Brand builders’ $300bn carrot

Consolidation is obviously taking place even faster than predicted (MW, last week), as AOL seals a blockbusting $330bn (&£206bn) merger with Time Warner (and, on a lesser scale, Granada strips the decks for UK bidding action).

If nothing else, the mega-merger has proved that dot.coms’ Bank of Fairyland money is as good as anyone else’s. Other marriages, or mésalliances, are clearly on the way, judging from the share price of Walt Disney, Viacom, Seagram and their like. Which is going to be great news for a swathe of business advisers. Management consultants will be needed to advise on the cultural fusion of the unmentionable with the inedible. Corporate identity specialists will attempt to invest the new corporate behemoths with an organic simplicity they cannot, in fact, possess. And brand builders, particularly ad agencies, will have their work cut out broadcasting these developments to the wider world.

It is quite possible that what we are looking at is the slow dissolution of a world order. Many of the companies which have held pole position in the stock market for 50 – or in the case of oil and motor cars nearer 100 – years may be yielding their positions. If so, there are bound to be major ramifications for top brands, their relative rankings and valuations over the next few years.

But that’s only part of the story. As fast as corporate America and Europe construct new megabrands out of content and carriage, consumers will be attempting to deconstruct them to their own advantage.

The issue of consumer sovereignty – no longer just a lustrous phrase coined by economist JK Galbraith – is beginning to pop up everywhere. In auction and reverse auction Websites such as and, which have the effect of moving the market into consumers’ own hands, but also in the unofficial boycott of new car purchases in the UK which, if sustained, will eventually force manufacturers to drop prices and probably decouple their closed dealership networks.

At one level, it is extraordinary that the motor manufacturers persist in their three wise monkeys’ act. For all their specious claims that UK and continental prices do not reflect like-for-like product, buyers are voting with their feet as they trek in increasing numbers to dealerships in Amsterdam, Bruges, Amiens and Stuttgart to acquire what to the unpractised eye appears to be exactly the same model specification at about two-thirds of the price. Of course, car makers need to reassure the second-hand market. But the best way to do that would be to introduce a limited indemnity package cushioning new car buyers from severe market adjustment in the short term.

Manufacturers and dealers simply cannot continue to ignore a reality which will become even grimmer when the world of begins to kick in their sector.


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