Brad Breininger: 0:00
Hi everyone, and welcome to this week’s Everything is Brand. This week we want to talk about mergers and bringing brands together. So the topic is when brands merge, let’s talk. Alright, so over the last little while there’s been some really big mergers in a whole bunch of different industries. If you take a look at, you know, some of the biggest like Microsoft and Activision, or you look at in healthcare, Merck and Acceleron, or Intuit and MailChimp, also in tech, you know, even going back to some of the really big influential ones like Disney and Marvel and Pixar, mergers really can bring huge brands together. And when that happens, there’s a lot of considerations that have to be thought of does, you know, which is the primary brand, do the brand stay independent of each other? Do they completely merge and come up with a new brand? It’s quite a detailed thing. But we’ve seen quite a range of what’s happened out in the marketplace. But let’s talk about what it means to brand. Some of these big mergers. That’s that’s really focusing on probably one of the biggest ones. And most recently is the whole Microsoft and Activision, because the gaming world is such an influential part as we move into the metaverse and everything else. Is Microsoft trying to get in on Meta’s, you know, place even though their stock dropped by, you know, $240 billion in the last few days, is Microsoft trying to get themselves into a new area and be seen in a different way? What do you guys think?

Christian Rosenthal | ZYNC: 1:40
I think they are, to be honest, one of the big issues is that they are not producing any huge games for their main console, which is Xbox, right? So they need to find a way to compete with Sony, Nintendo and the other big brands out there in terms of gaming consoles, right? Since they have the money, well they’ve started acquiring brands. But I guess my question to the team even is, what happens with those acquired brands and the perspective how they are perceived to the general marketplace?

Brad Breininger: 2:18
Yeah, I think it’s different for every merger, or every acquisition, I think that some brands survive. And some don’t. I mean, I don’t know what’s gonna happen with Activision. But if you take a look at what happened with like Disney and Marvel, Marvel is stronger than ever, even though technically, they’re owned by Disney. But Disney’s whole brand alignment is really about letting those brands that they’ve purchased live and breathe and grow and continue to leverage everything that those brands have brought to the table, like, the three biggest brands that Disney owns are probably Pixar, Marvel and Star Wars. And it’s not like they’re trying to roll them up under Disney. I mean, we’re all aware of the affiliation. But those brands still live independently within the larger entity. But that’s not always the case.

Marko Zonta: 3:06
Well, I guess it really all depends on how much equity is in those brands, right? Like, if they have a huge following. If they already have an audience, then it makes sense to actually keep that brand alive, and just keep going with it right, and potentially even grow the importance of that brand. And then in other cases, a brand is less known, they may over time, kind of fold under main corporate brand, right? So it really depends on the strategy in terms of why they acquired that brand. Like, is it purely a growth strategy, right? And in that case, they may actually fold it under their main corporate brand? Or is it market dominance in some other way, right? Like, they may actually be buying a whole new audience by acquiring an existing brand. Right? So if that’s the case, then it makes sense to actually keep that brand because you could potentially lose that audience. If you actually all of a sudden erase it and say, No, now it’s under a different brand, right? So it really depends, I guess, on why their acquisition happened. And what they plan to do with it

Sasha Codrington: 4:08
There is a recent example of this, that’s getting some backlash as well, the Oculus Quest, it was acquired by Facebook, ie Meta, and they’ve started rebranding it. So instead of being an Oculus Quest 2 it’s now going to be a Meta Quest 3. And there’s been some pushback from customers on that because the Quest is very successful. They have a lot of brand value, brand equity there that they’ve built up over the years. And people’s concern also is that you’re dragging some of the negative impressions and implications of the Facebook and Meta brand into a product that was already very successful and some people might not be aware that it’s a Facebook product, but now that they’re putting Meta on it, some people are saying that maybe that wasn’t the smartest move because there is such a high volume of customers that are concerned about the Facebook brand.

Brad Breininger: 4:59
Yeah. Sometimes organizations take over brands because they want to, and they don’t really care about the audience, they’re much more concerned about their corporate direction and their, their own corporate position. And I think you know, Meta is a really good example of that. It almost feels like their view of the world is that everything becomes Meta when it’s part of Meta, whereas I think Disney’s view of the world is we can all play well together in the same sandbox. And, and I think that has a lot to do with just general corporate values, and less about audience and less about whatever could happen to those brands.

