’s based on data, then finding the best partnership and best licensee, then everybody leaves? We have seen this with some fans, instantly buy everything out of stock, right? So sometimes you find these cases where it’s like, amazing. How did they realize to do this? And those are the moments me as a kind of lighting industry and go like, yes, that was a great partnership. Just that he was able to kind of actually do the, find the right kind of a feeling and emotion to attach to.

ER: Yep. No, that makes a lot of sense. One question I have in terms of a global market and technology is just a currency conversion. So to your point of following the money, how does currency conversion work when reporting royalties within the software and can licensees pay in a certain currency through the software to their license? Or how does that work?

TO: Yeah, so definitely so system-wise, but for us, we have multicurrency support. So our biggest companies are fortune 100 companies. So they are pretty massive. We’re talking about revenue nearly that manages the royalty goes through our software. So there can be, yeah, so it can be a lot of different currencies involved. And from just what really, it’s not a problem because it’s just converged those based on what is the value, but where it comes to more of issues, the agreed what you have as a currency on the agreement, these, the licensee respecting that currency and sending those reports with that currency. And also sometimes that we have had to do little tweaks here and there to manage the system-wise. And that’s not scalable also because of course, you’re always looking at all right. We made, let’s say that we made a deal with British pounds and now our partners sending us royalty reports that state dollars, for example, it’s more of difficulty too, how do you then look at because there are so many things involved that, you know, that might be commissioned there, recruitments and all that. And it gets even funnier when let’s say we have a three-year deal that the first year, you know, they send it with a certain courtesy, and the second installment, it comes with a different currency. So sometimes there’s some work to do, and we’re trying to help financial users as much as possible. We just need a reason study with our user base. And actually, I was very surprised about this. So we have different types of users inside flow I have is just, some are more agreement kind of looking from the sales side. And then some people are more actually working only with approvals and then some royalty managers there’s only of course with the financial stuff. And what we noticed is that the financial users are somewhat the happiest. You could assume. So Flowhaven, which was extremely surprising for me because my theory was always more on the sales and kind of approval side as a hypothesis. But was surprised to see that, especially on these currency issues, they can take a lot of time from your daily work as a finance manager.

ER: One other thing I can imagine that software and technology help with is just language and working in multiple languages. How does that work within the platform in terms of packaging submissions, and also then just logging in and working with people all over the world, you know, are they logging in and seeing, enable to review stuff in their main language? Or how does, how does that work for, for your users?

TO: Yeah, definitely. We have multi-language support. So tens of languages let’s put it like that we have in the system and everything from Cantonese, Mandarin, Japanese, Korean, Russian, Spanish, Portuguese. So if I’m a user logging in as a licensee to my brand owner’s system, I can decide what do I choose? And in full having our print orders can decide what languages can be sub what language is kind of useless and soft meat through the platform. So that’s, it gives more control. And this was something that I said that we did almost a mistake. We used to do it so that we thought about giving the partner users full control over the language that they chose. But we did feel test that. We realized that, yeah, necessarily you don’t want to have your approval comments back in Japanese if you only speak English. Right. And so that’s sometimes harder than can I approve this. And you can also just fully trust Google translate because you are approving a product. It is extremely important that it’s secure and it just fails.

ER: So is a translator looking at packaging and submissions, is that how people are handling it? Or does the software have a different translate function?

TO: We don’t have a translate function per se, but we have more language support. So if let’s say a Japanese licensee wants to submit a submission to an English brand owner, for example, the speeding a brand owner, they can do that, but that’s the end, the decision of the brand owners. They want to allow that. And then I’m sure you can also easily translate it quickly utilizing Google translate, but do you trust that then that’s your choice trust, but verify, right?

ER: Right. I mean, gosh, before Google translate and before, you know, implementing these efficiencies and the technology, it was much more manual and not efficient at all. So I think changing the game in terms of global capabilities and licensing.

