Can Zomato’s Brand Equity drive & sustain share value in the long term?

Zomato IPO

When a brand as marketing savvy as Zomato goes public, can their brand equity contribute on the financial front as well? In the milieu of the Zomato IPO, experts share their two cents…

How often are you aware of IPO announcements? And no, finance enthusiasts and folks who work in this sector don’t count. But for an average joe, moderately aware of finance but extremely active on social media – IPO updates aren’t something one might see on the top of their social media feed. The Zomato IPO however, was a different story altogether. 

The poster boy of startups, Zomato went public yesterday, marking many firsts. To begin with the Indian startup community, Zomato is one of the first internet startups to go public and has received massive support from the community with internet brands like Paytm and Mobikwik in queue to go public. 

Secondly, Zomato is also one of the first brands with an established marketing game to go public – their brand love reflecting in the buzz seen online, created by other brands and end-users, alike. 

On the IPO front, reportedly, the Zomato IPO was fully sold out on Day 1. And on the buzz front, according to a free web analytics tool, Brand Mentions, #ZomatoIPO received 35,987,343 mentions delivered daily – this includes media mentions on the internet and social media platforms (Twitter + Instagram). 

A Short Throwback… 

Zomato’s social media marketing game had been one to take notice of since the brand entered the social spectrum. Their brazen and innovative, social media approach can be attributed to the brand’s readiness to experiment and also, to Akshar Pathak who has been associated with Zomato since 2012 and is largely known for his creative prowess. 

Their marketing campaigns became mainstream with a massive OOH campaign that was a play on commonly used Indian cuss words. The campaign was loved and hated in equal parts but managed to put Zomato on the podium as a brand that knows its marketing. And now, the food aggregator app has managed to attain an influencer position, where any moment they create becomes a trend – a testimonial to the fact that moment marketing can work wonders when done right. 

Zomato is also one of the few brands whose marketing efforts reach beyond the walls of the industry, creating a stir among their end-users directly. 

This brings us to the question, can Zomato’s brand equity drive and sustain share value in the long term?

Also Read: 12 Times Zomato made hearts glow red

Can Brand Equity Drive & Sustain Shares? 

On the day of the IPO, Zomato played the part of a disruptive marketer to the tee. On cue came their tweet – a famous dialogue from the movie Hera Pheri and as expected, brands onboarded with witty plugins. Further, #ZomatoIPO had been trending even before its release, which saw a number of brands and users harp on the moment with memes. The stage was set. 

“We live in interesting times. A lot of the prospective investors today are millennials, active on social media platforms, as well as heavy users of apps like Zomato. It makes for a very interesting cocktail of marketing and financial connect, and I do believe that the marketing would influence the IPO performance,” explains Sanjay Mehta, Joint CEO, Mirum India. 

He however highlights that the idea might or might not be scalable in terms of other companies managing to replicate the same combination. “But it certainly works for Zomato,” Mehta concludes. 

Zomato’s marketing and swift social response legacy is rather long and has over the years resulted in goodwill that stands the chance to translate into something bigger. 

“Zomato’s quirky advertising, quick take on issues, clever use of moment marketing, demonstrating its ability to take a stand,  like when CEO Deepinder Goyal’s stood up for a delivery person on a communal issue, first to get delivery boys on bicycles, or even the multi-disciplinary board comprising four independent woman directors – including a sportswoman, have all left an impression in not just consumers minds but also potential investors,” shares Lloyd Mathias, Business Strategist and Investor. 

Mathias opines that Zomato’s disruptive approach to business and marketing has been a key factor in its growth and will continue to provide an edge on its listing in the markets. 

Advisor and Mentor, Prabhakar Mundkur however, is of the opposite opinion. “Startups are well known for being over-valued and an IPO is known for a way for the initial investors to offload their investment. I think Zomato is a great brand from a marketing point of view and it has been a life-changing app especially during the pandemic, but not sure if it translates into a share price in the INR 72-76 price range.”

Sanjay Tripathy, Co-founder & CEO, Armsprime shares that the IPO could have come at a better time when Zomato is harping on the growth triggered by deeper penetration of smartphones and the COVID-19 induced patterns of ordering food at home. But, as the world goes back to the new normal, the situation for the food tech industry might change. 

“Last year, primarily aided by lockdown Zomato had shown strong growth in new customer additions and 2/3rd of them came organically. IPO timing is right and with COVID-19 impact and with a higher scale of operations and reduced ad/marketing spends as a percentage of revenue leading to improved unit economics. But still, it is a loss-making company and with full vaccination, online food /grocery ordering will at least have a 40-50% de-growth as people will go for outdoor eating with a vengeance. So, the food delivery industry may not be able to sustain the rapid growth witnessed in the past,” Sanjay Tripathy shares Co-founder & CEO, Armsprime. 

Zomato as a brand and marketer has been credited with many firsts and them leveraging their strong marketing presence for purposes larger than advertising and communication might just be another one.