Wanna Know How To Build Brand Equity When Your Compensation Is Five Percent!
(And Not The Customary 50% Or More!)
At least some of you are already familiar with internationally recognized Fitness Guru “Tony Little” , correct? To date Tony’s firmly established brand is now modestly valued at a staggering $3 billion dollars.
Mostly due to the initial front end success of his national and later internationally successful -direct response- type of infomercials. Which he and several others, including former heavyweight champion and 1st ballot hall of famer “Big” George Foreman. Who at last count. The outrageously popular grill which bares both his name and image.
Has gone on to gross over one billion dollars in gross sales world wide. You talk about an icon whose mastered the process of how to strategically build brand equity.
Of course both of these iconic brands and others like hip hop star “Curtis Jackson” (aka) “Fifty Cents” have the mega “Billion Dollar Brand Builder” former original “Shark Tank” cast member Kevin Harrington. To thank for at least some of their products massive world wide success. And Tony Little in particular became a much more sophisticated entrepreneur in this process.
This Is Why You Definitely Need To Understand Some Basic Marketing Concepts!
Ladies & gentlemen most aspiring entrepreneurs who’ve invented some type of product. And they’re proactively seeking outside financing at every turn. Most if not all of that process is brand new to them on tons of levels.
And say even in the case of former boxing great “Big” George Foreman. George didn’t personally have any grills manufactured. And even if he did. He would have quickly “discovered” just how much ongoing financing would be needed in order to accomplish that.
And even after they created a suitable pro-type.
They would (like practically!) every other aspiring entrepreneur. He would need to attend most of the major industry trade shows promoting his invention. Once you add up the ongoing costs for 1st class travel nation wide or Internationally. First class hotel accommodations. Rental cars for both he and his immediate key staff members. (Ongoing daily meals.)
Granted, because of his major boxing celebrity. He most definitely could garner some national -prime time TV and radio coverage. But he’d still need a an extremely professional PR (Public Relations) team as well.
Instead of going that outrageously expensive and potentially time consuming route. George simply initially signed a license agreement. The company which paid him. Compensated him quite nicely for both the use of his name and image.
And Kevin Harrington’s company created a series of modestly priced, (albeit state of the art!) 30 minute infomercials. And through his national and International marketing/PR connections and proven direct response marketing expertise. These infomercials started being rotated primarily between the hours of 1:00 am – 5: 00 am virtually seven days a week. But a ton on the weekends.
And of course some of these little known cable affiliates were also given X% of the gross revenues on the back end. And it wasn’t very long before ole George was consistently cashing monthly checks in excess of $100,000 dollars or more. (Which is just one of his many ongoing revenue steams.)
Without Question Some License Arrangements Can Be Or Ultimately Become Outrageously Profitable!
Take the case of Fitness Guru Tony Little. Initially Tony and Kevin’s company signed a license agreement. Where Kevin’s production/marketing team would not only be responsible for the massive cost to manufacture Tony’s exercise equipment.
But they were also responsible for the housing and fulfillment of the orders. Plus the massive weekly advertising costs. Which included those popular 30-60 minute infomercials.
Which showcased Tony successfully demonstrating “how to” effectively use the equipment in multiple ways. In order to generate maximum fitness health and results.
And as direct result of these outrageously successful direct response type of 30-60 minute, late night cable TV infomercial programs. Tony’s exercise infomercials grossed a staggering $300 million dollars world wide. (And would later go on to gross billons world wide thanks to Kevin’s marketing/promotional and advertising expertise. And expert connections etc.)
And remember Tony had absolutely no front end costs whatsoever. Other than the monthly effort it took to deposit his $15 million dollars in lifetime earnings in royalty fees. And then it happened?
This Is How Initially Unsophisticated Entrepreneurs Become Extremely Sophisticated Ones!
One day Tony Little had a sort of momentary flash of marketing brilliance. (Or at least this is “what” he initially thought.) Tony or his by them massive legal and marketing team approached Kevin’s team about re-negotiating his 5% licensing agreement.
And convert it into a semi standard 50/50 partnership. And just like that. Tony suddenly would start receiving 50% of the gross profits. But “what” and perhaps his legal team hadn’t anticipated was the following.
Now Tony was also legally bound for 50% of all front end costs as well. Say what? And Tony and his people were shocked beyond belief when they “discovered” up until then. Kevin’s expert marketing/advertising team were routinely spending in excess of $150,000 dollars per week just in late night cable TV infomercial cost alone. And even more in some of the more expensive prime time spots.
Ever Heard The Saying All That Glitters Isn’t Gold? (Does It Make More Sense Now!)
But now thanks to their new legal arrangement with Tony. Their $600,000 dollar a month late night cable TV costs were literally cut in half. Because Tony’s company picked up the other half.
Plus Tony was now also informed. That typically turn around time before these projects really began to be profitable was give or take 18 months. (And that’s “if’ they ever turned a profit at all.)
Needless to say. Once Tony and his teams eyes were opened extremely wide. He immediately negotiated to go back to his original agreement of a 5 or X% flat licensing fee.
No further up front costs of any kind. Just monthly royalty checks. Hopefully you can now better appreciate why you might be much better off if you build brand equity based off of a 5 or X% flat licensing fee. As opposed to a customary 50% partnership agreement. Don’t you agree?
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