TO: Yeah, exactly. It’s more and more important than even communication, what it comes to approval. So just understanding that you know, if I get a comment on approval, I want to know that instantly also what we see more and more is that when our customers, when they release new style of guard flow, it instantly informs all the relevant partners that have a right to that actual style guide in their agreement, that they are aware that there’s instantly usable and all of these things that you don’t have to do any more manually, you know, let people know, call them or give them an email that, Hey, we have a new start, I’ve got half a dollar. And we also track the, do they download that? You know, are your partners cold intercepting those images for you? And it keeps your reminder. So that, because back in the day, there used to be situations before these types of systems that you might be using a new email. And then you realized after launching a style guide three months later that, oh, actually we didn’t receive any submissions from a certain territory. And then when you talk to the partner, they’re like, what style guide? What are you talking about? Oh, there’s a new style guide. So it just the last three months of friend awareness, And to be honest, there are a lot of people in the world, not just utilizing an industry that just doesn’t have time to read all of their emails. And email with email is extremely hard because you don’t know what to prioritize. Right. So if I get 300 emails a day, it’s hard for me to say which ones are the most important for me today to handle. And most of them, what we also see, especially when it comes to approvals, it’s not the most important approval you need to handle today. That is the oldest. It’s the most important approval to handle that has a timeline. So those are the kind of interesting discussions also that we kind of change the whole mindset of an approved person that, well, I’m not just working on the oldest to the newest approval. I’m working today on the most important approval. And this is something we give as information to all the approval users flow.

ER: What role do face-to-face meetings have in working on licensing deals even when technology software is in place?

TO: Yeah. This is a really important question. And back in the day, like, and one of our vision in the company still exists from before. When we even started the company, we had a vision that we are never here to replace any laws and professionals. That’s what we want to do. We want to increase the amount of advising professionals in the world and increase the industry size and, and create more meaningful products for the fans and health professionals to create those cooler products for the fans and what, you know, you always need face to face meetings in my European, especially for the creative work, because like we deal calls and zoom calls. They’re great, but it’s sometimes, you know, you are forming a relationship and a long-term partnership with the company. So I think it is extremely vital that we have a face-to-face meeting during, or even after this COVID time. So definitely like technology’s not there to replace that. What technology think gives you is then the data to back up that, what kind of relationships should you be looking for? What is the best kind of deal that you should be looking for? And this is interesting where sometimes you might have a gut feeling of a situation where you look at the data. And that is a very challenging situation that I have had to face myself.

ER: That’s interesting. And as we are shifting here in the US we are talking with partners about face-to-face meetings, and honestly, we’re getting pushback saying that we’re just going to do virtual and I’m with you. I think that there’s still a really important role because of the relationship piece. And we form our partnerships and our licensing deals around relationships, right? Like looking for long-term partners for our clients and the licensees. So I think it’ll be interesting to kind of see how people transition back to face-to-face meetings. I also thought it was interesting that the licensing show opted to go virtual again this year in place of the in-person events. Yeah. I would like, to me, I’m like, I understand that decision on our respect, that just for me, there’s the other side wants to go so much back to realizing expo, whether it’s through, I can do or to the actual show floor and meet, meet people.

TO: I haven’t seen our customers and my good industry friends, you know, in a couple of years, that’s, you know, that’s hard, it’s hard because the magic of the industry, it just doesn’t come through in virtual expo, even though that would be well organized. There is always that age, your age, all of me going like walking on a show floor of you know, Hong Kong expo or big our expo. And, and that, you know, I feel like an eight-year-old again, I’m like, oh my God, we’ve got these products. Oh, this is so cool. All digital partners are with them, you know? And that’s so yeah, just online, doesn’t give you that.

ER: I think you make a great point in terms of marrying relationships and your gut feelings with data. And I think that that’s a really interesting approach and it’s really important to have those data points when thinking about partnerships.

According to The Licensing Letter, 63% of licensed product sales come from the North American market. Why do you think that is? Are other markets just not responding or does the US truly have a larger market for licensed products?

TO: This is a fantastic question. It’s all about creating stories and telling those stories through the products. And I think that North America, what they did the best in us, they well were that, you know, as a continent and as the whole licensing industry, they were able to make that storytelling mode happened. And I think that’s extremely important. What I see, if you look at the kind of history of licensing, there have been fantastic stories already, or, you know, centuries in Europe, Japan, China, Brazil, but they were limited to few brands home. So there was a kind of, you know, one brand here, one brand, there may be a couple of brands, but they weren’t able to create the whole movie for the whole country or the whole industry. And I think that’s what happened in North America. And they were so successful in it all in on creating these awesome stories.

ER: What is the next evolution of technology for licensing deals? So what should companies be thinking about and looking for the next 12 to 24 months and even more into the future?

