Mergers & Acquisitions and Branding
by Brad VanAuken

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The Branding Consequences of Mergers and Acquisitions

Mergers, acquisitions and industry consolidations are common these days. MCI WorldCom's recent bid for Sprint is the latest of those and it raises some interesting branding questions.

We are told that the combined MCI WorldCom/Sprint corporate entity will be named WorldCom. Bernard J. Ebbers, MCI WorldCom's CEO, was quoted as saying that both the Sprint and MCI names will be extensively used in the new enterprise along with other brand names such as UUnet and SkyTel. Brand Forward's brand equity research shows that top-of-mind unaided awareness for Sprint and MCI WorldCom are 9.8% and 5.4% respectively compared to AT&T's 75.8%.

I'm not against managing a strategic portfolio of brands, but that approach does beg several questions:

• What will the role of the WorldCom brand be and what portion of the enterprise's marketing resources will be devoted to building it?
• MCI is already splitting its advertising dollars between the MCI, 10-10-321, 1-800-Collect and 10-10-220 brands. With so many company-owned brands competing for advertising dollars, will WorldCom have enough marketing resources to build a powerful contender to AT&T?
• How will the Sprint and MCI brands be used in relationship to the WorldCom brand (sub-brands, endorsed brands or independent brands?)
• Will Sprint, MCI and other brands be aligned with business categories or consumer segments?
• Which brands will they spend advertising dollars on and in what proportions?
• Which icon will WorldCom adopt for itself?
• It's important that a company's culture support its dominant brands to ensure that its brands' promises are delivered in everything it does. What will the combined MCI WorldCom/Sprint culture be like and which brand will it best reinforce?
• How will WorldCom efficiently and effectively manage a portfolio of brands in a very large enterprise that may not be organized by brand? This has large human resource and organization development implications.

BrandForward research and my intuition tell me that Sprint is perceived to be a savvy (even visionary) high tech brand while people perceive MCI to be a price value brand. Additionally, they perceive Sprint to be more youthful and MCI to be somewhat more annoying due to its aggressive sales tactics. Sprint's “pin drop” mnemonic device constantly reinforces its quality. People perceive both to be less old fashioned and more contemporary than AT&T.

Sprint is clearly a powerful brand name. It is shorter, more memorable and more consumer-friendly than WorldCom. Also, it alludes to two benefits, speed and agility—important qualities (a) for a major player in today's telecommunications industry and (b) in relation to consumer service expectations. The icon is well designed, consistently used and very recognizable.

My vote would be to use the Sprint name and logo for the corporate brand and to position the brand as the quick, high quality and technologically savvy contender to AT&T. Make people think that the future belongs to Sprint. This may not be incompatible with delivering the best value either. Isn't it plausible that the lean, mean, smart, savvy, aggressive “new kid on the block” might be able to deliver a leading edge, high quality product faster and cheaper than AT&T can? If WorldCom is the corporate name, then I would consider combining it with Sprint's strong icon.

As industries consolidate and companies, brands and corporate cultures merge, those businesses involved in the mergers run the risk of losing the sense of who they are, what they stand for and how they are meaningfully different to consumers. I will be watching WorldCom closely to see how they navigate the tricky branding waters of a combined enterprise.