Field Reports7 May, 2010 By: Thomas Haire Response
Under this strategy, the inventor serves as the licensor, granting authority to the direct response agency which becomes the invention’s licensee. With a deal in hand, the inventor is often resigned of further responsibilities and can sit back and await royalty checks.
As licensee, the agency is the investor, plus everything else the idea needs to mature. Licensing deals are common while inventor royalties range from 1-2 percent (or higher) depending on the stage of development of the idea, the agency’s investment, product cost-of-goods, and many other factors.
For an inventor to negotiate the fairest deal for all parties, he or she must have a detailed understanding of the magnitude and complexity of the entire process — and risk — for transforming an idea into millions of dollars. Many inventors have passion but lack experience and factual knowledge, and consequently have an unrealistic understanding of what’s really a fair deal. This is where an experienced law firm or agent comes in. Inventors should retain an attorney who specializes in intellectual property and, certainly, one who is privy to the special rules of the DR industry.
Funding is certainly an important item on the agenda, but it’s not the sole entry on your list of requirements. Time and time again, unfortunately, we see deep-pocketed people from other businesses parading into the DR industry believing they’re going to cash in immediately, and making outrageous promises to inventors. Although there are plenty of success stories, some of these investors have limited experience and have made critical mistakes. The urge for the inventor to strike a deal is often irresistible and made out of desperation. I’ve seen inventor-investor royalty deals ranging from 20-50 percent. Although this looks fantastic, it’s often too good to be true, and the significance of those types of deals is only confined to the paper they’re written on.
This is all the more reason for inventors to align themselves with an established DR agency that has the experience. Even if the percentage is very low, which they most often are, you can bet the qualified DR agency is projecting high-volume sales. The decision then is 100 percent of nothing or 1 percent of millions of units. Even if this company is known to have had a major losses in their past, there are plenty of valuable lessons gained from making mistakes. It’s better to partner with a company that’s already made (and learned from) their mistakes, at their own expense. You don’t want to be in a position to be part of a mistake while it’s happening.
Inventors should seek a reputable DR company with a proven track record of years — even decades — of experience. If you’re an inventor who desires to secure a deal, hang on a little longer. Conduct your due diligence to locate the right company to license your idea to — references are available from a number of experts on the process. Spending time choosing the right agency is the most prudent approach for inventors.
John Abdo is an Award-Winning inventor and spokesperson for numerous fitness products that have sold in more than 80 countries including The AB-DOer® and AB-DOer Twist™. He’s a multiple patent holder and recipient of many prestigious awards including the ERA’s “Best Infomercial Product of the Year” and “Best Male Spokesperson.” For more information, E-mail [email protected].
Inter/Media Continues to Connect Brand to DR to Retail
By Thomas Haire
ENCINO, Calif. — After recently earning the DRTV business of Neutrogena’s skiniD brand, one of the foremost challengers to Guthy-Renker’s Proactiv Solution, the Inter/Media Group of Companies also announced a new celebrity spokesperson — former Dallas Cowboys Super Bowl champion coach Jimmy Johnson — for the successful ExtenZe male enhancement brand. Recently,
Response chatted with Inter/Media leader Robert Yallen about these topics and other news from the agency.
Q: What’s new at Inter/Media?
A: We were fortunate enough to pick up the Neutrogena skiniD brand. We’re proudly looking forward to expanding the media presence of the brand and creating an overall plan to capture as much market share as possible from Proactiv Solution.
Q: What’s new with the ExtenZe brand? How did the direct response TV campaign help build the retail sales aspect?
A: I like to use the analogy of chess — really good chess players think many moves ahead. With ExtenZe, the plan was always to go to retail, but it went there later than expected because the ratios were doing so well on TV. We found we could get good ROI and maintain the DR margins with short form that wasn’t pigeonholed, while it would increase reach and frequency. We also changed the creative, began using shorter executions, moving away from claims that would be considered less palatable. We wanted to talk more about performance and virility, and this made the spots more credible. And it worked — according to IMS, ExtenZe was the No. 1 short-form product and No. 5 long-form product in 2009. Because of this, because we were everywhere, it forced us to move into retail distribution. Once in retail, we had to look at marketing and promotions — like our NASCAR sponsorship — to continue to gain retail buyer respect. And Anthony Raissen, who heads up our Inter/Quantum retail agency, did a great job of creating prominent retail space and placement for ExtenZe.
Q: How did the deal to bring Jimmy Johnson in as a spokesperson come about, and what does he bring to the brand?
A: As we migrated ExtenZe from the DR model and set the stage for a retail rollout, we knew we needed the assistance of a top celebrity, both for brand image and promotional capability. It was a long, arduous task to find the right celebrity — credibility, believability, ability to connect with the demographic and his significant other, and a willingness to embrace and use the product. We needed the person to commit to production days and appearance days. And one thing I always do when trying to make a deal like this is to meet with the celebrity, look in their eyes and try to ask myself the question, ‘Do they just want a paycheck?’ Jimmy was ready to work that hard. One of the big mistakes you see with celebrity endorsers is that they don’t embrace a product or clearly say they use it. Consumers need to believe the celebrity is using the product, and our demo believes Jimmy is. He does use the product and that connects immediately with the demo. When I went to the Daytona 500 in February with Jimmy as the spokesman for the brand, it became clear that everybody loves and respects Jimmy, and that’s a big part of the promotion — what does he do for the brand? And he’s always willing to do a lot of promotional appearances. He’s a true partner.
Q: How is the Inter/Quantum retail business going?
A: We do have a new client in beverage category. Things have picked up from an agency/retail perspective. Of course, planning up front is so important to retail execution, so to be able to have Anthony advise and avoid mistakes from both the DR and retail standpoints is crucial. We have the marketing experience, the relationships, the media and the creative to blast products off shelves. The key, then, becomes the right packaging and placement.
Q: What are your plans for Inter/Media during the next 18-24 months?
A: We’re working on increasing our digital unit, creating a robust affiliate program, and taking the performance model from traditional media, and expanding to online. We want to make digital work harder and smarter for our clients. In a lot of respects, the digital universe doesn’t really get the DR component, therefore overstates the brand component. We’re redefining how we do digital planning and executions. It took a while to figure it out, but we’re cracking the code now.