TO: Yeah, I would say that there’s going to be a post-COVID shock. Going back to the office is going to require some changes to the companies and how they operate. This is not only to the splicing teams themselves but also the partners. We have survived as an industry this unique time, and it’s really important that we keep our lives and relationships good. We are forgiving to our partners. We work together as an industry to make it even bigger. And I think that’s going to be extremely important, and then technology will serve that there are many forms. It comes down to us as people and professionals to keep those partners happy. And also our colleagues happy. And that’s what I hope now with returning that we remember to smile and be supportive to each other and also celebrate brand partnerships within the industry, whether they are our creations or whether they are our competitive brand’s creation. I think that’s the whole point to come together as an industry.

ER: That’s a great insight. And it’s about the relationships at the end of the day and making those work and then everything else comes together through technology and great products and great thinking and creativity. But if the relationships aren’t there, all those other things are just really challenging, I think.

TO: Yeah, exactly. We have to regain trust again as an industry.

ER: If people want to find you online or connect with you outside of the podcast, what’s the best way to do that?

TO: Well, I’m very active on LinkedIn, so you can always find me on LinkedIn. Also, our website, flowhaven.com. You can find us there but definitely, LinkedIn is the number one place to find me.

ER: Thank you so much for your time today. I think you’ve brought a lot of great insights in terms of licensing and how companies and brands and licensees should be thinking about global licensing and technology and just partnerships as a whole.

TO: Great. Lovely to talk with you. Thank you for letting me be here.

Joining us on The Brand Licensing Podcast is co-founder and CEO of Brainbase, Nate Cavanaugh. On this episode, we take a closer look at CRM software and how technology can strengthen your licensing relationships.

Nate Cavanaugh is the co-founder and CEO of Brainbase, a platform that helps brands manage and monetize their intellectual property. Launched in 2017, Brainbase works with globally-recognized brands that generate billions of dollars in sales from their intellectual property. Brainbase is based in Los Angeles and has raised more than $12M from leading venture capital firms in San Francisco, LA, New York and Europe.

Prior to Brainbase, Nate was the founder and CEO of Guuf, an esports tournament platform, which was acquired in June 2016.

Listen to the full episode below, or check us out on Apple Podcasts or Spotify. Don’t forget to subscribe!

Episode Transcription

Emily Randles: Hi, Nate! How’s it going? 

Nate Cavanaugh:Hey, how are you? 

ER: Good. We’re excited to have you as one of our first guests on The Brand Licensing Podcast. Thank you so much for your time today. Nate is here to talk to us about the role of a CRM software in licensing, but before we get started, Nate, could you just give a little rundown on your resume? 

NC: Yeah, sure. I’m originally from Pittsburgh. I grew up in an entrepreneurial family. I’ve been around startups for what feels like my whole life. I’m 24, newly turned 24, and I’ve watched startup companies grow from pretty small to quite a large scale. I’ve been interested in tech from a very early age. I started a website design company when I was 15 years old in high school and thought I didn’t even want to go to college, but then ended up reluctantly going for one year at Indiana University of Bloomington following after Mark Cuban. I studied business management and economics there on the side studying venture capital startups and product design. I ended up starting an e-sports tournament platform in December of 2014 when I was 18. I was building that company in my college dorm room while I was taking classes at IU and then a year and a half later, I actually sold the company to a firm in New York city when I was 19 and then ended up taking that money, dropping out of college, and moving to LA to start what is now Brainbase. It’s a crazy, condensed story, but essentially, now I’m the co-founder and CEO of Brainbase. We’re a technology platform that helps brands manage and monetize their IP. The first product you mentioned helps brands to do licensing and manage their existing programs. So, we work with the teams at Kathy Ireland Worldwide, Sanrio which owns Hello Kitty, Buzzfeed, and a handful of others. Now the company is based in LA, and we also have a second office in Europe. 

ER: Awesome, that’s very exciting. So, I heard about Brainbase through an email that I received from your team, and it had like a screenshot of this beautiful reporting dashboard. With my experience in client services, I’ve been looking for something that could really solve the problem of royalty reporting and project management and product approvals. I was so intrigued when I got this email from your team and to date, we had really pieced together our product development and nothing really worked exceptionally well and the platforms didn’t work well together. The other thing I found was working with a bunch of different licensees and licensors is that if the platform or technology wasn’t simple, they either didn’t use it or they didn’t use it correctly. And it just made things more complicated. So, like I said, when I got the email about Brainbase, it was the technology solution I’d been looking for from a client services perspective. As a very data-driven company, we work with very data-driven companies, and I felt like this was what’s lacking in the marketplace. You know, we’d get these like Excel files from licensees that had sales data, but it wasn’t in a usable format. So that’s kind of my background around Brainbase and why I was so intrigued to connect with your team and connect with you. What made you want to create Brainbase? What brought you from e-sports into the technology of licensing? 

