Agents of change

M&As are back on the agenda, and the frontline force for brands – marketers – have the hard task of fusing clashing cultures and forging new brand allegiances. But with skill, this tricky process can become a rewarding experience.


One of the most promising signs that an economic recovery is beginning to gather steam is merger and acquisition activity. And lately, it appears the M&A gears are grinding back into action (see below). American food company Kraft has bid for British confectioner Cadbury and now Unilever has agreed to acquire Sara Lee’s personal care business for £1.16bn, which chairman Dave Lewis says will allow the business to “play across the full pricing piano in the UK”. Unilever admits it is already on the lookout for more deals.

But while M&A deals may be good news for getting the economy back on track, they can have a dramatic impact on marketing departments. They can mean more brands to look after, different customer segments to consider and learning new ways of approaching a target market. And with some analysts predicting that we will see more M&A activity in 2010, it seems there will be plenty of these opportunities and challenges for marketers ahead. Do they have the adaptability to cope?

One of the primary goals of any marketer in an M&A situation is creating allegiance to the newly formed brand or business as quickly as possible. While this can be a difficult experience, some argue that an adaptable marketer can create an extremely positive one that pulls employees together.

A marketer with first-hand experience of this is Brian Bell, who was at IBM when its PC business was taken over by Chinese brand Lenovo. He became head of marketing in the UK and Ireland at the new company.

“IBM employees used to refer to themselves as IBMers. But after the acquisition, a new breed of Lenovians was born,” Bell explains. By getting marketers behind the new brand immediately, it bred a culture of everyone working together for the same goal.

Aside from transferring loyalties from one corporate culture to another, another positive for marketers in M&A situations is the opportunity to work with strong brands and develop new skills.    

Sara Lee’s Brylcreem, for example, has recently been repositioned as a more masculine brand in an attempt to make more of an impact in the burgeoning male grooming category. Although this work began before Sara Lee went up for sale, the strategy has been followed through since the sale was announced in March, with new packaging for the brand and cricketer Kevin Pietersen signing up to become its new poster boy.

Steven Melford, co-founder of strategy agency Clear, says more attention is often paid to brands that are up for sale to make them more attractive to buyers. This puts the marketer taking responsibility for the brand following an acquisition in a good position.

“Businesses want to buy strong brands with a strong reputation. When you’re under the spotlight of being up for sale, you need to be much more disciplined in making sure you have a real point of difference and a strong identity. This can mean companies inherit strong brands, with momentum and real potential for growth,” says Melford.

Mark Hamilton, head of marketing for Pernod Ricard UK, agrees that acquisitions can help brands boost their credentials. Pernod Ricard acquired Absolut Vodka last year, a spirit brand with a strong identity that uses strong political messages, such as its marketing campaigns in support of the gay community.

It recently launched a “manifesto” to reposition the brand and capitalise on the political marketing that had been established prior to the acquisition. Hamilton says marketers should feel positive about such high profile activity, as it gives them a chance to flex their marketing muscles.

“For marketers, this is a valued addition to their brand profiles because it presents them with a new challenge of making something already popular even more so and a viable market alternative,” he argues.

Bell concurs. He says that being taken over by the third-largest PC company in the world opened up new marketing opportunities for his marketing department. He goes further to argue that he believes marketers are the beneficiaries of the “biggest opportunities” during M&As.

“To be able to transfer existing brand equity and build upon it to develop awareness and purchase consideration of the ‘new’ brand… is not an opportunity that presents itself everyday,” he enthuses.

While Bell and Hamilton look back at the business opportunities presented to them by M&As with enthusiasm, some marketers feel more unsettled by their experiences of two corporate cultures coming together. In some cases, the different operational tactics of both brands can cause confusion or friction.

Interim marketer Rob Rees, who has worked on several mergers and acquisitions, says: “It can be a really difficult time – you have different cultures and different styles of marketing and you have to suss out which members of the team want to go through this painful process.”

He led the marketing team when Campbell’s integrated the Unilever-owned Oxo and Batchelors into its operations in 2001, building a strategic brand management culture for the new team.

