The Economist explains
Why do companies rebrand themselves?
Usually, to give consumers a fresh impression. Easier said than done
OF ALL THE things a company wants itself compared with, cancer is far down the list. But that’s what Facebook got from Alexandria Ocasio-Cortez, a far-left congresswoman, after rebranding itself as Meta: “Meta as in ‘we are a cancer to democracy metastasising into a global surveillance and propaganda machine’”, she tweeted. Facebook is hardly the first company to rebrand. Why do they do it?
Sometimes rebrands follow mergers: neither firm wants to appear the lesser, so a new name is hatched. Sometimes they signal a broadening of ambition, as when France Télécom became Orange and began expanding outside its home market. Google metamorphosed into Alphabet after venturing beyond search into sexier realms, such as autonomous driving and surgical robots. Facebook’s rebrand seems similarly inspired. In a video in which he appeared almost lifelike, Mark Zuckerberg, Meta’s chief executive, said the name was meant to reflect that the firm’s chief reason for being is now to build products for the “metaverse”, a networked virtual reality. And beyond its namesake social-media platform, the firm owns other apps, including Instagram and WhatsApp, and hardware brands, such as Oculus. The new umbrella name resolves that “inherent awkwardness”, said Mr Zuckerberg (its subsidiary products will keep their names).
Sometimes firms rebrand to polish their reputation. As any marketer can attest, brands have equity that can depreciate. Sometimes they are better ditched, so as to gain distance in the consumer’s mind from a tarnished good. Philip Morris, a tobacco firm, is now Altria—though it still sells cigarettes, which still cause cancer. The opposite can happen too, where firms seek to bolster themselves by way of their marquees: that’s how BSN, a soulless acronym, became Danone.
Separating the corporate entity from the product also lets firms convey different messages to different audiences. Firms interact with investors, politicians, regulators and employees while products speak to consumers. This allows for two-track messaging without appearing contradictory, says Laurent Muzellec of the business school at Trinity College in Dublin. Diageo can support responsible drinking while Guinness ads on TV tell tipplers to guzzle the stuff. Meta, speculates Mr Muzellec, could sponsor initiatives to reduce teen online addiction while Facebook carries on hooking the kids.
Rebrands are not always successful. In 2001 Britain’s Royal Mail, for some reason, decided to call itself Consignia, which cost £2.5m ($3.4m). It then unrebranded, which cost another £1m. PwC Consulting became the butt of corporate jokes when it took the name Monday, which was scrapped in a takeover by IBM.
No rebrand can fix underlying issues with a product. Better, more engrossing competitors are just a tap away—as TikTok’s rise demonstrates. And it cannot be coincidence that Facebook rebranded after years of unfavourable stories. The rebrand makes none of them go away, nor does it make its leader any more credible. Meta may have just half the letters in Facebook’s name, but it retains all of the company’s problems.