Three decades ago, licensing was confined to the likes of cartoon characters on kids’ lunch boxes. But Feldman, ’71, saw its true potential.
- By January 10, 2019
As CEO of LMCA, Feldman—considered by many to be the father of corporate brand licensing—remains an essential part of the agency’s three-decades-plus success. Having partnered with blue-chip multinational brands such as HP, AT&T, Westinghouse, and Arm & Hammer, among many others, LMCA is responsible for $6.9 billion in annual licensed product sales, and boasts more $100 million licensing deals than any other agency in the world.
Ultimately, the premise of LMCA, as Feldman tells it, transcends licensing. “Really, the gist of it,” he said, “is to help companies grow into new businesses in new products, services outside of their core capabilities, or new geographic territories, without their having to invest a cent in plants, equipment, inventory, organization, advertising, marketing, or virtually anything else. That’s what we do.”
But Feldman didn’t initially set out to build a career in licensing, much less own his own business. “The corporate development work I was doing for [Rockwell International and Continental Group] caught the attention of others,” he said. “It was unusual, unexpected, and innovative—it looked like I was pulling rabbits out of a hat. The word spread, and I was asked by other companies to advise them.”
Today, LMCA has more than 20 employees spread across offices in Atlanta, St. Louis, Shanghai, and its New York headquarters.
Chicago Booth Magazine talked to Feldman about his initial career aspirations, his insights into what makes a brand licensable, and the biggest trends in brand licensing today.
Chicago Booth Magazine: What did you want to be when you grew up?
Feldman: My interests in my early studies were, in fact, in architecture. I ended up winning a scholarship to study architecture. But after about a year, year and a half, I came to question the real viability of my continuing in that direction. I ended up leaving school and went to work for an architect, and after an additional nine to 10 months, I closed the door on that. Then I went through an extensive exploration process. I realized that when it came down to my personality, my interests, and my career goals, I needed to do something creative. I needed to do something original. And I needed to make money while doing it.
One of the important milestones in my journey to licensing was as a result of my work while I was a student at Booth. I was chosen to be a part of an international program that Booth had at the time. So, I was sent to Europe in my second year of my MBA studies. There I had to write a thesis as part of the MS program at the European school. For some reason or another, I ended up writing a thesis about licensing.
“When I started knocking on people’s doors 33 years ago, they looked at me like I came from the moon. I was talking about a business concept that most people had never heard of.”
It was the late 1960s, and at that time there was a big push on the part of American businesses to extend and put down facilities in Europe. They were building plants and equipment throughout Western Europe. But I was scratching my head saying, “Why are they doing that instead of just licensing their technology?”
I started knocking on doors of American companies setting up shop in Europe, and I asked them that question. Their executives looked at me as if to say, “What the hell are you talking about?” Nobody knew anything about this. It opened my eyes to the potential of licensing as a business tool.
CBM: What drew you to licensing as opposed to architecture?
Feldman: Licensing was a brave new world. It was creative, and there was a lot of action in it. I met a lot of people in many, many different industries. And it was an area that was really an opportunity for me to be a forerunner, a real pioneer in that era. It appealed to me on those fronts. It’s a business model that can be financially attractive—and it’s proven to be, for both our clients and our firm.
CBM: What are the biggest changes from when you first began?
Feldman: When I started knocking on people’s doors 33 years ago, they looked at me like I came from the moon. I was talking about a business concept that most people had never heard of. It took some daring people at the time to hire us and keep their fingers crossed to see what happened. It worked out pretty well, to the point where today there are very few companies that don’t pursue licensing or use it in one sort of avenue or another.
CBM: Does that mean licensing can be the wrong move for certain brands?
Feldman: One of the early companies that we spoke with was a very narrowly defined brand. We had a hard time coming up with the extension ideas. It was not at all clear where we wanted to go with the brand, so it was limited as a licensable property.
Licensing’s a great business tool but it’s a better tool for some brands than for others. We work with the equity of a brand and we extend it into areas that are strategically attractive to our clients’ businesses.
Brands need to have certain attributes in order to be licensable in the first place: You need awareness. The awareness needs to be aspirational. People need to want your brand. And, of course, your brand needs to have equity that’s extendable. Not all brands carry those attributes.
CBM: What are some of the most common rookie mistakes in licensing today?