The cultural differences of the two companies proved challenging, and understanding the way Campbell’s approached marketing compared with Unilever was vital before the integration process could begin.

“Campbell’s was very commercial and very numbers focused, whereas Unilever is much more academic and does lots of market research – so there were different cultures to consider,” Rees remembers.

It isn’t just culture clash that plagues marketers during M&As. Sometimes the corporate objectives of deals aren’t set out clearly enough and the marketers get caught in the middle. One marketer, who does not want to be named, explains how a deal they were involved in was a complete disaster because the two business units coming together had entirely different aims.

One part of the new company wanted to save money and another part of the business wanted to build a stronger brand. “The line management wanted to build stronger marketing capabilities, while someone on the board was tasked with cutting costs. There were misaligned objectives and as a consequence the deal wasn’t all that successful,” the marketer explains.

The obvious fear for many marketers during an M&A is losing their jobs. Relocating can be too large a sacrifice for many and overlapping responsibilities can result in job cuts. Simon Carter (see Viewpoint, below) says when he was involved with the merger of MyTravel and Thomas Cook, just five out of the 50 MyTravel staff offered the option of relocating took up the challenge. Most simply did not want to move their families around the country.

This fear may have some validity as many businesses downsize their operations when they come together, but Rees suggests that the threat to marketers is often exaggerated. He believes that marketing positions are often much more secure than other roles.

Rees says the most at-risk positions are those associated with the back-end operations, which tend to be cut when closing a factory or streamlining productions as a standard way to reduce costs. Even in the current climate, Rees thinks marketing teams are seen as relatively streamlined operations and forced job cuts are less likely compared with other departments.

Fear alone, however, can be damaging to staff morale and lead to resistance to change. Gus Carlson, chief marketing officer at Thomson Reuters, came up against this challenge when Thomson Reuters was created by a buyout in 2008.

Initially, Carlson worried that staff would feel uncertain about working with a new brand and new set of colleagues. Both sets of staff were loyal to their individual businesses and their ways of working.

To cut down on the levels of fear employees of both brands were given a level of control in creating the new brand, determining its marketing activities and developing new goals and processes together. A “no hat” rule was applied to these discussions, meaning people taking part had to be open-minded and leave their emotional attachments to Reuters and Thomson behind.

Deciding which bits of the business to keep and what to change is challenging for any business, says Carlson. The ability to detach yourself from any brand bias is key to a successful transition from the old to the new identity.

He says that addressing fears head on by getting people involved in creating the new brand and its values eventually helped marketers develop external communications to promote and explain the new brand. It also meant that people in the new organisation bought into the new business because they had helped shape it.

“Be prepared no matter what side of the table you’re coming from to be honest about strengths and weakness. People sometimes hold on to the legacy features of their brands perhaps too long and that can trip you up,” says Carlson.

Thomson Reuters’ chief executive, Tom Glocer, has also bought into this mentality, signing off his letters as “chief brand ambassador” which Carlson says was important, as it communicated the commitment from the leadership to the new business.

While the process of getting staff on board with new identities is likely to be time consuming following the M&A process, implementing new marketing materials is another job requiring military precision. Rolling out everything from a new logo to corporate guidelines across 300 countries can be a challenge.

Thomson Reuters’ Carlson says that tying together the staff involvement with administrative marketing tasks is vital. In his case, an ambassador programme is in place with 500 staff involved in educating others in the company how to use the brand. He argues: “Now our employees have equity in the brand. It’s a wonderful way to embed the brand in our company.”

Revenues appear healthy as a result of the acquisition. Thomson Reuters reported an annual increase in revenue of 8% in 2009 and the brand has risen four places to 40th in the Interbrand/ Business Week best global brands list.

While mergers and acquisition decisions are financial ones, people within the business are key to adapting operations internally to ensure that any potential growth becomes a reality.

While all agree that there can be difficulties in overcoming the early issues of culture clashes and differing aims, most of those who have experienced the process of M&As seem to believe that they offer marketers a chance to have more of an impact both internally and externally than ever before.

Marketers are good at bringing together employees around a new culture and brand. They play a key role in the transition period to help create a new business vision and strategy that will move the business forward. It appears that while they might also feel some trepidation, marketers should greet potential M&A activity with excitement.

