What happens when a brand that people trust and feel strongly about is acquired? Loyal customers have a strong emotional attachment to it; often they’re watching with trepidation, worried that the small brand is going to get big and “corporate” and lose what made it special. We’ve been thinking about this as we watch what’s happening with Tumblr. Fans are afraid that the Yahoo acquisition is going to ruin what makes Tumblr unique—and after seeing what happened to Flickr, another Yahoo acquisition, they may have good reason. Marissa Mayer, Yahoo’s CEO, went as far as to say, “We’re not going to screw this up.”
Questions for Acquiring Companies
It’s not necessarily a bad thing for smaller companies to be acquired and gain access to the resources of a larger entity. Often the move can provide a jolt of energy for both the acquired and the acquirer. Our enterprise clients face this challenge frequently. How can they retain and foster the spirit of the companies they’ve acquired?
Any acquisition has to be handled carefully from a brand management perspective. As an acquiring company you need to ask yourself:
- How does the acquired brand add to, or build upon, our own brand essence?
- Which attributes may be at odds with our brand?
- How much of that unique character do we want to keep?
- How are we going to elevate what we have decided to retain?
- How do we ensure that our new people feel valued and part of their new environment?
- How do we communicate these decisions in a meaningful way?
When the unique essence of a brand is important to preserve, acquiring companies have some options they ought to consider:
- Let the acquired brand stand on its own: In some cases, this makes strategic sense. Zipcar has been acquired by Hertz, but you don’t see any mention of Hertz on the mobile app or the website. Hertz is a largely invisible presence. The Zipcar brand is about independence and sharing: You just need “wheels when you want them.” It is a brand appeal to a very different kind of consumer and circumstance, one that Hertz would have trouble delivering under its existing brand. That independent appeal can be made stronger now that Zipcar enjoys the operational efficiencies and national reach that come with being part of Hertz.
- Demonstrate how you are better together: In the technology space, many successful acquisitions have shown how two brands coming together created more value than they could have on their own: Amazon with Zappos, for instance, or Google with YouTube. These companies didn’t try to simply absorb the acquired brand and its customers. Instead the attitude was, “Wow, we bought something incredibly special here, and it makes us all better. Let’s let it develop.” Having this complementary view is important if you want to retain the people, both employees and customers, who love the brand.
When done right, acquisitions of beloved companies appear almost seamless, but it’s rarely easy. But behind the scenes, parent companies must make careful, considered decisions about what makes the acquisition unique—and how to retain what it is that made the brand worth acquiring in the first place.