Feldman: The missteps companies make have changed as the industry has evolved. Early on, brands were not thinking about licensing in a very strategic sense. They would get their door knocked on by some company that would say, “Hey I like your name and I want to pay you money for it.”
And brands would say, “Wow, that’s a great idea.” But that was really a short-sighted approach. They weren’t thinking beyond the “feel good” of quick royalty revenue.
Today, a lot of people still mistakenly think licensing is a simple concept. But the execution is not simple. You need to pursue licensing in a strategic sense, in a way that really elevates your brand and its equity and your direction and goals.
This isn’t about slapping your logo on whatever product comes your way. To fully realize the significant impact that licensing can have on your brand and your business, you need a strategic approach, a deep understanding of what your brand stands for and research that shows which new products and services would be embraced by current customers and even attract new audiences.
“There’s increasing integration between the brand owner and its licensee partners. They’re coming together, they’re sharing resources, and they’re acting as one.”
CBM: What do you see as the biggest trend in marketing or brand licensing?
Feldman: There are a number of trends going on. One is that you see more professionals moving into the licensing ranks. In the time since licensing came out of nowhere 30-some years ago, the industry has come a long way from knocking on doors and having to prove these concepts. Now, people want to train in licensing, and NYU and other schools are offering courses in it. It’s becoming a profession. That is an important trend, and there is increasingly a chief licensing officer in more and more organizations. We’ve seen that evolving over the past 15 to 20 years in particular.
At the same time we’re seeing companies becoming much more serious and strategic about licensing, and working to integrate the licensing tool into their larger marketing and growth initiatives. There’s increasing integration between the brand owner and its licensee partners. They’re coming together, they’re sharing resources, and they’re acting as one. They’re building a level of momentum that is having a strong impact on their bottom lines.
CBM: What’s the key to identifying co-branding opportunities?
Feldman: It’s really trying to look creatively at equities. Arm & Hammer is a wonderful example. We extended Arm & Hammer into whole-home air filtration in a co-branding deal, adding a deodorizing feature to the kind of air filtration system you can have in your house. To consumers, what the filter is doing for their house is the same thing Arm & Hammer is doing for their fridge—it’s keeping the air clean and fresh. Another great example was the co-branding program we put together between Betty Crocker and Mott’s. To add authenticity and consumer appeal to Betty Crocker apple streusel cake mix, we brought in the number one name in apples—Mott’s. From apple juice to apple sauce, Mott’s, at the time, was the category leader and it was a great way to enhance the equity of both brands.
CBM: What keeps you inspired after all these years?
Feldman: I couldn’t imagine a better business for myself than this. I’m constantly learning about different businesses, countries, and cultures. Earlier this week, I spent about five hours over two days with some businesspeople from the Middle East who have real passion for their business and are looking to innovate. They’re looking for new ideas, and being a part of that is very exciting for me. If anything, it’s just getting better as licensing becomes more attractive and of interest to more and more companies. It’s rewarding work, especially when I see the actual product in the marketplace and I know that I’ve been a part of the story behind it. I’m working with people who are determined and passionate. Everybody’s benefiting from it strategically and financially. For me, that’s exciting stuff.
CBM: How do you feel Booth has influenced your career path?
Feldman: Going to Booth was a wonderful experience for me. I come from a very humble, very limited background. Going to Booth elevated me in a dramatic way. Having that kind of exposure and involvement with an organization of that stature took it to another level for me.
Booth helped me build confidence in myself. I remember one of my early classes was statistics. The textbook was maybe 45 pages long; it was nothing. During the first class, the professor said to read chapter one, which was like a page and a half long, and that we were going to talk about it next class. I went home and I must have spent nine hours trying to get through page one. It represented a challenge that just floored me. Somehow I got through it and I said to myself, “If I can get through this statistics class, I can do anything.” Being part of that, getting through that statistics class, and meeting other Booth people really boosted my confidence in my ability to contend with whatever came down the pike.
Booth fit me because I like understanding how things work. I like understanding how things are put together—and Booth is that kind of place. The professors push students to gain an in-depth understanding, more so than most schools.
The international program just opened the world up for me. I mean, I was a guy from inner-city Chicago whose family had literally never been outside of Chicago, and then one day I was on a plane to Europe. It was a real eye-opener and it thrust me into a world, both inside Booth and in Europe, that led me to some incredible new places.
We'd love to hear your Booth memories, stories, connections...everything.