When a brand dies, we hardly even notice anymore. And yet, a rebrand is not a superficial thing. Forget customer pledges. Unless you truly intend to keep your promises. There are consequences to the business and the community beyond what happens to followers and fans in social media.
In 2015, DuPont announced their new sustainability goals for 2020. The following year would be a difficult one. “For practical purposes, DuPont doesn't exist anymore,” said Abraham Lenoff, chemical engineering professor at the University of Delaware after DuPont merged with Dow Chemicals to create DowDuPont.
In an article about the death of DuPont Joe di Stefano quotes from their conversation:
“It takes an enormous effort and a lot of time and a large infrastructure, especially human infrastructure, to create value in a large company like DuPont. The financial community doesn't know how to do that. Hedge-fund managers know how to extract value from a company, and leave an empty shell, so they can build their houses in the Hamptons.
DuPont had one of the premier engineering units anywhere in the world. They knew the principles and how to apply them. Without people like that you can't develop, design, and start up plants. It's an enormous loss to science and engineering.”
DuPont's tagline “the miracles of science” was likely the product of agonizing conversations and approval processes before becoming marketing narrative. The company had been in business since 1802. Its story evolving through expansion, investments, and new developments.
Two years from the merger's closure, DowDuPont planned to spin off into three separate public companies. Chopping up a business for parts leaves little room to celebrate the contributions of the dying business to progress. There's even less thought about the people who contributed to building the business and the brand.
Where is the value?
Mergers are actually quite rare. By definition, which is a statement of purpose, in a merger the combination of companies is consensual. A merger is meant to be a 50/50. Company A gets 50 percent of the stock of Company B. Company B gets 50 percent of Company A. The two companies form a new legal entity.
Anything different, say a 56 and 44 percent split of stock, is an acquisition. Make no mistake, an acquisition is a takeover. One company absorbs the other into its operations. Executives may want to position it as a merger in internal communications when they retain the name of the company they acquired.
But from that to calling it a merger would be a misnomer.
Because the acquired company effectively ceases to exist.
There are famous examples in banking. Philadelphia National Bank, which became CoreStates, then renamed in the mid-1980s to First Union, when the North Carolina bank acquired it. First Union subsequently acquired Wachovia, but it chose to retain the Wachovia name. During the 2007-2008 crisis, Wells Fargo acquired Wachovia.
Brand is one of the assets—and asset is a proper term to use—the company taking over may want. Two like companies, but one has a better market awareness, like in the case of Wachovia. Often good reputation is part of it. Because brand is an asset for trading, you put it on the balance sheet. Brand awareness a proxy of perceived value.
The word merger is more palatable for the seller. So the buyer uses it. But it doesn't fool anybody. At the top level, it's useful to understand brand and flow strategies. Because they influence which words people use. Your understanding can apply at product level as well.
A flow strategy trades the brand for greater market penetration. For example, white labeling, distributing aggregation risk across multiple partners, and funneling results into your business model. A strong brand is usually more valuable than flow. You can get more flow for your brand dollar.
So far, it sounds like an operational question. But what happens when the brand embodies business practices customers love? Every company in business makes a promise. Its ability and willingness to deliver on all promises creates direction for the business and builds value for its brand.
Brand can be an asset financially, as I outlined above. But it can also be an asset for value in use. Customers love it. Employees have that extra oomph. There's a conversation between the business and the people who support it filled with useful feedback loops.
What happens to the brand in acquisitions
I've been in the acquired company on three separate occasions by design. The reason why they hired me: increase and renew brand awareness to compound value. I use story as arbitrage and narrative to increase capacity and build new capabilities. They, in turn, create positive momentum for the brand.
Arbitrage works even when the goal is not to divest the business at a profit and is simply good business. My experience includes a decade in communications and brand strategy for insurance and risk management consulting firms. I evaluated the risks and exposure alongside my colleagues to diagnose where the business was going.
They applied insights to coverage through insurance and financial instruments, I did to relationships through communication and brand strategy. Two thoughts on how the brand affects operations:
1. When companies get acquired or merge, one or both brands die — Often, in the haste to kill the brand, the people who waved a flag for it get killed as well. Inevitably, the culture takes a toll, especially if it had not had enough time to percolate through the organization.
“Business as usual” generally means how the prevailing company is used to getting things done. Despite the direct to stakeholders nature of customer relationships today, organizations still make their brand decisions behind closed doors, then push big launches out.
Perhaps we like telecommunication companies even less than banks. Yet, customers loved Cingular Wireless. In the words of customers (source mobile forum), “Great phones, great coverage, generally great customer service reps, and total freedom.” Employees loved it (source Reddit), “I worked there when I was 18. I went from circuit city making $20k / year to $75k a year. It was amazing. Then it turned into att mobility and sucked.”
