Why companies rebrand

·2 min read

Facebook is now Meta, as the company tries to shift into a new organization focused on virtual connectivity. Industry watchers say the new moniker — and the timing of its unveiling — is also an attempt to shine its tarnished image.

What's happening: The nearly trillion-dollar tech giant is following a familiar playbook of corporate rebranding exercises, which have generally worked out well for companies that want to move on from their pasts, Priya Raghubir, professor of marketing at NYU's Stern School of Business, tells Axios.

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Memory lane reveals four main reasons for corporate name changes:

1) Simplifying...

  • Facebook itself is not new to this game, having launched as TheFacebook.com.

2) Restructuring...

  • Google renamed itself Alphabet to be organized like Warren Buffett's Berkshire Hathaway, giving its underlying business groups more autonomy to operate.

3) Rebranding after scandal or in need of makeover...

  • Philip Morris shed its brand in favor of Altria to protect its reputation from being associated with its tobacco products.

4) Pivoting...

What they're saying: In Facebook's case, you see these reasons coalescing, Raghubir says.

  • The company may also have stepped up its timeline because the rebrand "diffuses all the negativity around Facebook" and points to a positive future, says Gene Munster, partner at Loup, a research-driven investment firm.

  • For well over a month, Facebook has been under siege by the public, lawmakers and regulators over its decisions — revealed in new leaked internal documents — to prioritize growth over social welfare.

What to watch: "I think they're still trying to figure out what the vision of metaverse is," Munster says.

  • But the rebrand shifts and "anchors" the company's energy around the concept of the metaverse, while Facebook as a business unit continues to pay the bills through advertising revenue — and to get heat from regulators for years to come, he adds.

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