Media reports over the past days pointed towards interesting developments brewing at Facebook. Rumours circulated in relation to a name change which could be formally announced by the end of October. The change in name is believed to represent the brand’s evolution, steering away from being just a social media platform.
This concept of business evolution is not new. One successful example is Amazon which evolved from an online book retailer. International Business Machines Corporation, more commonly known as IBM kick-started its operations in 1911 as the Computing-Tabulating Company, rebranding in 1924.
Changing the name of a brand is something which needs to be considered carefully, especially when dealing with a business the size of Facebook. In certain contexts, the name of a brand can literally be everything and a change might imply less users and customers. Certain instances however might be ripe for a rebranding. When brand names start to fall out of favour with the public or else need to be re-aligned with the future, a rebranding may be considered. In the present moment, this is the situation for Facebook in both scenarios. This is seconded by the fact that Facebook has made headlines and not always for the right reasons quite recently.
The renaming of the holding company is being considered in light of the fact that Facebook is facing an avalanche of criticism due to its negative associations with mental health, disinformation and privacy. The rename will detach existing brands such as Instagram and WhatsApp from the criticism and potential reputational crisis.
This may bring to the fore several investment benefits. Some Investment Managers may be reluctant to invest in Instagram for example, due to the baggage of Facebook. The change in name can allow such investments to take place with fewer concerns.
On the other hand, there may be issues which would still persist even in light of a change of brand name. The business model itself is controversial as it involves keeping users hooked onto a platform, gathering data pertaining to preferences and opinions of users, to in turn leverage these for the benefit of advertisers. If the controversy surrounding its business model persists, a change in name may be less likely to escape the reputational carnage that may ensue.
Time will tell if this would be a good move in the long-term. Let us know your views in the comments section below.