In a move that doubles its branding practice overnight, McKinsey & Co. has bought Envision, a Chicago-based branding company. The acquisition gives McKinsey, the world’s top strategy consultancy, greatly extended reach into the lucrative b-to-b marketing advisory realm. It also underscores the emphasis that Fortune 500 CEOs and chief marketing officers, who have long relied on McKinsey’s advice, are placing on brand valuation.
Executives at New York-based McKinsey would not disclose the acquisition’s financial terms. But consulting industry watchers estimate the deal is worth between $16 million and $20 million. Envision’s 14 employees will be absorbed into McKinsey’s 14-member branding practice, formed in 1997.
Filling a need
It is telling that McKinsey, which rarely makes acquisitions, chose to buy a branding outfit. McKinsey consultants traditionally advise boardroom pooh-bahs on broad strategy matters and, increasingly, technology. But in recent years the firm has found that its clients wanted help on branding. And while many of its consultants could hold forth on topics such as whether, say, a razor manufacturer should enter Indonesia, branding wasn’t their forte. This was a problem for McKinsey, whose clients were being pressured by Wall Street to build brand to hoist overall valuation.
The firm has since recruited ad agency veterans and assorted branding experts, and the Envision
acquisition solidifies this new direction. "We found that with many clients, their brand was an important part of their corporate strategy," said David Court, a McKinsey partner and head of its North American marketing practice.
More than half of McKinsey’s branding clients are b-to-b. And a good deal of its legacy branding advising service is quantitative, which its manufacturing clients in particular appreciate. "We do a lot of marketing spend-effectiveness work," Court said. And while Envision’s approach, too, is empirical, among its experts are psychologists who advise on the cognitive and emotional aspects of branding.
Some industry watchers suggested that McKinsey is positioning itself to steal branding business from the big ad agencies. But at least one ad executive said there will be plenty of branding business to go around, and that Madison Avenue is used to sharing its biggest clients with McKinsey. "For traditional agencies, a lot of their clients already use McKinsey anyway," said Scott Murray, president of TFA/Leo Burnett Technology Group, Southwest.
But there are roadblocks that might hinder a smooth acquisition. One ex-McKinseyite, who asked to remain unidentified, said that the firm’s elitist culture could be tough for the Envision consultants to crack. "McKinsey’s is a very specific culture," he said. "And it’s tough to graft the McKinsey culture on an acquisition."