Tim Mullaney

Brookdale Senior Living’s acquisition of Emeritus Corp. is part of an ambitious strategy to make Brookdale the first truly national U.S. eldercare brand. So is it ominous that the Feb. 20 merger announcement came three days after The New Yorker ran a piece arguing that the age of powerhouse brands is ending?

In an investor presentation in December, Brookdale CEO T. Andrew Smith explained the branding initiative. Traditionally, “brand equity” in senior living has been concentrated at the local level, he said. That is, potential senior living customers have not thought of a brand name such as Brookdale, but instead have thought in terms of “the facility on Elm Street.” This has created what Smith called a “white space” in the sector, which his company now is moving aggressively to fill — through a comprehensive marketing effort and through the mega-deal with Emeritus that will create the nation’s largest senior living provider.

The marketing initiative has involved ads on networks such as CNN and Hallmark, as well as a concerted effort to generate Internet leads, according to Smith. Already, leads from mobile technology have increased about 90%, he said during the investor presentation.

The deal with Emeritus is expected to close in the third quarter, and then it would take some time to get signage changed and basically have all the Emeritus locations flying the Brookdale flag, Smith said in a conference call about the merger. However, with the marketing ball already rolling, it seems Brookdale is well-positioned to become the Starbucks (or pick another ubiquitous national brand) of senior living. Consider this statistic: A Brookdale community will be within 10 miles of 6.5 million seniors 80 years or older, if the merger goes through.

The deal also reflects what many see as a general trend toward consolidation, as McKnight’s Editorial Director John O’Connor explained in his “Daily Editors’ Notes” blog post yesterday. The prevailing long-term care business model very well may be shifting, as operators move away from a “local focus” to embrace the “new mantra” of “the bigger, the better,” O’Connor wrote. It’s a shift that has not been lost on small operators, given that many expect to be acquired by bigger fish in the short term, according to a recent survey.

Basically, the writing seems to be on the wall, and smaller operators probably don’t like the message. They might take heart from James Surowiecki’s New Yorker article, “Twilight of the brands.”

Business leaders by and large still subscribe to the “truism” that a company’s brand is its “most important asset,” Surowiecki writes. This is misguided, he argues. In fact, he asserts, “brands have never been more fragile.” This is because the Internet has created “supremely well informed” consumers who are “far more likely to investigate the real value of products than to rely on logos.”

Surowiecki’s article is based on a new book, “Absolute Value.” The authors are Itamar Simonson, a Stanford marketing professor, and Emanuel Rosen, a former software company executive. They offer a historical perspective to make their point. In the pre-Internet era, it was difficult to determine whether a new product really improved on the tried-and-true, so people were loyal to brands that they trusted, they claim. It’s an idea that seems to be backed up by the numbers Surowiecki cites. In the 1980s, four-fifths of American car buyers reported that they were loyal to a particular brand. A recent Ernst & Young study suggests this way of purchasing is a thing of the past, as only one-fourth of respondents said that brand loyalty affected their shopping habits.

Some have argued that consumers suffering from “information overload” will happily forgo analyzing the huge volume of reviews and other information available online, and stick with a brand. This is not the case, according to Surowiecki. People have in fact become extremely adept at weeding through all the information accessible via the Web, he writes, so brand is much less important a consideration than “reviews on Amazon and Engadget and CNET.”

This is all bad news for established brands looking to stay on top (save a few that possess a certain magic, such as Coca-Cola or Apple) — but it’s good news for “upstarts,” Surowiecki says. The last decades have seen smaller players make big inroads in industries once ruled by monolithic brands. As examples, Surowiecki offers carmaker Hyundai and computer companies Asus and Acer. Hyundai has gone from being a “joke” to selling 4 million cars annually, while Asus and Acer moved out of being niche players in Taiwan to capture serious U.S. market share.

If you accept that we really are seeing the “twilight of the brands,” then a consolidation of the long-term care market into a few big brands actually would be bucking larger business trends. Some unique aspects of the healthcare sector might make it an outlier, and support a “bigger is better” mentality — see, for instance, the increasing pressure providers are under to coordinate with each other.

However, I think a small operator looking to be a leader in a particular market might take valuable lessons from Surowiecki and “Absolute Value.” Thanks to the Internet, these smaller providers have a powerful and affordable tool to create and spread positive word-of-mouth – to compete with the Brookdales of the world in the virtual space where, according to Surowiecki, most consumers get the information that will influence where they spend their money.

And if it’s difficult to compete with big players that have substantial resources, there also are the benefits that come from being differentiated from the competition. The dawn of mega-providers might mean that consumers instinctively think of “Brookdale” for their senior living needs, just as people think “Starbucks” for their caffeine fix. But almost certainly, there will be those who balk at the thought of being one more number in the rolls of a huge corporation, and who will seek the senior living equivalent of the independent coffee shop.

Of course, as Brookdale’s surge in mobile leads shows, the Internet is an equalizer, not a weapon that only “upstarts can harness.” More modestly sized organizations might increasingly have their work cut out for them, but given the case that Surowiecki makes, I think it’s not quite time to say we’re in the twilight of the small operator.

Tim Mullaney is Staff Writer at McKnight’s. Follow him @TimMullaneyLTC.