Licensing Deal: Home Run -- or House of Cards?

Magazine Brand Lends Its Name to Real-Estate Franchise

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NEW YORK (AdAge.com) -- Get ready to see "For Sale by Better Homes and Gardens" signs sprouting from lawns across the country.

Better Homes and Gardens, which has already licensed its name to products ranging from home decor to computer software, is extending its brand to real-estate agents.
Brand Identity
AdAge photo illustration, photo by Seth Joel
Under a long-term contract with Realogy Corp., which owns Century 21 and Coldwell Banker, a residential-real-estate franchise system called Better Homes and Gardens Real Estate will arrive on the scene next July.

It's the rare licensing deal that both embodies the brand and extends it not only beyond the page but beyond retail aisles, too. Of course, these grand plans don't always work out, so Better Homes will have to keep a close eye on the execution -- or risk damaging its brand.

If all goes well, Better Homes will receive ad revenue in addition to licensing fees, because the deal commits Realogy to spend a certain amount advertising the real-estate franchise in the magazine and other assets within parent Meredith.

"But well beyond just that, it provides circulation opportunities and database opportunities with homeowners and buyers coming through," said Andy Sareyan, president of Better Homes and Gardens. "It's yet another way for the Better Homes brand to reach out across the country in a positive manner."

David Melançon, president-CEO of the branding shop Ito Partnership, thinks the deal is brilliant -- at least for Realogy. "They're taking a well-known brand and using it in a way that could be really effective to them," he said. Thinking of the Better Homes brand as it applies to a house, Mr. Melançon said, "I get the impression of a middle American, warm, not-too-expensive but really nice home."

"The concern I would have," he added, "is on the Better Homes end."

Control
Martha Stewart Living Omnimedia has licensed the Martha Stewart name to houses sold by KB Homes -- but Mr. Melançon noted that Ms. Stewart and her team sign off on the homes, maintaining a degree of control over what appears to the consumer to be a product by MSLO. "It's about being on brand for Martha," Mr. Melançon said. "But it's easier to control the design of housing than it is to control Realtors. If I'm Better Homes and Gardens, I would want to be very careful about which Realtors are out there holding a card with my name on it."
Andy Sareyan, president of Better Homes and Gardens
Andy Sareyan, president of Better Homes and Gardens

Better Homes used to have that kind of control, when its brand was attached to a real-estate service that it owned and operated itself. But Meredith sold that business in 1998 to GMAC, which promptly renamed it. Now Better Homes is back in the game partly because its licensee already has experience with third-party brands like Sotheby's, whose Realogy-owned real-estate business has 400 offices worldwide including more than 275 in the U.S.

After 85 years of publishing a monthly home-and-garden magazine, the Better Homes brand is well known, and is generally seen as stable, trusted, warm and consistent. As long as the people who align with Better Homes and Gardens Real Estate fit within the parameters of what people expect from a BH&G product, the concept is "extraordinarily interesting," said Robert Passikoff, president of Brand Keys.

Meeting expectations
"Trends come and go but the fact is they have a very stable brand, a well-respected brand," he said. "This is really the franchising of a brand into an area where there is a very high likelihood of customer engagement. From the brand perspective, it comes in with the best baggage you can carry: very high expectations.

"Disengagement and disloyalty," he added, "come from a brand, product or service being unable to meet or exceed the expectations."

There are no guarantees in life, said Richard A. Smith, vice chairman-president at Realogy. "It'll never be perfect because all these agents out there are independent contractors," he said. "But we're all joined at the hip and have a vested interest in the brand."

Correction: Meredith sold its real estate business to GMAC in 1998, not 2003 as originally reported.
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