NC: Yeah, I get asked that question all the time. I always feel like I hear people that work in a licensing industry say that they never expected to work in the licensing industry. It’s sort of this odd thing. I’ve never been able to figure it out still four years into the company. Yeah, e-sports is very different than IP and licensing. As a founder, and I consider myself an entrepreneur at this point, but I’m more of a generalist. So, generally speaking, I just have a general passion for technology and startups, no particular market focus. But I just like working on problems in industries that affect large numbers of people. And initially the idea for Brainbase was to build an online marketplace where brands could buy and sell their intellectual property online. So we were trying to solve patent trolling. So we wanted companies to be able to sell patents online so that they would go into the hands of startups and increase liquidity for patents. And then we realized that licensing was another type of an IP transaction companies buy, sell, or license their IP. And then we realized licensing was actually a really interesting place to start. But throughout that learning process, we realized that managing a licensing deal is actually a lot more complex than even negotiating one. And so we started looking around the space and try to understand, okay, how are brands actually managing this work today? And like you found that there weren’t very many solutions that were either a well-designed or work well together. And we thought that that would be an interesting entry point into the broader market. And so the vision for the company was to start in licensing and licensing management and then expand it into all of these other market segments. And that’s why we describe our company as a sort of a management plus monetization platform for IP in general. 

ER: So what really is the difference between Brainbase as a technology or management platform and other more general platforms? Why should like a licensing company consider switching to Brainbase that’s specific for licensing? 

NC: Yeah, I could talk about this question for a long, long time. Obviously, I have a bias, full disclosure. But look, I think very basically if you look at the usual suspects for brands that are looking to manage a licensing program and you compare those products and how they’re designed and how they function and how the features work together, and you compare them to other apps that you use in your everyday life, call it WhatsApp, Slack, Zoom, Google Hangouts, YouTube, et cetera, they don’t look like any of your favorite apps. So to me, that means there’s a user experience and design problem and they’re just not well-executed software products. And so on a related note, how much have they actually evolved and changed in the last five years? Five years in a software context is like an eternity. Who has actually built those companies? are they, are they people and founders that are obsessed with product design or are they people with sales backgrounds who’ve been in licensing for, for a really long time and wanted to try and build software. And if you look at the best designed and best performing software companies, they’re generally built by people who are obsessed about tech. They’re obsessed about design, product, user experience. And that’s, that’s us to a T where we weren’t originally from licensing and from IT, we learned it ourselves, but felt like my cofounders and I were uniquely qualified to just build good software products. And so one specific example would be, you know, at Brainbase, we care a lot about the details. Like we fight over things like the color palettes and the font sizes that our customers see when they log into the product and make sure that the user experience is perfect. We debate over details like how thick are the lines on our line charts and bar charts on our analytics graphs. Other products don’t even have analytics. So I think just to, in a very stark comparison, the way that Brainbase works together, our Assist platform, which is our licensing CRM covers everything from managing your existing deal flow pipeline, your contracts, we provide awesome analytics across what products, partners, countries, et cetera, are performing, how they’re performing over any period of time. And then also all of the product and creative approvals in the sales reporting. So we’re also working on some really awesome new features that we just announced recently, like a payments feature, which is essentially going to work like Venmo or square cash, but for licensing royalties. So a brand owner’s going to be able to collect their money instantly from their licensees, rather than, than having to wait the net 30 or net 60 payment terms. So on all sorts of levels we feel like it’s not even close, but I would, I would encourage listeners to check out a demo and see for themselves. 

ER: Yes. And, and that was my experience as well. Like it, I mean, the lines are just, I’m a very visual person. And to your point, like the analytics was, was a big piece that was missing and, and our licensees needed that information just as much as the licensors. And I just think, you know, beautiful design it to your point, like what you’re using on your phone every day. And that’s, that’s the expectation today and that’s the expectation of my clients when we’re reporting to them. So I think it makes a big difference that you guys are passionate about, you know, user design and using not only the data, but, you know, putting it together in, in the format that it just makes much more sense in my opinion. 