As Pernod Ricard’s Hamilton suggests: “I think any marketer worth their salt would relish this challenge.”

Hot or not?

M&A activity in marketing services

Daniel Domberger, director of media:tech at Livingstone, an international investment banking boutique, rates what’s still “hot” in marketing services M&A.

He says: “Confidence is picking up, and we’ll start to see more activity towards the end of this year, with results showing by the end of Q1 in 2010.”

Super hot



Marketing services which can show demonstrable ROI


Online lead generation

Strategic buyers rather than private equity

Softer sell (over a cup of coffee) rather than high pressured pitches

Digital publishing


Search engine optimisation

Going cold

Me-too advertising agencies

Smaller start-up advertising agencies

Traditional publishing

M&A predictions

How would a Kraft acquisition affect the Cadbury brand?

Brand valuation business Brand Finance argues that the value of the Cadbury brand could increase by at least a quarter following a successful integration into the Kraft business. The firm has carried out an exclusive analysis of the deal for Marketing Week.

David Haigh, chief executive of Brand Finance says that the Cadbury brand is “strong”, but adds: “The question is: what will Kraft do with that? I suspect it will leverage a huge amount of value from it by putting the business across its network with new products. I don’t think the true value of Cadbury has been extracted.”

Haigh also wonders what will become of Cadbury-owned organic chocolate brand Green & Black’s should Kraft’s acquisition go ahead. He warns: “The cost of production is so high, that it’s hard to make a profit out of it.”

But with Kraft signalling an interest in quality with its recent investment in “natural” food company Naked Pizza, a takeover might not be bad news for the Green & Black’s brand. With its high ethical and quality credentials, should a takeover be agreed, Kraft could look at the value to the business of keeping such a consumer-pleasing brand in operation.      

Using analyst forecasts, Brand Finance has calculated Cadbury’s enterprise value to be £11.8bn and the Cadbury’s brand value to be £2.3bn.

The brand value – based on the brand’s current use – does not include the wider benefits of the acquisition by Kraft: principally the expanded distribution and marketing leverage.

Most of the synergies calculated by analysts are likely to be focused on cost savings and operational efficiencies, rather than revenue uplifts through enhanced distribution.

The chart below shows:

First column: the total value of the Cadbury business based on Kraft’s offer.

Second column: the value of the Cadbury business calculated using analyst forecasts, including synergies anticipated by Kraft management.

Third column: the potential combined values of the merged businesses. Combined synergies have been estimated by Brand Finance.

Simon Carter

Viewpoint: Simon Carter


Culture clashes, internal wrangling and bruised egos are just some of the challenges that marketers have to deal with when it comes to managing the effects of mergers and acquisitions. And that’s before formulating an entirely different marketing strategy and tackling the external communications to promote the “new” brand. 

Simon Carter, marketing director for the UK Government division at Fujitsu, has experienced the good, the bad and the very ugly of life in the thick of the M&A process.

One of the toughest challenges for any marketer during the M&A process is bringing teams from different companies together to work as a single cohesive unit. This is the downfall of many deals, argues Carter.

He himself experienced cultural clashes when the petrol company Total formed a joint venture in the mid-Nineties with London Electricity, the then nationally owned regional body, to form a company called London Total Gas.

“Total is a modern, French multinational with very clear views on its brand, its people and its customer proposition. London Electricity, by contrast, was, at the time, a small regional player in a monopoly market, with little appreciation for operating in a competitive market – the two did not gel well.”

Instead of working as one united team, Carter claims, inter-company disagreements got in the way of a coherent strategy to move the business forward.

Carter also experienced the MyTravel and Thomas Cook merger in 2007, which initially caused tension and difficult decisions for marketing staff when two teams came together. 

The marketing integration of the two brands, handled by Carter, aimed to find an opportunity to reach a wider audience and create new marketing strategies, in order to attract more customers to book their holidays through Thomas Cook.

The big test for the marketing team was attracting the MyTravel customers to the Thomas Cook brand and convincing them that nothing had changed apart from the name.

