Should You Rebrand After An Acquisition?
You’ve just acquired a firm or been acquired. What are some good reasons to rebrand?
Brand management used to be a much simpler proposition than it is now. When the “big idea” was king (think Don Draper & Co.) you had a handful of media channels and a fairly straightforward customer definition.
Now there are so many stakeholders and channels, not to mention all the methods for which products and services can be monetized, that branding has become a wildly intricate endeavor.
The complexity has given rise to the notion of brand “architecture.” It takes more than a village, it takes a full-on, well-designed city infrastructure to manage the layers of modern brands.
Post merger and / or acquisition, things get even hairier. Now you’re taking two entities with (presumably) defined offerings, each with their own set of stakeholders, preferences, and history of working together, and altering the perception of those relationships.
The action that was originally undertaken (the merger or acquisition) with the goal of strengthening or building, can easily confuse, disenfranchise, or disappoint existing or potential customers if not planned and executed with discipline.
The economic value of a brand is expressed as how it is perceived relative to the needs of the customer. Managing that perception has become a house of cards for many. How a service, talent, or product is perceived in the mind (or in the “tribe”) of your customers is a highly subjective and psychological matter. There is the personality and the promise made or implied, and there is the delivery of that promise: all combined, you have “the brand.” However, the subtlety involved in matters of design, naming, imagery, language, etc. belies the immense economic value brands represent. Seemingly minor actions such as changing typefaces, transitioning to a lighter shade of one of the partner brand colors, or publishing an out-of-character point of view about a subject critical to your customers can have potentially disastrous — or powerfully beneficial implications.
Post M&A, the newly created entity now must blend and manage the implied values of the 2 previous entities. No easy task!Brands and their definitions are therefore assets, and must be treated as such.
Why Brand Architecture is Critical
This article assumes that a merger or acquisition has taken place between two organizations, each with their own established brands.
By doing so we can examine a larger potential set of interactions and the importance of managing them.
Each brand in a larger structure therefore has a role in supporting the group, and the relationship between brands needs to be defined and managed. Maybe nurtured is a better word.
To better understand how those relationships function, let’s consider just three forms of brand architecture, the house of brands, the branded house, and endorser brands.
House of Brands
In the House of Brands structure, Individual brands are positioned on their specific benefits with little or no relationship back to the master brand. P&G’s hair care offerings are an illustration of this: Dandruff control (Head & Shoulders), Shampoo-conditioner blend (Pert), Glamor (Pantene.) But notice that P&G doesn’t brand these products as “Procter & Gamble Hair Blend” or P&G Glamor Shampoo. Marketing a set of sub brands purely on the basis of their individual reasons for being allows for clear targeting of niche benefits to customers who seek specific solutions. Of course, the wide range of benefits are brought to you thanks to the master brand, but this is very subtly implied, if it’s ever overtly stated at all.
The classic example of the Branded House is FedEx, where a master brand’s sub-brands describe differences within the world of logistics: FedEx Express, FedEx Ground, FedEx Freight, etc. The implication clearly is that you’ll always get a “FedEx quality experience” with any specific service attached to their name.
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Think of any example of two brands separated by the words, “by” or “from,” such as “Courtyard by Marriott.” At first blush you may think that this is no different than the aforementioned relationships P&G’s beauty brands have with Procter & Gamble. But the situation is very different. Why? Because there are no P&G branded beauty products.
Marriott is it’s own brand of hotel, distinct from Courtyard. However, the emotional value-connection back to Marriott lends a specific feeling, flavor, and experience to Courtyard that is strongly implied — and therefore must be managed.
There are other, more nuanced versions of brand architecture we could discuss, such as token endorsements (where a well-known brand’s icon, logo, or phrase appears on a smaller brand), the linked name (such as Apple’s iMac, iPhone, iTunes, etc.) and the world of subbrands, sometimes referred to as “brands within a brand” or an “ingredient brand.” Car companies do this often, since a model by a manufacturer will often evolve with its own specific customer base. Consider just a couple of Toyota brands, the Prius and the Accord; clearly their own brands within the Toyota brand that speak to distinct customer groups in distinct voices.
Post M&A: Should You Rebrand?
Thus far, we’ve been dishing out a branding-101 lesson. On to the good stuff.
According to Harvard Business Review, M&A is fraught with failure. Huge failure.