NC: Yeah. I mean, I think it’s never perfect, right? Like getting, getting a software product perfect takes actually does take time in fairness to, you know, companies that are trying to build apps and products, that version one is never perfect, perfect of anything, businesses, software, physical products themselves, they have to go through multiple iterations. But I think what a good indicator of successes is how quickly companies iterate on their initial version. And I think that’s something we’ve been really aggressive about is making sure that we’re iterating based on feedback that we get from our customers about what they like, what they don’t like and so on. So I definitely agree with you. 

ER: So, because you’re kind of new, not new now, but you know, jumped into the licensing field, what’s been the most challenging thing, or maybe the most surprising thing about the licensing industry that you hadn’t previously experienced with your other ventures. 

NC: Yeah. Well, the first thing I would say it’s a, it’s a really small industry, I think for better, for worse. I I’m, I’m a believer that I think the larger the industry becomes it’s, it’s mutually beneficial for everybody. But it’s a very small space in the sense that everyone feels like one or two degrees of separation away at some level. I would say that the complexity of how each brand owner and company structures, their programs is actually quite different and building that into translating that into software into something that’s actually scalable was quite challenging initially. So how does brand A structure, things like their guarantees and payments and royalty rates versus another brand and how do you sort of reconcile those? And then the third thing I would say is I felt like initially I am starting to see a little bit of a turn in people’s perception about technology and the licensing industry, but I think pre Brainbase, I think there was still a lot of general resistance from executives in the industry about essentially just being comfortable with the status quo. And I think people are increasingly seeing, like that’s not actually going to be OK. And, and that’s fine, but I think it’s a combination of those two things just like in general resistance to technology, very small space and hard to make it scale. And I think that’s the exact reason why we’re trying to build this company is to solve a lot of those issues. 

ER: Yeah. That makes a lot of sense. I know we have like, like brands or clients that just like, “Oh, I just emailed you the approval.” And, and I’m like, looks good does not mean approved in my world. It’s like, if I need to get back, I need, I need you to officially say this is approved and, you know, tracking it in email is just a nightmare. So, yeah. But I get that resistance and it’s been a little bit hard to transition some clients into these, you know, platforms and management. 

NC: But it’s back to your previous point, ultimately for anything, whether it’s licensing, people don’t like change in general. And I think the re the people are much more receptive to change. I think if the experience of the product is really strong and to your previous point, when we started, if the design is easy to use elegant, et cetera, not even again, not just for software, but for anything, it makes the change a lot easier. So that’s one thing we’ve obviously tried to put a huge premium on. 

ER: Yeah. That makes a lot of sense. So we’ve talked about kind of what challenges are in the industry, but what trends are you seeing right now? 

NC: I think there’s a trend of people feeling uneasy about the future of retail. I don’t think it’s contrarian or a bold opinion anymore to say that the future of retail is going to be at least more experiential. I would say it’s, it’s really tough to bet against Amazon and eCommerce in general, obviously I have a bias sort of pro eCommerce and pro Amazon as a, as a founder of a tech company. But just the general uneasiness and the uncertainty around what the future of retail is going to look even pre COVID-19. I think there was a lot of questions around, you know, what’s retail going to look like in five years. But I think that’s even heightened now. That’s a little bit more of a cynical trend. But I think there, there are a lot of implications around that, right? Like I think even this week with licensing week virtual, and to think that UBM now, they were acquired by Informa, but whose businesses entirely in person events is transitioning to an online model this year is really something, you know, interesting to study. I did a short interview with licensed global a few weeks ago, and I, and I predicted that something like licensing week virtual will actually be more popular than licensing expo in the next five years. For the exact reasons I mentioned, I think there’s just a general transition, or at least diversification to, to, you know, e-commerce marketplace models, in general, most a really bullish on digital content licensing. I think what Epic games did with Fortnite and Travis Scott, I thought that was a brilliant collaboration. So just brand collaborations in general. But digital content licensing, I think is really, really interesting. There’s a lot of implications for this in eSports with like digital skins, digital stickers on messaging platforms. So in the gaming context, I think that’s, that’s really, really cool. And then just deals beyond traditional licensing, but beyond just the traditional brand manufacturer relationships. So just doing a, I think collabs are really the best manifestation of that, but so like, those are the few, few things I would say. I’m sure I’m sure there are many others that I’ve missed, but those are the ones that really feel top of mind for me right now. 

