Six months ago, Facebook changed its name to Meta to reflect the company’s focus on the metaverse virtual reality space. This announcement is similar to the name change of another tech giant, that is Google. In 2015, Google changed its name to Alphabet.
It’s not known if Meta’s name change has been accepted by everyone, but even Alphabet is not a popular name among the general public. Even for those who regularly follow technology information, most of us are still more familiar with the names Facebook and Google.
So, why would a company decide to change its name, even though the old name is so familiar to everyone.
Patti Williams, a professor of marketing and associate dean of education at the University of Pennsylvania, says there are a number of reasons why big-name companies would swap names. Sometimes the current name doesn’t really make sense for the direction the company is going or they’re looking to get rid of the negative things that have been attached to the current name.
In addition to Facebook and Google, many companies have changed their names in recent years. Last year, payments company Square became Block, and in 2016 Snapchat became Snap. In 2017, Tesla even dropped “Motors” from its name,…
For Facebook, the reason their name was changed is debatable. Facebook says it will change its name to Meta in October 2021, the same month as Frances Haugen’s controversial interviews. Haugen, a former employee, said that Facebook knew the extent to which its platforms were used to spread misinformation and hate, but the company chose to do nothing, resulting in Facebook suffering. criticism from the public.
Williams believes the Facebook-Meta’s name change is largely to remove the negative pressure from Haugen’s revelations. Renée Richardson Gosline, a professor of management at the Massachusetts Institute of Technology, agrees.
Gosline said: “It remains to be seen how closely Meta relates to what Facebook does, and if they continue to operate in the same way, it will not be easy for them to separate from the negatives associated with Facebook.”
The Meta era has generally not been a good thing for the company’s stock so far, and the name change has “inspired” memes of ridicule and criticism. The rebranding announcement video – over an hour long – features CEO Mark Zuckerberg introducing the company’s activities on the metaverse. It was carefully produced, with stunning graphics, and made absolutely no mention of Haugen’s accusations or the crisis at the company.
However, Meta’s stock has had better news lately – with the share price skyrocketing following the late-April earnings report, investors seem pleased with the growing number of Facebook users. Even so, profit was higher than expected, but still 21% lower than the same period last year.
Spread the risk
There is another incentive for companies like Facebook or Google to change their names, they are threatened by their own success. What started out as an iconic product has become an empire of brands, some of which are completely unrelated to the original product.
This is the key similarity between Google and Facebook, says Barbara Kahn, a marketing professor: both companies started with a successful product and then grew, both organizationally and through brands. acquisition. Every newly acquired product, from Instagram to WhatsApp, has its own brand and reputation.
Kahn says: “The names Facebook or Google really bring restraint when they are the roof of many other brands.”
A company is said to be a “House of brand” when it owns many different brands and businesses and the parent company does not have to show an association with a subsidiary and the subsidiaries do not need to be associated with each other. that’s what both Google and Facebook want. The opposite is called a “Branded house”, which is like Disney, in that the parent company’s brand name supports all other products in the portfolio.
Establishing a “House of brand” helps prevent contagion between sub-brands, spreading risk, Kahn said. Consumers can completely separate the brand from the parent company.
For example, you may have a grudge against Amazon, but you still listen to Audible, or shop at Whole Foods, so this brand separation is valuable.
Target audience
Whether a name change is acceptable or not has much to do with the audience the change is aimed at. That audience is not necessarily a consumer; it can also be competitors, or investors.
Williams says: “Facebook tries to make people think that the name change is because of a change in growth strategy and not to avoid negativity, but I suspect both are correct.”
Williams added, “By choosing Meta, they are actually declaring to competitors more than consumers, declaring that they will make a huge investment… It is an attempt to send a strong competitive message about the future. future of the company.”
Similarly, Google’s move to Alphabet is intended to announce that it has surpassed the shadow of a company with a search engine or even surpassed Google-branded products.
Google’s name change is also primarily geared towards the financial markets, emphasizing investors on all that the company has to offer, and Google itself doesn’t expect most people to call them Alphabet.
For its part, Meta will probably need to do more to get this name change into the public mind. “I don’t think the metaverse on its own is enough to break the negative stereotypes people have with Facebook.”Gosline said.
If a company changes its name and does good things with the new brand, rebranding and new values can bring them success.
Reference: Yahoo