Jeremy Linskill: 5:35
We’re talking about Facebook and meta, the whole switch from Facebook to Meta, I think Facebook was trying to put a positive spin on themselves and rebrand and get bigger, but – so I think they still see Meta as a good thing, a new positive brand. But what the public is seeing is that Facebook is just changing in the Meta, and so Meta is still negative. And so yeah, I see what Sasha’s saying about switching Oculus to Meta, but I think Facebook’s looking at Meta, like it’s positive. And this is a good thing. And we want to, you know, we want to bring everything under the umbrella, where as like Disney, and all of that. All of those brands, still have a lot of equity and still have a lot of value, Star Wars, Pixar, and Marvel. They’re all positive brands. And I think that that’s when the roll up under happens is when those brands lose that value. And then there’s not as much importance to them. I find the Pixar one a little bit interesting. And I don’t know about you guys, but I’m confused by the whole Disney Animation. Because some things are branded Pixar, some things are branded Disney, but when you watch the movies, from a look and feel, they look almost identical. Like I can’t really tell the difference between a Pixar movie and a Disney animated movie. But there’s multiple things happening there. So I find that one a little bit confusing. But yeah, I think they’re very different scenarios on, you know, in different ways that people are going about it for sure.

Gabi Gomes: 7:03
I also don’t like how they treat them with a slash, like they’ve literally kept the logos kept the brand, and literally just put a slash like we’re not gonna deal with this right now. It’s like, can’t make commitments don’t want to deal with it. Let’s just put a slash in between it.

Jeremy Linskill: 7:17
Yeah, I think like, if we’re talking about a Pixar one, I think Disney’s big plan when they acquired Pixar, was to immediately bring them under. But I think that there was some backlash there. And so they had to kind of keep the Pixar brand alive. You know, and that’s back when certain people were running the studios, and there was the stories were great. And there was a distinction to a Pixar movie that I personally don’t think Is there anymore. I don’t think that just because it has the Pixar stamp on it. Now, it’s going to guarantee that it’s a good movie, like it did back when, you know, it was Toy Story and, and Cars and all that. Now I find that it’s a little bit more watered down, because Disney’s got their hands into things.

Marko Zonta: 7:53
Yeah, that’s probably a good example of when some brands are acquired, and they may actually have a plan to do something. And then if they realize after the fact that there’s either pushback or additional value in that brand that I didn’t really take into account, they may actually delay that folding under the main brand. And this is maybe one of those examples where Pixar at the beginning had a lot of value. And it’s being eroded over time, or it’s slowly being transferred over to the Disney brand. Right? So different strategies, right? In some cases that you know, acquisition happens, it’s a financial transaction, that bringing brands together may take two years, five years, 10 years, right? Like it just depends on what they’re trying to do and how visible it is.

Brad Breininger: 8:39
And in a lot of ways, it’s a window into what their business practices are. Because if you’re an organization that recognizes the value, and you’re an organization that recognizes what the audience wants, then you’re going to perhaps delay that like what happened in the case of Pixar. But it’ll be interesting to see Sasha, based on your example of Oculus, it’ll be interesting to see what Meta does with Oculus, because if there is pushback, and they decide to stick with Oculus, then maybe they’re not as steamrolling as I think that they might be from a brand perspective. But if they basically say audience be damned, and let’s get Meta in there, then it says a lot about their business practices.

Marko Zonta: 9:22
But I think a lot of times companies also by other companies, to position themselves differently for future growth. I think one example is Maple Leaf Foods acquired a company called Field Roast Grain Meat, so Maple Leaf foods, a meat producing company, and Field Roast is a vegan company. So you would think why would they even think of buying that? But it’s it’s a growth opportunity. It’s a new market opportunity. And it’s interesting because when that was in the news, a lot of people who are vegan and believing in that whole You know, follow that lifestyle. They were like upset about it. And it’s like what’s happening here, right. But it makes a lot of sense from the business perspective. But it also makes sense to keep that brand intact, because you can’t mix audiences that have different points of view, right. And this is a perfect example where they have to keep that brand alive because it makes sense in terms of how they communicate messaging, and what it actually means to the audience.

