Traditionally, non-public fairness companies have been shopping for firms the place the return was predicated on unlocking working efficiencies. Following the 2008 monetary disaster and the accelerating adaptation of expertise, alternatives for vital effectivity enhancements are diminishing. Instead, Blackstone, the large non-public fairness whose portfolio consists of almost 300 firms, got here up with an primarily a brand new mannequin for the PE sector. Efficiencies nonetheless matter, however now, the funding philosophy places a premium on increased progress and enterprise transformation to create a better exit a number of.
A 2017 survey primarily based of 300 firms discovered that the worth of the S&P 500 consists of tangible belongings (26%), model (20%), and different types of mental property and intangible belongings (54%). The fascinating side is simply how model worth varies by trade sector. The chart on this hyperlink exhibits that model worth ranges from a low of 6% of market cap for pharma and vitality firms to over 30% for a variety of client services and products.
To underscore its transformation, Blackstone has employed Jonny Bauer as Global Head of Brand Strategy and Transformation (full disclosure: I not too long ago partnered with Blackstone, managing company search on two pitches.) Bauer beforehand was head strategist at perennial “Ad Agency of the Year” Droga5. The celebrated company is regarded by many as the most effective American company of final decade. Bauer, a founding member, is taken into account a serious purpose for the success of the company. In 2019, the company was acquired by Accenture for $475 million, a hefty sum for a mid-size company.
Bauer not too long ago advised Ad Age that, throughout his company days his model technique considering was all the time centered on progress, however now it’s additionally advanced to worth. And the strategy that he employs is exclusive. The relationship with non-public fairness begins with manufacturers on the lookout for capital to change into extra aggressive. People come to Blackstone to accomplice with the PE as a way to take their firm to a brand new degree. This is the place Bauer is available in. Instead of a tagline or a characteristic, he views a model because the product of technique. The concept is to ascertain a differentiated model functions and construct iconic manufacturers. And to deliver technique and goal to life with high-impact artistic ideas and advertising and marketing methods.
Bauer’s position is to construct model fairness for Blackstone’s portfolio firms, with the objective of serving to them develop exit worth a number of. This upends the PE typical mannequin, hitherto just about ignored model worth as vital a part of valuation. The strategy Bauer is taking is extra holistic than merely conventional advertising and marketing, and might contain every thing from product growth, powering creativity with innovation, design, technique, reimagining the enterprise mannequin, and, final however not least, company searches and the retooling of the advertising and marketing suite.
He isn’t nearly serving to current Blackstone firms however participates due diligence of goal acquisitions as nicely. Bauer can provides an entire different side to the analysis of firms, and as a marketer he usually may see a chance that goes past monetary evaluation.
Internally, he’s collaborating with a number of top-notch company strategists and sometimes reaches out to exterior communications companions as wanted, often advert businesses or design companies, both by way of formal pitches or appointment with out spec work.
Marketing at this time is at a crossroads, however as Blackstone indicators, it’s extra necessary than ever. To ship significant experiences, manufacturers have to change into related and construct a basis for agility shifting ahead. To harness this chance, it’s time to vary advertising and marketing. Brands have to unlock advertising and marketing efficiencies by breaking down the obstacles to agility. The buyer transformation and conduct change is an ever-growing complexity throughout the advertising and marketing ecosystem resulting from disruptive new expertise, e.g., augmented actuality or the Metaverse, and an explosion of recent platforms; Reams of information to research; And fighting digital transformation.
As prospects’ mindsets and shopping for habits rework in a post-COVID world, advertising and marketing should observe. To attain individuals the place they’re, entrepreneurs should deeply perceive new buyer motivations and expectations and reply to them. If they don’t, individuals will vote with wallets, selecting to purchase from another person who higher aligns with their new values.