A brand protection program provides licensing brands with two big advantages: anti-counterfeiting and royalty protection. Experience has taught us that typically a given brand is likely to be more concerned about one of these issues than the other, but both play a vital role in every licensing brand protection solution. These two components are like two sides of the same coin, and they support and benefit each other.
Licensing inherently requires building and maintaining trust relationships, since a brand grants only a select number of companies the exclusive right to manufacture products for them. In order to earn and maintain that privilege, each licensed manufacturer must secure their operations against counterfeiting and gray-market diversion to ensure that the brand’s investments—and the investments made by other licensed manufacturers—are not undermined by poor quality and unauthorized distribution. This is especially true when manufacturers are based in countries that lack strong intellectual property protections and law enforcement practices.
Strong anti-counterfeiting measures also help brands attract the best licensees. Because licensees invest in manufacturing and distribution of the branded items, honest licensees want a level playing field. Well-protected licensed products can help persuade licensees to invest in the brand.
If you are securing your brand assets against diversion and counterfeiting, those assets then achieve their full value within the licensing marketplace, and as a result, you should next consider how to ensure that royalty payments are also accurately accounted and paid. As the value of your assets increase, licensing fees also increase, and some licensees may feel a temptation to under-report their manufacturing and sales of your licensed products.
The data collected from the ordering and usage of security tags and labels can provide a check-and-balance against royalty reports.
Ultimately, licensors that undertake brand protection programs can reap huge financial rewards by capturing all the royalties due to them from their licensees. The application of highly secure labels has the added benefit of greatly enhancing the security for the brand’s authorized products, building brand equity, and helps legitimate licensees gain market share.
Download our eBook “How Brand Protection Delivers ROI for Licensors” to learn more about the benefits of a brand protection program and how to implement a successful program for your brand.
Bill Patterson is OpSec's Vice President of Global Licensing. He is responsible for protecting the royalty stream and brand names of many of the world's largest licensed properties.