Jeremy Linskill: 10:26
I mean, I think ultimately, like these brands that are getting acquired, they’re obviously doing something right, right? They’ve obviously boosted their value to the point where somebody buys them. So they’ve kind of figured it out, you know, whatever they’re specializing in. And it’s a question of like, when those other brands that do acquire them come in, how much they kind of let them steer the ship, versus getting their own people in there and changing things, and watering it down, or that kind of thing, as well. So that all kind of plays into it from a strategic business perspective. And then I think it’s just, when is the right time to rebrand or change things or adapt things has to be kind of figured into that. So ultimately, I think sometimes they do it at the right time. And sometimes they do it at the wrong time.

Brad Breininger: 11:12
Yeah, and they don’t, they don’t always know what the right thing is, you know,

Jeremy Linskill: 11:15
And I was going to say, maybe there is no good time either, right? Like, that’s the thing, maybe you just kind of have to jump in with the Oculus and the Meta Quest, right. Like, I think that that’s a thing where there’s probably not a right time or a wrong time. And it’s just like, you know, what, we’re gonna do it, we’re going to face a backlash, and then the long term, it’s hopefully going to play out in our favor to bring it under the Meta, you know, because really, when I think of, you know, Meta, that’s where I think of them in that space in the VR space, right. So they really need that product to be branded in that space as well, so that they can get behind their name and start showing things for their value. So

Brad Breininger: 11:50
Well, it brings up a really good point. And I think that this is such an important point to the conversation. And that is a lot of older established companies where their brand might be a little old or tarnished, or whatever it might be, have established a name for themselves in the marketplace. But the other thing that they’ve done is they’ve probably made enough money to go out and purchase an up and comer or a startup or someone who is kind of innovating. A lot of times what happens when these brands merge is that the older established brand is buying either new technology, or innovation, or a difference to the way culture is happening. Like you were saying Marco like, the reason Maple Leaf, bought Field Roast is because Maple Leaf is old news, I mean, being a butcher or a meat company is not going to get them into the 21st century in the way that they need to be there. And I think that it’s probably the same with Meta and Oculus, or it’s the same with Microsoft and Activision, they’re really buying street cred, or innovation or a different way. And the reason that they’re able to do it is because they have all of this money, because they have been successful over history, but they might not be successful going forward. Or they might not be able to pivot or change or innovate quickly enough to affect the main brand. And I think that that’s probably a big reason, and probably determines a lot about when they’re going to make that shift.

Marko Zonta: 13:22
And it’s interesting to that point, like acquisitions happen all the time, massive global corporations are constantly buying smaller, innovative, different thinking different approach type of companies, companies like GE, or you know, Pfizer or like Microsoft, Apple, they’re constantly acquiring companies. So it’s going on all the time. It’s just that in a lot of cases, you have a specific audience. And if you’re not part of that audience, you don’t even know that it’s going on, right. And over time. If they do it really well, people may not even realize that it’s under a new ownership, new leadership. And it just kind of happens. And people move along, and it’s all good.

Brad Breininger: 14:06
Well, last year, in 2021, there were over 20, almost 22,000, mergers and acquisitions. And they were of all different shapes and sizes. And to that point, I think that this happens, not only in these big instances that we’re talking about, but even smaller instances and where there might only be 10 customers that really love a brand and that brand goes away because it’s been acquired or merged or whatever. And in other cases, the smaller mergers and acquisitions, the brand sticks around and – but to that end, I think the most important thing is that as long as customers feel like they’re getting the same delivery or they feel like they’re getting the same experience or if the amended experience is still a positive thing, then I think that people are pretty forgiving about this kind of stuff. I don’t think in a lot of cases brands don’t matter to the major population, if their experience is still the same. If those elements of the brand are being carried over, or they feel like it’s still connected, then a lot of people will forgive. I think it’s a little bit different for some of these major huge brands like a Pixar or where people are highly invested in it. But generally, what people want, ultimately, I think, what customers want is to feel like they’re still getting the experience that they signed up for.