M&A is a mug’s game, in which typically 70%–90% of acquisitions are abysmal failures.Why is that so? The answer is surprisingly simple: Companies that focus on what they are going to get from an acquisition are less likely to succeed than those that focus on what they have to give it. (This insight echoes one from Adam Grant, who notes in his book Give and Take that people who focus more on giving than on taking in the interpersonal realm do better, in the end, than those who focus on maximizing their own position.)
Hearkening back to the start of our article, we mentioned “managing perceptions.” In the previous quote, the diamond in the rough is the perception of what the dominant partner in M&A has to give — both to the acquired firm, and of course, to the customers of the new, resulting entity.
From a branding perspective, therefore, there are several choices following M&A. The most often experienced being:
- Staying the course — allow the existing brands to maintain their identities
- The acquired brand is absorbed, with the dominant brand retaining, or evolving, it’s identity. (Sometimes, the reverse occurs, but not nearly as often.)
- A new brand is created, leveraging the strengths of the two parties
Despite all of the conversation about rebranding, it should be noted that there are many good reasons NOT to rebrand:
- Your organization is now “open under new management,” but there is no significant change to the vision or the offering of the company.
- Internal teams in the organization are simply bored with the existing brand. Although this could be true, the bigger question is: What does the market think of your brand? Test your perceptions against the market.
- Your current brand has strong perceptions and recognition. This is a carry-over from the previous point; if your brand has clear strengths from the point of view of customers, you may benefit from an “if it ain’t broke, don’t fix it” approach.
What to Keep in Mind When Rebranding After a Merger or Acquisition
Coming together creates the perception of a truly new company. Even if you retain one of the partner’s names in totality, the feeling or expectation in the market is, of course, that something big has just happened — something has really changed. It may have the same name, but that company isn’t the same anymore.
So then, how do you re-wrap this new entity? What should guide the rebrand or brand evolution?
Ask yourself some straightforward (but challenging) questions:
- In this new entity, does a master brand exist that fuels this new personality? If so, how? Added credibility? Added visibility? New associations that bolster the brand proposition?
- Does the new entity drive a powerful need for a separate brand because of new associations? Or maybe it avoids an existing negative or competitive market presence?
- Does a master profit formula exist that allows the new brand ecosystem to thrive? Or does the blended ecosystem give us clear insight on what we cannot continue or achieve?
The first bullet indicates that you’re building a new or extended Branded House. Just like the example of FedEx, the master brand’s established characteristics will define the limits of the new expression.
The second bullet reveals that you’re establishing or growing a House of Brands. Citing P&G, if you have a new entity that is clearly addressing a specific customer need in a differentiated way, it can and should have it’s own unique expression.
The third bullet speaks to the long-term health of your merger and its impact on culture.
If you’re struggling with the questions above, there are some things you can do (and BS LLC can help you with.)
Clearly articulate the new entity’s customer-facing value proposition
This can be a “thought experiment.” Play out the scenarios in as many different ways as you and your team can visualize. The north star to maintain while doing this, however, is what your customer’s actually need. What job are they hiring the new company’s products or services to do? This may require some new research. (Hint: BSLLC can help with that, too.)
Create a new brand strategy that is objective, based on clear market observation
From an insights-driven value proposition, you can map out a resulting brand strategy. Again, if you’re struggling with your rebrand or existing brand evolution, doing this as a “thought experiment” can yield powerful insights. By determining what the resulting strategies for success would need to be, you can perhaps more easily determine the correct brand flavor and approach for the new entity.
It’s easy to get lost
When you’re in the midst of a merger or acquisition and tasked with determining a new brand direction, it’s not hard to be overwhelmed. You’re swimming in a world of mixed realities, both abstract and concrete. It’s to your advantage to work with a team that understands customer research, brand strategy, creative strategy, and message activation (or “delivery.”)
Doing so frees you to do the linear, measurable tasks of logistics, while your branding partners (like us) can extract and distill insights from data and present you with fact-based options regarding everything from naming, to persona definition, to identity design, communications design, and comprehensive branding.
BS LLC offers branding, strategy, and design solutions because we believe that businesses operate at their highest growth potential when guided by a holistic set of goals, informed by shared values, and driven by well-crafted tools.
If you would like to learn more about how BS LLC can help you grow from the inside out, please send us a message or give us a call. Additionally, you can take an in-depth look at our services and resources.
Contact Ben Greenberg