The orange brand bit the dust after the company's $41 billion deal to acquire A&T Wireless in 2004. SBC later acquired AT&T and adopted its name. AT&T then folded the 6-year-old Cingular Wireless brand name into its 100-plus-year-old telecom brand. And to save in advertising costs.
More than 24 million customers of the original Cingular company missed the playful brand. The transitions were painful for customers and employees — both had to deal with incompatible systems and in some cases service termination fees to get the family onto one provider.
2. Discontinuing a brand with likes and followers becomes a bit more complicated — They are a proxy for reputational value among people who may not yet be customers. Organization invest resources to develop a personality and voice for its brand to interact directly with people who may advocate and refer the business.
An example of this in banking: when ING Direct, the fun orange account bank became Capital One 360, it turned into a smorgasbord of colors and symbols. People mourned the loss of fun and optimism. Its brand personality was that strong, and backed up by friendly customer service.
Even industry analysts had their doubts. And you thought money doesn't get personal. ING Direct was one of the financial industry's most admired brands.#
The loss of the popular ING Direct brand has sparked a strong reaction among customers and banking industry analysts alike. Will Capital One kill ING Direct’s reputation for service, innovation and ideas along with the name? And would anyone squeal if your brand disappeared tomorrow?
To their credit, the communication team saw the brand challenge. But the parent company got carved up as part of a government bailout.#
As it explained on its website, “As we told you back in June 2011, our parent company (ING Groep) agreed to sell ING Direct USA as part of a restructuring agreement with the European Commission. ING Groep allowed us to use ‘ING Direct’ only until February, 2013. So we had to come up with something new.”
Customer messages in social media were quite passionate. Most consumers regard their financial providers with a mix of apathy, indifference, and frustration, if not outright derision and disdain. ING Direct has managed to permeate the veil of indifference and stand for something. Once gone, that enthusiasm doesn't come back.
Most companies are not prepared to address this situation. Acquisitions are very hard on the marketing and communication groups. They're often the first to go. Rather than being a space to develop relationships as assets for the company, social media has become mostly a bunch of channels for announcements and offers.
True, social media does feel a bit like sharecropping, but it does offer real opportunity. Hard to provide a valuation of its impact when there's a fundamental misunderstanding of the value of community. Ironically, the examples of brands where we had invested time and attention that went away abound in social.
Anyone remember Friendster?
Recognizing the nature of the challenge
At this point, I'm mindful of Lord Vetinari, the benevolent dictator of the Terry Pratchett novels:
Be careful. People like to be told what they already know. Remember that. They get uncomfortable when you tell them new things. New things… well, new things aren’t what they expect.
They like to know that, say, a dog will bite a man. That is what dogs do. They don’t want to know that man bites a dog, because the world is not supposed to happen like that.In short, what people think they want is news, but what they really crave is olds… Not news but olds, telling people that what they think they already know is true.
Therefore, that is the nature of the challenge. Why do you think the entire marketing and consulting industry complex most frequently skips steps in favor of getting to approach and tactics? The culprit is a poor understanding of the forces of direction.
Say you're a big technology company that wants to acquire a design agency. It's a likely scenario. So much so, that I was hired to work on these questions more than once. Here's an example of some steps to consider in the deliberating process:
- Has a decision been made to eliminate the Cool Design Brand altogether already?
Technology companies tend to “move fast and break things.” Given the propensity to act, the complete URL migration with the design agency identity had already happened in this case. Pro of integration becomes a cons(equence) for brand value.
The Cool Design Brand acted as a playful lead magnet. At that point the acquirer was left with no baseline digital brand consistency to capitalize on for its lead generation.
- Does the Cool Design Brand convey what the firm does, even with no marketing spend?
Anecdotally, in conversations with peers on the client side and agency leaders it does — we get it, they say, we get the customer experience view of the world and respect that you got there years before it was fashionable. Additional conversations with prominent brand advocates and industry insiders validated the favorable cost position.
- Would a Cool Design Brand command higher strategy consulting fees per hour?
Considering a conservative industry average blended rate of $220/hour (at the time) and the fact that this firm was hitting on all cylinders to become a serious contender on analysts radar for Global Design Agencies (further documentations to support this claim shared with the senior team), Cool Design Brand would.
- Does brand consistency pay off in the short and long term?
Brand is a very interesting kind of asset. You can trade in flows for a better price position. This is why business decisions that impact how people feel about the brand require a strong resolution. For example, Qantas labor strike traded brand reputation for a better cost position on people, also seen as an asset a business trades. They had to discount fares heavily to get people to give them another chance afterward. Do that again, and there are unintended consequences to the brand.
If we had no humans as part of the client base (or employee base), it would be an easy decision – fold the brand, who cares? Markets are emotional, too. The human side of business can be a tremendous asset. We're used to ideas being important. Relationships are right up there before them.
When a brand disappears, so does its value. Perhaps a better question is: What happens to customers, employees and relationships in an acquisition? Because that's the impact to the brand valuation. But that's not likely to be the angle that holds interest.