Marko Zonta: 15:32
And I think that there’s another part to mergers and acquisitions as well, you know, we’re talking about it’s kind of the external audience, but then there is the internal audience, the team, employees, partners, all that stuff, right. And that needs to be managed as well. Because sometimes you have very different cultures that come together, you know, especially if it’s a larger corporation that’s established and perhaps moving slowly, and all that stuff, and you have in the acquire a young company that’s very innovative, moving really fast, and all of that. So it can be a big culture shock to the team. And maybe that’s, you know, a bigger discussion, and maybe we should have a whole other podcast to that. But managing that internal culture is a big part of brand building, right, and, and the success of the brand.

Sasha Codrington: 16:17
In the beauty and fashion industry acquisitions are just the standard. I mean, the vast majority of the big fashion brands are owned by only three conglomerates, it’s the same with beauty, vast majority of them are owned by L’Oreal. And that’s been the case, the point that you’re making Brad about innovation. And the same Marko you about finding ways to get into different markets, different customers, different audiences. That’s something that we see with L’Oreal. An example is Deciem, that’s a smaller beauty company that is very focused on being eco friendly, purchasing only the products that you need, etc, etc, which is kind of the opposite of the impression that people have of L’Oreal, which is something that they’ve had a lot of issues with animal cruelty and being a brand that doesn’t care too much about the environmental impact. So they have been slowly acquiring Deciem, they at one point only had a 20% stake and it’s slowly crept up into I think, the 70s at this point, they have a majority ownership of Deciem. And that’s something where they’re expanding into a completely different audience. But it’s completely quiet, the Deciem brand hasn’t been touched at all. So that that audience is still purchasing from them with with no knowledge effectively, of how the ownership and the structure and possibly the values behind it are changing.

Jeremy Linskill: 17:34
But if people found out, do you think that they would leave them? You know what I mean? Like, is it a bit shady?

Sasha Codrington: 17:40
It’s tough, like, I’m obviously aware of that ownership change, and I still buy products from them, because I do really like that particular brand and the products that they offer. And that experience to me hasn’t changed, it’s still the same products, when you go into the store, it’s still the same great customer service, all of that, but it is in the back of your head that okay, there is something different going on behind the scenes now. It used to be a Toronto brand, and that’s not the case anymore. And it’s I think that’s the same kind of thing that’s going on with Oculus, where people are really drawn to that product, it’s something that’s far ahead of its competitors. They might be concerned about the ownership by Meta and Facebook, but the product is so good, the value is still there, the experience is still the same. And so they’re still making the purchase.

Brad Breininger: 18:27
Yeah, I think that people are loyal for a whole bunch of different reasons. I think, to your point, Jeremy, I think that some people would look at that and say, ultimately, my money is going to L’Oreal, and I don’t want that to happen. So you know, there probably are people like that. But Sasha, as you said, there might be a little bit of respect for L’Oreal for understanding how important customers are to that company. And also what that company stands for in the marketplace. And so some people may look at that and say, Okay, well, yes, they ultimately own it, but they respect the brand. And so I’m okay with that. So I think it really depends on the consumer, the customer.

Gabi Gomes: 19:03
I’ve got an example of one that went the other way in terms of like, we’re talking about the big conglomerate, big brand, basically either acquiring others for IP intellectual property, or just gobbling up the competition to make themselves larger. We’re also seeing similar services and products, etc. being acquired. One that was interesting to me was Ginger and Headspace. So it’s actually Ginger acquired Headspace, however, and became Headspace Health. So this is one where the acquired brand ends up being the main brand now. Right? And I found that really interesting because, I mean, Headspace has done a lot of great work in their branding department and awareness and whatever, but it has become larger than Ginger who acquired it, right. So I hadn’t heard of Ginger or at least I wasn’t too familiar with it, I think I might have heard it in passing. But Headspace was definitely the larger brand awareness company. So it was interesting to hear that one basically take the Headspace name. And that became the parent company of that one.