Most of the MyTravel retail stores, called Going Places, were eventually rebranded

to carry the Thomas Cook name, but Carter and his team had to convince MyTravel customers to keep booking through the Thomas Cook branches.

“There were some challenges to convince a customer who had always booked with Going Places,” Carter notes. He adds that while the old MyTravel stores were “the same shop, with the same staff” and people were about to “book the same holiday”, existing customers did notice that “the name above the door and the livery of the store was that of Thomas Cook”. 

Carter explains: “A lot of marketing effort went in to encouraging those past bookers that nothing had changed.”

This took the form of a series of direct mail shots, press and poster campaigns, which reinforced the message that past MyTravel holidaymakers could still buy their travel from Thomas Cook. 

This was not the last of Carter’s M&A marketing experiences. He also worked on London Electricity’s joint venture with Virgin in 2000. In a utilities market where there

was little difference between the brands, the two brands came together to form Virgin Energy, aiming to shake up the utility market by exciting employees and bringing in customers who were attracted by Richard Branson’s brand.

However, the excitement didn’t last for long. Branson sold his shares in the joint venture in 2002 and the company was taken over by London Electricity and its name changed to EDF Energy.

“The problem was that many customers had left the traditional energy companies to become Virgin customers because they liked Virgin and they liked Branson,” explains Carter.

He adds: “Suddenly the name changed, and in fact made it worse because it was now some unknown [at that time] French outfit.  So we went from saying ‘you chose to get your electricity from this modern, sexy company called Virgin… but now you’re getting it from this French company called EDF’.” 

Although the decision made financial sense, Carter claims that the marketing team drifted away, finding it too difficult to get excited about promoting an unfamiliar brand.

“I had left London Electricity to join the sexy brand Virgin, and I didn’t want to go back to the company I’d left two years before,” he says. “Within six months of the merger… every single ex-Virgin employee had left.”

Ultimately, Carter warns, M&As can be exciting and rewarding for the most adaptable marketers but they can also be very difficult. His rather bleak advice? “You have to make the best of the situation as opposed to seeing it as an opportunity.”

Top 10 rules of successful marketing and branding integration during M&As

1 Stay neutral

Remember not to take sides when evaluating the combined strengths of the organisations.

2 Crack the ‘value creation code’

The overriding goal is to create more value as a result of the combination. Let your strategy development reveal the ‘value story’ for everyone in clear and compelling ways.

3 Focus on potential

The merger message is all about tomorrow. Whether in brand definition, design, communications or employee alignment, develop a ‘brand promise’ – the commitment you make and the expectation you set – that will deliberately push the organisation forward.

4 Create one enterprise with architecture

One of the most powerful tools in the branding toolbox is brand architecture. This process brings order to the merged organisation in terms of

Customers are always at the root of a merger, acquisition or consolidation. Consider how the customer experience and the interactions that define it are likely to change – or should change – as a result of the merger. Make these interactions a target for early implementation, as these will provide early proof of the success of any new promise you make.

6 Sell differently, but the same

The sales force is your frontline when it comes to advancing or holding back your merger efforts with customers. It needs to be in the loop fast. Use the new brand to shape sales messages, materials and training that convey improvements as a result of the merger, while reinforcing successful, current practices that are not going to change.

7 Don’t compromise on the name

It is easy to slip into the mode of using both brands’ names after the merger, because it was the only way the deal could be done; or because you believe both have brand equity. If at all possible, avoid this route. It signals unfinished business to outsiders as well as to employees of both concerns. Take the long view and take the name – or create one – that is most meaningful, strategically.

8 Involve employees early

Your company’s brand is only as strong as your people. You must communicate with and interact with employees as soon as possible. Have people translate the brand promise and values in ways that influence how they do their jobs.

9 Gauge your progress

Because brand development should be designed to spur merger success, it is vital to measure results.

10 Keep it simple

There is nothing simple about a merger, acquisition or enterprise consolidation. They challenge the status quo, often sparking disruptive change and distracting people from their jobs. Try and clarify brand development by creating positive themes people need to understand, communicating these themes in a compelling way and inspiring your people to turn operating policies and practices into action.

Source: This is an edited version of the Siegel & Gale guide to mergers, which is available this week on


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