ER: Those resonate with me as well. I think I was reading the other day where, you know, they were talking about retail is shrinking in 2023 and the current COVID has just sped that up to 2020. It was shifting, but now I think it, you know, shifting even more and then just how brands are using their direct to consumer, you know, relationship and sales and then, and also how Amazon’s impacting that. So I think it’s, you know, really top of mind for everyone in the industry. 

NC: Yeah. I was going to say, I imagine that that’s something that a lot of your clients are thinking about as well. And I think B to C is a big part of that, that too. But as I said, I think it’s really challenging to bet against Amazon and just the general distribution that they have and all of their internal, I think their excellence around logistics is, is pretty tough to compete with, but I think I am very, I feel very strongly that retail is not going to go away. I just think it’s going to look very different and specifically it’s going to be a lot more experiential. And I think for specifically for higher end brands, I think they’re going to even have a potentially even a better opportunity than, than, than previously because there will be fewer potentially fewer retailers, but the ones that still exist are really high end. So we’ll see. It’s gonna be really interesting to watch. 

ER: I remember last year at the licensing show they, one of the guests or keynote speakers was from Macy’s in their popup shops that they were doing this, the store within a store and just the experience that they were building with those. And I think that that’s kind of more of what people are looking for, right? It’s not just going to buy a shirt at retail, but it’s going to meet their favorite influencer at the retail, or have more of this experience while they’re shopping. That really resonates with me, you know, as a consumer as well. So I think that’s spot on. I also think it’ll be interesting from a business perspective. So, you know, we, we actually are a remote team and just travel a lot to visit with clients and with potential licensees. And so kind of how that’s going to evolve, you know, that the zoom and the, the conference calls are working, but like there’s a, there’s a pull still for this face to face meeting. And when can we get back to that? So I think it’ll be interesting to see how trade shows, you know, evolve with tradshows and meetings just in general, right? That, that the face to face is still important. But how does that evolve after this kind of period? 

NC: Totally interesting subject around just office office space in general versus working, working remotely. I mean, I’m sure you’ve seen Facebook announced that some significant percentage of their workforce is going to be remote over the next short number of years. And a lot of other companies are transitioning away from that. I, I definitely agree with you that in person office spaces are really important. I think people are realizing how much they actually enjoy sitting next to somebody at a desk every day. I think there, again, those are also going to look different, but yeah, I think for certain companies may even double down on, on having an in person space, we are also remote by nature. We have a team in,uin LA and then also in Europe. And,uthe transition for us was fairly easy, but I think for both teams, we have office spaces in two cities. And I think that the team,ufor us is just like really itching to get back into the space, just to see people cause you miss a lot of like the, the facial expressions, the context and the in person meetings and stuff that you just don’t get from back-to-back-to-back zoom calls every day. 

ER: So what’s one piece of advice you would give somebody who is either, you know, either considering a technology platform or building their licensing program? 

NC: Look, what I would say is a couple of things first is I’m not we’re as a company, not blind to the fact that licensing software is not what people that run licensing programs wake up and go to sleep thinking about everyday people or have a million other priorities that are on top of, you know choosing a software for the licensing program that said, if you’re starting a new program from scratch, or you’re trying to rebuild yours, or just modernize your existing licensing infrastructure, getting the foundation in place really does help. And I think providing a great experience on the software side for your licensees so that you can then get better at data analytics so that you can then make better decisions and therefore drive more revenue. I think everyone would agree that is really important. Technology is not everyone needs to be a technology expert, but I think what I would encourage people is to at least know enough to be dangerous. So if you’re evaluating 10 different systems that all on the surface look the same, you know, enough to actually be able to tell the difference between, you know, which one is the right one versus not. And I always come back to the previous point of look at the products that look most like the apps that you use every day and that are following just modern product principles. You don’t have to be a, you know, a software engineer to understand that, you know, certain products look more modern than others, and it’s not just a surface level problem. Of course, like there is something to be said for having great functionality. But I would say just know enough to be dangerous. If there’s somebody on your team work closely with your VP of IT applications or someone on your team that knows it better than you potentially, if you’re not a technology expert by trade. And then I think the other real trend is putting a large premium on business analytics and being able to actually understand which products and partners you should double down on versus cut based on performance and which brands are selling better than others. So you can make better decisions. Ultimately licensing is around brand extension and building, you know, a better rapport with your customers, but it’s also about generating ancillary revenue. And I think analytics are a large part of both of those. And I think that’s something that Brainbase does a nice job of, but yeah, I would say those two things, or I guess three would be my biggest pieces of advice. 