Brad Breininger: 20:15
Yeah. And maybe that was their goal all along. Maybe they had money and not enough brand value? And who knows, right? Who knows what the reasons are? I mean, I think it, I think what you’re saying, Gabi, is it really points out that there’s all different reasons and all different scenarios where this happens, and it depends on ultimately, I think what organizations have to do is they have to look at who they are in the marketplace, but they also have to look at how consumers or customers view them. And they also have to look at what they want their business to be going forward. It’s like that’s kind of like the triumvirate of what they need to put together when they’re making these decisions.

Marko Zonta: 20:52
And the fact that a brand is an actual asset, right, like there is a value, a dollar value that’s assigned to the to that brand. And in a situation like Gabi’s example, maybe they did an analysis and realize that that particular brand, even before they went ahead with the acquisition had a much, much higher value in terms of the audience and everything else that’s attached to it. So it makes sense to do that, right. So it’s quite possible that, you know, they acquired them for that reason alone, right, that they just needed to actually move into that space very quickly. And building their own brand would take way too long. And this was maybe a cheaper option, and kind of get to that very quickly. So there is definitely a lot of value in the brand itself.

Gabi Gomes: 21:37
But somebody made this point earlier, at some point does a brand not need to reevaluate? Often we just keep the company intact, etc, and just attach it like Square and After Pay, for example, right? You’ve got all these, okay, you know, here’s the payment, but now you can pay it this way, pay it this way. And that some point down the road, that becomes a bit of a complicated experience to the end user. And I’ll go back about the whole TD Canada trust back then, you know, 20 years ago that, I guess kind of made sense. I mean, they’ve literally merged both logos together, and both brands together. And now all of a sudden, 20 years later, like it’s just disappeared. My point, maybe not 20 years. But you know, I think while some things may make sense to kind of keep temporarily from a brand, once it’s been acquired, at some point, you need to evaluate those two brands, and whether they do need to blend in together, especially when they’re augmented services to a main service, things like that.

Marko Zonta: 22:46
But that actually highlights the point that a brand is a living, breathing entity, it is constantly changing and evolving, right? So you can’t develop a strategy and that strategy will just be perfectly fine for the next 20 years. It won’t be right because the market changes the audience changes the you know, what people are looking for changes what you know, where the company is going changes. So any brand, you know, is constantly changing and evolving. And you know, maybe that’s the point where it’s like they kind of had a plan for 10 years, let’s say, to kind of do it one way. And maybe that was always planned that they’re going to phase it out. Maybe that wasn’t the case. And they realize that it just doesn’t make any sense to keep that part of the name and take it out. The point is that it’s constantly changing.

Brad Breininger: 23:36
Yeah, I think people’s brand loyalty wanes also, I mean, just because you went to Canada trust 20 years ago, doesn’t mean that 20 years later, you have that same level of loyalty. I think what we see there is currently what’s happening with Disney and Pixar, I don’t think that the Pixar brand is as beloved as it was, you know, when that merger happened. And eventually, the bottom line is that Disney is known for animation, the idea that at some point, Pixar won’t flow into Disney animation with all of their history and position in the marketplace. I think we’re just kidding ourselves to think that that’s not going to happen. But I think it just takes time for people to change their viewpoint of how they view some of these brands. And I think in those early days, it’s tough because people are really tied to the Oculus brand. And so they might not like the Meta change. But over time, I think that that wanes. The bottom line in all of this is that when brands merge, the questions have to be asked what are customers and consumers thinking about this and so we have to take that into account. The next question has to be what is the plan for our business? What do we want to do with this? What are we trying to achieve? Are we trying to build the main brand, are we okay that the secondary brand can sit with it in conjunction for a while? Is this a long term strategy, really understanding what those business issues are? And then third, looking at what is kind of happening in the marketplace? Does it make more sense to bring that innovation to the forefront? Does it make more sense to bring kind of the smaller brand to the forefront and keep it out there? Because the overarching idea of what people are looking for and want in the marketplace is better served by that brand. So organizations and brands really need to think about all of these things when brands merge. So that’s this edition of Everything is Brand. Next week, we’ll be back with a new topic. So join us then and remember – everything is brand.