Presuming an advertising agency has audited its assets and developed a strategy for legally securing them, it’s time to talk about making money with them. How does the agency legally structure these opportunities to take the assets to market and develop financial value? These are the most common scenarios agencies use today.
Realize an Enhanced Purchase Price for the Agency’s Business – Some IP assets, such as brand trademarks and tagline trademarks, have financial value simply because they enhance the perceived value of the overall business. An agency (any organization, really) that puts demonstrated thought and resources behind protecting its intellectual property is usually also doing all the other things it needs to do to extract maximum value from its assets—including its IP, talent, financial capital, and business operating systems. This is true regardless of whether a particular asset produces its own revenue stream. In this case, selling the agency usually means transferring the IP along with all other agency assets.
Outright Sale of the Asset – If the intellectual capital creates a distinct revenue stream for the agency, it’s a candidate for spinning off into a separate entity, or sale to an outside party. This type of transaction will be finite, and the end legal result will be a termination, via an assignment, of the agency’s intellectual property rights in the asset for the agreed consideration. Sometimes we see the reverse, and the agency decides to get out of the agency business and focus its business efforts around the retained asset—such as a technology product like software, or an information product that supports some sort of consulting service, like a brand development process or system.
Direct Licensing of the Asset – Where the agency wants to retain intellectual property rights in the asset, but allow others to use it in exchange for financial compensation, it sometimes directly licenses the asset to third parties. Revenue models can vary greatly for licensing transactions. In some cases the license fee may be a one-time payment at the time the license is granted; in others, the revenue is recurring in the form of ongoing payments linked to the volume or time period of use of the asset. An example of an asset category that is a good candidate for direct licensing might be a model marketing system for a particular client industry that the agency licenses to multiple customers or clients.
Licensing with a Distribution Model – This is similar to direct licensing; however the agency will give others the ability to sell licenses to the asset (technically, sub-licenses) to additional parties in exchange for an agreed portion of the licensing revenue stream. This ideally creates a larger distribution channel for the asset. The best example of an asset for licensing via distribution might be a mobile application or software product licensed to other agencies or service providers, who are permitted to white label it for their customers.
These potential revenue models are by no means exhaustive, and I’m sure additional models will present themselves as more agencies turn to developing products to support their main businesses.
This is Part 3 of a series on Turning Marketing Agency IP assets into Money. In previous posts here and here, I discussed discovery of the agency’s proprietary intellectual capital so that the agency has a sense of its assets and how to evaluate their potential for additional agency revenue.
In Part 2 of this series, I discussed methods to legally secure the agency’s intellectual property before it takes an asset to market.
Sharon Toerek is an intellectual property and marketing law attorney, with a national Firm based in Cleveland, Ohio. She devotes her legal practice at Toerek Law to helping creative professionals protect, enforce and monetize their creative assets. Contact Sharon at firstname.lastname@example.org, or visit www.legalandcreative.com.
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