The reaction was swift when Facebook recently announced that it would be changing its name to Meta. People rushed to make mocking tweets and critics he pointed the moment was coincidentally close to the consequences of a whistleblower Reveal the deep-seated problems of the company.. Others bought shares in an unknown Canadian company—Meta Materials – thinking that the Facebook ticker had already changed.
CEO Mark Zuckerberg says he’s changing Facebook’s name to It signifies the change that is occurring within the company. while helping to build the “metaverse” –the future of the internet. He says he also wants to avoid the “confusion and awkwardness” that comes with his business sharing a name with one of its apps, and has been considering a rebrand since buying Instagram and WhatsApp in 2012 and 2014, respectively.
There is arguably an effort to reshape the public perception of the social media giant as well – the name change comes later. years of controversy surrounding Facebook, including the use of the platform by military officers in Myanmar to incite genocide, and the generalized data mining of its users for targeting political ads.
But what effect can a name change actually have on a business and its bottom line, and how much cost and risk is associated with rebranding? The answer is not simple for any company, but especially for a global technology company like Facebook, which has a name as ubiquitous as social media themselves.
“That kind of [re-branding] The campaign runs for many, many years and will likely cost billions of dollars in the long run, ”says Brett Caraway, an assistant professor of media economics at the University of Toronto. He adds that because the company has already invested so much in the Facebook name, the stakes are high.
“He is trying to undo or redesign what he has already established, and there is an inherent risk in that.”
Even at risk, Caraway points out that Meta isn’t the first big tech company to change its name to signal a new direction. The same thing happened when Google changed its name to Alphabet in 2015, in an attempt to create an identity that went beyond the powerful search engine. Alphabet, Google’s parent company, also has subsidiaries such as YouTube and Fitbit.
“By naming them differently, it gives an idea of how each subsidiary works together and how much autonomy they have,” says Carraway, who adds that the company wanted to show stakeholders that it was also investing in different areas of its business, such as Android. . and the smart city development organization, Sidewalk Labs.
“That is important in terms of how they run the business, but also in terms of how shareholders understand the operations of the company.”
There are similarities to Facebook’s decision to change its name. the metaverse—An interactive online universe that Meta hopes to pioneer — is an area the company plans to spend more resources on, especially as Facebook, the social media platform, is increasingly seen as a tool used primarily by older generations.
But changing a name is also a tactic some companies use to steer clear of controversy. The Edmonton soccer club recently changed its name to leave its old racist name, a decision that cost $ 2 million but has been widely applauded by fans.
A less successful example was when the American tobacco company Philip Morris became Altria in 2003 in an effort to protect its non-tobacco brands from negative perceptions of cigarettes in North America.
Joanne McNeish, a marketing professor at Ryerson University, says the company likely spent millions on brands, logos and trademarks, just so consumers are still aware of Altria’s tobacco roots. (Toronto Ryerson University also undergoing a name change distance himself from Egerton Ryerson, one of the architects of Canada’s residential school system).
In Canada, McNeish says national name changes generally tend to be less noticeable, reflecting the country’s calmer and more conservative business environment. She points out when The Bay changed its logo to Hudson’s Bayand when banks like Royal Bank of Canada or Bank of Montreal switched to abbreviations as they became more involved in the global market.
But even seemingly small changes can come with big costs.
“It still costs millions of dollars, because it’s changing everything from business cards to posters to construction checks,” says McNeish. “When you do all of that and it doesn’t result in increased sales, then it basically has an impact on profits.”
That was the case when Coca-Cola brought out the “New Coke” in the 1980s in an attempt to reorganize the market share of competitors like Pepsi. The new product was sweeter, and the company thought the rebrand would be a success, but “it failed spectacularly,” says Caraway. It turned out that consumers liked the original recipe and demanded that it be returned to them.
Rebranding failures show that it’s important for companies to think of more than dollar signs when things change, says McNeish, as a name “acts as a signal” to the consumer and shapes their experience and knowledge. of a brand.
McNeish says the move from Facebook to Meta suggests that the company’s focus on its first social network will shift elsewhere and invest in other platforms or businesses over time.
“In other words,” he says, “little by little they will leave the Facebook business.”
Reference-www.canadianbusiness.com