In 2019, Facebook launched an ambitious strategy to shift from one Facebook to two: facebook the app with its signature blue ‘f’ – and FACEBOOK the company, with a fresh all-caps identity spread across its Instagram, Oculus, and WhatsApp platforms. The company’s message to the world, and to Wall Street in particular, was that there is more to FACEBOOK the company than facebook the app. This week’s announcement that the corporate name is changing suggests that the world didn’t buy it.
By launching a new corporate name, Facebook aims to broaden perception of the company and signal ambition to grow beyond its existing businesses. In doing so, it also moves the corporate brand one step farther from its connection with customers.
A new corporate name does little to alleviate customer concerns around ongoing crises associated with Facebook’s social media practices and policies. Instead, it prioritizes the investor audience – compartmentalizing those challenges and pivoting focus to greener meta-pastures.
Is this a move to circumvent responsibility? Is this a strategic hedge against federal regulation? An effort to distance the Facebook social media brand from a metaverse experiment that may or may not spawn a dystopian nightmare? An acknowledgement that the future of our online social lives needs a total reboot?
Whatever the rationale, Facebook at the corporate level is signaling less focus on its customer image.
Building a monolithic brand is hard
As a strategy partner at the brand and innovation consultancy Lippincott, I talk to brand leaders routinely who are grappling with this all-too-familiar challenge: Our current brand is known for something other than what we’re building next. Do we build a new brand for these growth areas, and if so, how do we ensure the company is seen by Wall Street for all its parts? Or do we do the work to stretch perceptions of our current brand, and bear the risks associated with redefining our core business?
As brands like Starbucks, Nike, Amazon, Apple, and Netflix have experienced, any issue with the retail brand is inextricably linked to the investor brand. And any operational missteps cause ripples in customer sentiment. When investors buy the same brands that we shop as consumers, greater transparency and corporate accountability is required.
Contrast this with a holding company model, where brand risk is diversified. P&G or Diageo can make changes to its portfolio of brands more easily, because each brand has less connection the corporate identity. Conversely, corporate actions should be less salient to the consumer of individual brands that are minimally affiliated, if at all, with the parent.
Google’s move to Alphabet in 2015 took advantage of elevating the company above its individual product brands. A broadened corporate identity offered greater flexibility and investor permission to venture into net new spaces – for example, investments in Waymo autonomous vehicles or a foray into healthcare innovation with Calico – without causing confusion or dilution to the core Google business. It also signaled entrepreneurial ambition: that the core business of today may be surpassed by new growth engines of the future. The average Google user will never see or experience the Alphabet investor brand, and that’s the idea.
Will this become a trend?
Will more mega-corporations move to distance their investor brand from their consumer brands? Many enterprises do grapple to distinguish their corporate names from one slice of the business:
• Marriott International is a company that shares a name with just one of its 30 diverse hotel brands
• UnitedHealth Group is synonymous with UnitedHealthcare, though its Optum business has driven a major share of the company’s recent growth
• PepsiCo and The Coca-Cola Company both strive to stand for far more than their namesake colas
• Amazon acquisitions like Whole Foods may challenge the elasticity of the retailer’s brand
Do they all need Alphabets of their own? The answer is, likely, no.
The alternative: A more agile consumer brand
Many of the world’s strongest companies have embraced the alternative to Facebook’s move: building more customer connection with the brand at the top of the house. It requires agility, and continued investment in managing and expanding what the brand can mean to its customers, even as business priorities and offerings evolve over time.
Apple has managed to evolve and expand over time, from computers to phones to entertainment, gaming and education, all by continuing to reinvent what the company stands for without changing its name or core focus.
Disney is synonymous with its entertainment brand: Mickey Mouse and theme parks. But by standing for an idea as lofty and malleable as “magic,” it has created a brand that can house Marvel and ESPN and grow in far more directions.
Bank of America has stretched beyond associations as a retail bank to define a broader range of financial services, from wealth management to global markets—and focuses on communicating this broadened perspective as a benefit to customers.
Instead of creating a flexible vessel to house disparate brands, these companies have leaned into a loftier, uniting purpose that centers on the value they bring to customers and investors alike. Instead of distancing corporate leadership from the customer, CEOs of these brands are playing increasingly visible, activist roles. Tim Cook (Apple), Bob Chapek (Disney), and Brian Moynihan (Bank of America) have all joined the Business Roundtable, amplifying their companies’ voices in support of social and environmental progress. Yes, it’s harder, because crises of consumer confidence cannot be compartmentalized. The onus falls on the total enterprise to build and manage trust.
For Facebook, a new brand may help reassure investors who seek new paths to growth. But what is yet to be seen is where customers fit into this vision for the future. Will the new brand be present in our lives as customers, or will it remain in its own Wall Street metaverse?
Jake Hancock is brand strategy partner at creative consultancy Lippincott, which has named everything from Duracell batteries to Coca-Cola’s Sprite to Hyatt’s Andaz.