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Storyboard | Decoding the after-effect of an IPO on a consumer brand

A market listing puts newer brands squarely in the public eye, helps them reach out to a wider consumer base and garner instant 'trust'.

October 03, 2021 / 09:38 AM IST
Going public is the “beginning of a new story” for brands.

Going public is the “beginning of a new story” for brands.

It’s raining initial public offerings (IPOs) in India. At last count, 38 companies had had their IPOs in 2021 and raised Rs 71,833 crore compared with 16 public issues that raised Rs 31,128 crore in 2020. Among the big ones was Zomato’s blockbuster listing.

A flurry of upcoming IPOs from the startup ecosystem has generated even more excitement. The line-up includes insurance-tech platform PolicyBazaar, fintech major Paytm, digital payments app MobiKwik, and hospitality brand Oyo. Digital mapping company MapMyIndia and Nykaa, a beauty, wellness, and fashion marketplace, are among the few profit-making internet companies that are also gearing up for an IPO.

Listing on stock exchanges is a big moment for any company. But what’s the immediate impact on a brand after a company goes public?

Impact of a public listing

Shanti Mohan, founder of angel investing platform LetsVenture, says IPO “changes the value of consumers for the company”. Especially for startups, “when consumers become investors, they also become a part of the company’s success and growth.”

Secondly, there's “the value and prestige that come with listing on a major stock exchange, which is a motivator for both employees and associates, and helps attract talent by offering stock options,” adds business strategist and angel investor Lloyd Mathias.

And thirdly, it immediately widens and diversifies your audience. Being in the public market itself gives startup brands “immense reach and recall in a diverse country like India,” adds LetsVenture's Mohan, “which probably cannot be gained with marketing dollars.”

But a listing almost immediately puts additional pressure on brands, which can come from anywhere. For instance, being a listed company puts brand founders in the public spotlight. “You are not only answerable to the board but also to the public. So your actions will be scrutinized more minutely,” says Dheeraj Sinha, CEO and chief strategy officer – South Asia, Leo Burnett. Actions both big and small, online and offline, can have an impact on the brand and business.

Watch the trust factor

Vivek Khare, an adviser and angel investor who has put his money in companies like Zomato, Policybazaar, and Cashify, agrees with Sinha when he says that a public listing puts the company’s brand under a microscope. “An investor is constantly looking at what consumers are talking about a brand outside the financial market. Consumer experiences could affect my decision as an investor.” That’s where building trust becomes crucial.

CleverTap, an AI-powered customer lifecycle and user retention platform, has been closely working with several consumer companies that are set to go public. CleverTap CEO and co-founder Sunil Thomas says, "IPOs boost brand recognition and earn companies a badge of honour in the eyes of consumers. They indicate a level of success and proof of concept that consumers are often more willing to trust.”

However, new businesses should be cognizant of the fact that consumer trust is never simply handed over. Thomas says, “Marketing momentum should not slow down once a company has gone public. Businesses should keep customer engagement and retention as their top priority before, during, and after the launch of their IPO to continue to earn the trust of their audience.”

Going public is the “beginning of a new story” for brands, says Thomas, “the credibility and trust net will just widen from here, as there is no scope of hiding."

The bottom line is that the true test of the brand is after the IPO.

Priyanka Nair