Private equity investors had an interesting year of dealmaking, though there may be signs of a slowdown in the coming months. Anticipating a tougher market ahead, the deals won’t stop; they will simply become more selective. Analysts are focused on ways to optimize for cash that will better position companies for economic turmoil, while also taking a fresh approach to new private equity investments. With talks of a recession, increasing interest rates, and public market volatility, private equity firms need to be more strategic and directed with their investments in target companies. This means minimizing risk and adding value to turn good companies into great ones.
PWC notes that private equity deal volume slowed down in the first half of this year even with plenty of dry powder available. This indicates that PE firms are more concerned than ever about potential volatility. Analysts NEED to invest in a holistic assessment of the target company’s digital marketing efforts to strengthen their understanding of the risks and value opportunities ahead for possible investments.
A proper due diligence process will evaluate the marketing accounts of the target company and give you extremely valuable actionable insights. You must compare industry best practices, competitor data, and the target company’s strengths, weaknesses, opportunities, and threats (SWOT) to develop a well-informed analysis. Data and insights help minimize risk and forecast the opportunities that could remain in each of these areas should they be awarded increased investment and/or more experienced management.
DEPT® offers a fully comprehensive audit that provides the following three components for firms looking to invest more confidently.
#1 – Digital media assessment
This evaluates the efficacy of paid search, paid social, and other in-market digital media spend. Advertising spend has grown more competitive and costly in recent months. However, withdrawing all advertising is not a sound option. Research shows that companies should continue to uphold a brand presence in the midst of challenges and provide a consistent brand experience to sustain or grow market share.
Our digital media assessment analyzes a target company’s audience segmentation, size, and overall strategy in contrast to landing page and ad type, quality, or device format. It will identify the strengths, gaps, and opportunities they face. We review ad performance to potentially lower acquisition costs and provide more targeted, more tailored brand experiences. As a result, private equity firms will know if – and how – a company can shift advertising budget to the platforms and activities that will deliver the most powerful results.
#2 – SEO assessment
As consumer behavior changes, consumers gravitate to search engines for solutions to solve their problem or address a need. To be everywhere the customers are, target companies need to not only invest in search marketing but keep up with the ever-changing dynamics. Companies that will weather an economic storm will only do so by staying connected to what their customers want and evolving with them as needs and behaviors change.
By executing an SEO assessment, you can dive deep to assess technical SEO opportunities, content creation/optimization, and user experience opportunities that can improve the design and functionality of your site. These insights are then contextualized with competitor website research and your cross-channel performance data. You should also audit the brand’s presence on alternative “search engines” like the Apple App Store or Amazon. By digging deeper into search behavior, you’ll be able to see where and how to make improvements to keywords, messaging, meta descriptions, and other aspects of branded or non-branded performance to grow organic search presence.
#3 – Conversion assessment and heuristic analysis
A user flow analysis will help you map consumer behavior through the target company’s digital assets and website. By identifying changes to behavior and matching those insights to the channel and account management strategies, ad copy, and the competitive landscape, you can earn greater value from existing traffic through enhanced click rate optimization. This analysis includes recommendations for testing, iteration, and optimization that will improve the overall user experience.
Companies can minimize threats to their economic growth by maintaining a consistent connection with consumers through brand investment. DEPT® has helped a number of PE firms make smarter investments over the years through our Digital Due Diligence service. This measures how well-positioned a potential target company’s marketing strategies are to ensure you make the right investment and – if you do choose to invest – shows you where improvements can be made.
To get a deeper look at how this program can help your firm, reach out to our experts today.
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Chief Revenue Officer, Growth Americas