The end of the year marks a unique time in the life of businesses. With Q4 coming to a close, most businesses are actively looking backward and forward in equal measure. They are reviewing their performance from the year that is drawing to a close and setting new goals for the year to come. In truth, some executives may already feel as though they are mentally camped out in Q1 of 2020 – I know I am at this point.
This annual transition also represents an opportunity to consider the broader trends that have shaped our work and forecast what will happen in the next year. 2019 saw a number of interesting rebranding-related trends that are worth reflecting on. And, with a national election on the horizon, 2020 is shaping up to be a noteworthy — and potentially unpredictable — year.
Here’s a roundup of the biggest rebranding-related trends from 2019 as well as our predictions for the world of rebranding implementation in 2020.
The top rebranding-related trends of 2019
2019 was an exciting year in rebranding despite signs of declining M&A activity. Following is a recap of the top trends that shaped the rebranding space over the past year.
1. M&A activity is down, but the size of deals is up.
After two to three years of unprecedented corporate M&A activity, Wall Street saw a noticeable decline in the number of M&A deals in 2019. Indeed, three thousand fewer M&A deals closed in the first half of 2019 than in the first half of 2018. But even as the overall number of deals went down, the size of the deals that did go through went up. Midway through 2019, the median M&A deal size in North America was valued at $93.5 million. The sectors with the biggest increases in M&A activity relative to 2018 include finance, consumer non-durables, distribution services, technology services, and consumer services.
Impact on rebranding: M&A activity and rebranding go hand in hand. In most situations – at least one brand is destined to change. The more mergers and acquisitions deals that close, the more rebranding activity will take place, and the more companies need to consider their positioning, portfolio of offerings, culture, and value to the market and as an employer.
2. A renewed focus on business structure optimization.
Over the last four or five years, many businesses have focused their energies on more conservative and predictable business investments. They’ve gone after strategic, pointed initiatives geared at addressing key business problems and driving results. These initiatives have typically revolved around specific market segments, products, or overall corporate messaging. But this all shifted in 2019 – either fueled by the economy, realizing new corporate tax cuts, or by simply having putting off prudent investments in brand for too long. They leveraged those additional resources toward solving broader issues related to business structure and positioning. Many sought to increase their market share by investing in their brands, repositioning, rationalizing their architectures, and splitting the company or spinning off assets where advantageous. This trend likely accounts for the fact that divestitures are going strong even as M&As activity is softening.
Impact on rebranding: Well, this one is fairly obvious. When organizations invest in their business structure and brand, the result is an uptick in repositioning-related rebranding initiatives.
3. The rise of specialists.
For nearly a decade, corporations have displayed a preference for agency partners that offer a full range of services. Over the past year, this inclination toward one-stop shops has started to wane. Today, more organizations are opting to partner with a portfolio of highly specialized shops. We are also seeing a much higher volume of companies selecting small partners for big work. Companies are seeing the benefit of the deep expertise that specialized partners bring to the table – focused teams delivering what they are truly expert at. But companies must also be proactive about optimizing and streamlining agency relationships as well as putting in place systems to track, measure, and report agency partnerships.
Impact on rebranding: The more external partners an organization works with, the more challenging it is to consistently implement a rebrand – and the more there is to manage in an already complicated and often siloed process. This puts a lot of pressure on already stretched internal teams and introduces more risk. Planning, integration, and management are the keys. That can include leveraging a rebrand as a unique opportunity for the organization to rationalize agency partnerships.
2020 rebranding forecast
In the world of business, some years are easier than others to predict. The U.S. economy continues to show strength in employment and stock prices, and companies have a lot of cash on hand. But with a potentially contentious U.S. presidential election inserting additional volatility in the picture, 2020 may be harder-than-average to predict. Here’s a look at what might be coming down the pike in the world of rebranding.
1. M&A activity will likely continue to slow down.
As mentioned, M&A activity began to wane in 2019. That downward trend may continue in 2020 as businesses take a wait-and-see approach to the presidential election. But the time for pausing isn’t here yet. Going into the end of the year, activity levels (and spend) are still high as organizations continue to pursue big projects. That’s likely to remain true through the first few months of 2020. Indeed, Wall Street may be business as usual for the first half of the year, followed by a noticeable lull in Q3 and Q4 as election season ramps up. If that’s true, organizations will feel pressure to achieve more with the same budgets (or less). This will put a drive on marketing operations optimization as a subset of ongoing implementation, activation, and management. As 2020 approaches, look for opportunities to optimize, streamline, and save money.
Impact on rebranding: The surge in organic rebrand spending may indeed hold up early in 2020 and well beyond should economic indicators remain strong. Add to this the fact that corporations are flush with capital at levels rarely seen and one could anticipate a boom year for the rebranding world. However, rebranding activities will likely slow down along with a slowing in M&A deals. Those businesses that do move forward with rebrands deep into 2020 are more likely to do so with a strong business case to back it up. And they may be more inclined to take a measured approach to rebrand implementation. In addition, they may be especially interested in capturing synergistic operational efficiencies along the way.
2. Maturing organizations demand customized partnerships with specialists.
In contrast with ten years ago, today’s corporations know a lot about how to acquire other companies. They’ve learned via first-hand experience how to effectively execute an acquisition. And they’ve significantly expanded their internal capabilities around rebranding in the process. They know how to integrate employees. They’ve spun up internal creative shops. They’ve acquired highly seasoned professionals from leading firms. As a result, they don’t have as much need for generalist agencies when it comes to acquisitions or even some aspects of rebranding. Instead, organizations are increasingly seeking out agencies that can help fill the gaps in their knowledge. This puts pressure on consulting organizations and agencies to be solution-providers. Rather than having a set way of doing things, consultants and agencies must cultivate the agility needed to apply their skills to their clients’ unique business challenges in a strategically informed way – and at a price point fit for the job. Organizations that partner with agencies in this way can solve problems more efficiently with less overall financial exposure and depth of reliance on any one partner.
Impact on Rebranding: As large corporations gain experience in M&A-related rebranding, the consultants and agencies that serve them must find ways to add value over and above the basics. Additionally, corporations that have gained some rebranding experience need to be wary to not bite off more than they can chew. Team members across marketing organizations and other operational areas of the company are still resource strapped, and during a rebranding, they still need to do the job of keeping the business running and growing. The trick here will be to engage specialized resources at the right time to help scope, budget, plan, structure and optimize the conversion based on their depth of experience and then turn over this optimized plan to internal resources to execute in less time, with less risk and cost, and improved outcomes.
Regardless of where the dust settles, 2020 is sure to be an interesting year in the world of rebranding. With an added dose of political uncertainty on the horizon, and little bit of economic “can it really be true,” those companies (and external partners that serve) that them that remain attentive, strategic, and flexible will be the ones that thrive in the year to come.