ER: That’s awesome, and I couldn’t agree more with the analytics and kind of figuring out which horse to bet on and which programs to let go of. I think that that’s really important when your resources are constricted and you are trying to maximize your program. With that said, one thing that kind of comes to mind is having data that you can compare, like, how is your program doing in comparison to other like programs does Brainbase offer any solutions in terms of industry data? 

NC: Yeah. So one of the products that you may know that we’re working on later this year, we’re launching a lot of new stuff this year, but one of the features is called our Marketplace Platform, which is designed to help brands and agencies find new licensing partners, brand partnerships, and sponsorships entirely online. 

ER: One question just to wrap things up is what’s the strangest licensed product you’ve seen or something that’s kind of makes you go, “Hmm, I wouldn’t have thought of putting that together.” 

NC: I found a licensing deal that Mattel did with a company called Patriot Computer Corporation. This is so fitting. Obviously, I’m giving a computer answer. But in 1999, they made a Hot Wheels and Barbie computer, Mattel and this Patriot computer company. Supposedly, the computers had so many defects that Patriot Computer actually went out of business a year later as a result of producing the product because it just did not go well. I love Mattel. I think they’re a remarkable company. One of their former Chairman and CEO is actually one of our advisors, but yeah, certain things just should not be licensed. And I think Barbie computers might be one of those. So I was looking at it and chuckling, but I think that’s one among many others I’m sure. But that was the one that felt like a good answer. 

ER: That’s awesome. This is something that I’m excited to gather people’s answers on all the strangest and interesting products extensions that they’ve seen. So, thanks. That’s an awesome example. If people want to find you online or connect, what’s the best way to do that? 

NC: I love Twitter. I wish more people in licensing use Twitter. I think there’s some awesome stuff there. My Twitter handle is @CavanaughNate. My email address for people that are in the licensing space that want to learn more about Brainbase is nate@brainbase.com. Those two places are the best for me. 

ER: Perfect. Thanks for your time today. Like I said, your insights have been great. I’ve really enjoyed talking with you and we’re excited to hear more about the launches of Brainbase and use more functionality of your platform. Overall, I appreciate your time. 

NC: Really excited to listen to this when it goes live. Thanks for having me on the podcast, Emily.

CONTACT:
Emily Wickerham Randles
IMC Licensing
erandles@imclicensing.com
1-502-272-2406

IMC Licensing Announces Representation of ELEVENPARIS Fashion Brand

IMC Licensing is proud to announce its representation of the Parisian Fashion brand ELEVENPARIS. Since launching in 2003, ELEVENPARIS has become a global fashion brand with a long list of celebrity ambassadors. IMC Licensing will develop unique brand extensions for the ELEVENPARIS brand with best in class partners for the U.S.

According to Emily Wickerham Randles, IMC President, “IMC is thrilled to be partnering with the ELEVENPARIS team. We believe this partnership will create meaningful brand extensions that will engage new consumers while bringing the ELEVENPARIS brand into various new categories.”

ELEVENPARIS is recognized for its street, subversive and spontaneous style. The brand’s urban spirit, pop references and sporty looks come together to create must-have apparel lines. With women’s, men’s and children’s collections, the brand appeals to consumers who see fashion as a means of expression. ELEVENPARIS has 7 stores in France and is sold at premium department stores and specialty retailers across Europe, Canada and the United States.

IMC will bring their expertise in the fashion industry and network of partners to build out an extensive licensing program for the ELEVENPARIS brand. Categories for brand extension include: Footwear, Cosmetics, Fragrance, Bags & Accessories, Intimates, Sleepwear, Kids & Jr’s apparel and more.

About IMC

Representing a roster of iconic Fortune 500 brands and a strong reputation for quality and integrity, IMC has developed licensed products that have generated more than $3 billion in sales since its founding in 1997. Passionate and curious, we offer fresh thinking and creativity that is widely renowned in the brand licensing industry.

About ELEVENPARIS

The story of ELEVENPARIS started in 2003 in a tiny office located at number 11 (eleven) of a street in Paris. It’s from there, between boxes and pieces of fabric, that two friends committed to launch their brand.  The international brand is known for its fun t-shirts, its creative and contemporary collections and its street wear style, as well as for its famous ambassadors. https://elevenparis.com/en/

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