The 2023 state of the branding industry

The 2023 state of the branding industry

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Philip Guiliano

Make no mistake, 2023 was a year of incredible flux in the world of brands and the business of branding. While transactional volume was down overall, the industry still witnessed huge mergers, like the $68.7 billion deal that saw Microsoft scoop up gaming goliath Activision Blizzard. Big splits also came into play — such as Johnson & Johnson’s $40 billion split-off that sets the stage for massive pharma and medical tech growth.

To gain a better understanding of the 2023 “state-of-the-branding-union,” we sat down with BrandActive Partner Philip Guiliano for his take on the most impactful trends of the past year and where he thinks we’re headed in 2024.

Uncertainty in the financial markets

According to Philip, fears over the many indicators of economic down-turn and global recession, mixed with conflicting data overall related to jobs, consumer behaviors, profitability in some sectors, and other factors have certainly influenced the level of corporate activity overall, and of course had a major impact on the level of marketing and brand related investment.

Another factor here in the US is The Fed’s actions to combat inflation – rising interest rates.

“Money isn’t free anymore, and interest rates being what they are, companies and brands are holding out to see what happens in the world before making or executing on any grand plans.”

Stalled or cancelled M&A deals

One result of this wait-and-see behavior was a slowdown in the world of mergers and acquisitions. Despite the closure of a few major deals, Philip noted that many deals previously underway ended abruptly – whether for strategic reasons, regulatory changes or challenges, politics, or any host of other factors.

“Everyone’s a little bit tentative to move forward with deals, and I think it’s due to a combination of factors: the state of economics, geopolitics, local politics, and of course financial markets.”

Spin-offs

Still, where corporate transactions are concerned, the news isn’t all bad. As Philip pointed out, spin-offs look poised to set the stage for M&A growth as we head into the new year.

“The splits and spin-offs we’re seeing, Johnson & Johnson, Ingersol Rand, Dow, or even GE, are actually great for the branding world, the markets, and even future M&A because many of those splits and spinoffs will indeed become acquisitions someday. The more these companies split and spin off, the more they regrow, making additional brands available for acquisition. Then, when those companies get big enough or evolve to a place where transactions are prudent – they will do it all again – and the cycle continues.”

In this arena, the theory holds that when companies start splitting off assets to better maximize their value, they then regrow those divisions, and become more competitive in their respective markets.

Increase in healthcare scrutiny

Another factor Philip pointed out as having an impact on pharma branding in particular was an increase in healthcare regulatory scrutiny. The government continues to get deeply involved in this sector – as seen with the PBM back and forth, pharmaceutical legislation, rules and regulations that limit deal possibilities in the provider space, and so on. Oh right – and then there was COVID and the financial, organizational, and talent recoveries that many organizations are still going through. Over the past decade, there hasn’t been another industry that has had to shift, find its footing, and shift again more than the healthcare space – and this doesn’t seem to be easing any time soon.

Brand repositioning

An additional trend Philip identified was around the concept of brand repositionings. That is, finding new ways to market without spending on a top-to-bottom global rebrand of logo, identity, etc. According to Phillip, many brands did take the opportunity to reposition themselves in 2023 either in response to the changes in consumer behaviors coming out of the pandemic – or just general consumer and business evolution overall – and the desire for meaning, simplicity, value, and convenience.

“As we all know, the pandemic shifted customer buying behaviors,” Philip said. “Brands were forced to ask themselves who they were as a business and make rapid changes to adapt to evolving consumer expectations. As an example, healthcare providers needed to become telehealth providers. Technology company portfolios expanded significantly into communications.

“Coming out of the pandemic, the smart companies invested in themselves in the face of unclear financial situations. This meant they could emerge from the pandemic fully repositioned to take advantage of the market. Others, as we saw in 2023 didn’t do that and are now playing catch-up.”

A second factor driving brands to reposition was a trend toward that Philip referred to as the “clean up” factor. This type of repositioning saw companies making an effort to clean up their existing brand portfolios as a means to refresh their offering.

“For these companies, it boils down to taking a breath, examining their brand architecture, and spinning off brands that have outlined their usefulness. This way they can dispel customer confusion and save money on managing their brands.”

Companies need to consider , ‘What’s the opportunity cost when people can't easily find or use the files they need?’ – Philip Guiliano

Doing more with less

The continued pressure to do more with less was another critical trend that stood out in 2023. Across the board, marketing departments were under pressure to prove that their levels of investment were paying off. As a result, marketing behaviors appeared to change.

“An interesting trend found in the stories of brands using earned media and guerrilla marketing tactics to be highly successful in what they do, versus just throwing money at TV and digital. It all goes back to the whole premise of needing to really analyze how we’re spending money.”

This same need to prove costs can have an impact on the internal operations of a brand agency, as well overall opportunity costs.

“Companies need to ask themselves, ‘What’s the opportunity cost of resources and efficiency when people can’t find or use the files they need? Or don’t understand their role?’” Philip added.

The role of AI when it comes to finding efficiencies

Another factor Philip touched on was the role of AI when it comes to helping companies uncover efficiencies.

“I think we’re going to see a rapid revolution in the use of AI for marketing analytics. For many, marketing has always been a black box of “prove it”, without the ability to crate a complete picture that actually does that. Are you over or under spending? Are you spending in the right ways? Do you have the right resourcing and talent and partners? What can be automated and what can’t – or better yet – what do you choose not to? We’ll see AI used for business intelligence, marketing, data tracking, ideation, creative development – you name it. The impact will be very real – and very rapid.”

Where is it all headed?

Finally, Philip to provide a few predictions for the upcoming year. Here’s what he had to say:

  • People will be paying very close attention to interest rates – as the Fed just announced the forecast of 3 rate drops in the coming year.
  • As the upcoming election cycle creeps closer, the US government may kickstart major projects, including infrastructure that may impact markets
  • Companies may become more opportunistic as post-pandemic financials and corporate health become more transparent and targets emerge.
  • We will continue to see companies cleaning up their portfolio to maximize value.

Stay tuned, 2024 promises to be an exciting year for branding.

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