Rebranding can be a risky move for companies. It signals big change, and execs need to manage that change effectively.
Jumping into a rebrand without thoroughly preparing internal and external stakeholders can lead to confusion, negative press, declines in search and social performance, and even loss of customers or partners.
In this post we'll examine the potential risks of rebranding…
In our recent brand reputation blog, we saw how brands built over years can be crushed overnight.
To answer the question above, we‘ve taken a look at the engagement impact of a couple of the biggest rebrands in the last five years.
Let’s start with Facebook.
While the Facebook name still remains, back in October 2021 Mark Zuckerberg made the decision to separate and rename its holding company, changing it from Facebook to Meta.
With the same intentions as Musk, Zuckerberg opted for a name change to signify a change in the business’ direction, and its expansion into new areas (ie. the metaverse).
We took a look at the impact of this decision on headline engagement.
We studied Facebook headlines minus the mention of Meta, and vice versa, to understand the impact of the rebrand on content engagement.
The name change, which occurred in October 2021, appears to have diluted brand attention.
Average engagement for Facebook headlines from July 2018 – October 2021 (pre-rebrand) compared to November 2021 - today (post-rebrand), has dropped by 76%.
And over the last five years, Facebook headlines have attracted 212 engagements on average, while Meta has only managed an average of 36.
What’s more, Meta has 100% lower monthly search volume (550K) than Facebook (124M), according to BuzzSumo’s Keyword Tool.
Now, of course there are other reasons for this discrepancy. Facebook is still a platform used by billions of people every day, so it’s bound to rack up more interest than its holding company Meta.
And, as we've seen, Facebook interest is on the decline.
This is expected, since the platform has been around for decades and has therefore reached maturity.But that aside, changing the name of a brand by default makes that brand less sticky.
Once the media furore has died down surrounding re-names, we have seen brands earn fewer mentions, less press, and lower searches.
It takes years to build a brand, and a name change can devalue that equity in more ways than one.
Another brand story that hit the headlines was Pepsi-Cola’s decision to rebrand its signature maple syrup from Aunt Jemima to Pearl Milling Company.
The former brand drew criticism in 2020 due to the racial stereotyping present within its logo and across its advertising.
Over the last five years, Aunt Jemima earned 4K headline engagements on average.
In the same time period, articles surrounding Pearl Milling Company didn’t even achieve half of that.
In fact, its average headline engagement was 70% lower.
What’s more, monthly search volume for the Pearl Milling Company is now 90% lower than its predecessor.
In the two years leading up to the rebrand, Aunt Jemima landed 843K mentions on social media.
In the two years following the rebrand, Pearl Milling Company (PMC) has achieved just 21K.
In other words, in its first two years PMC only managed to land a 40th of its former mentions.
But mentions aren’t always positive, and news doesn’t always mean good news.
A great majority of the Facebook reactions surrounding Aunt Jemima pre-rebrand were negative in sentiment. Of the 32K Facebook reactions to Aunt Jemima headlines, 53% were angry.
The Pearl Milling Company name was a chance for the brand to start afresh – but what impact did it have on sentiment?
Well, judging by Facebook reactions, audiences were still unhappy.
In fact, of the 170K reactions (ie. 5X the amount that the former Aunt Jemima brand received), 39% were angry.
This goes to show that rebranding may not necessarily help you shake off negative associations.
In this case rebranding was the only right decision, but the impact on brand presence is unignorable.
When a firmly established brand changes its name, it's going to take time for audiences and consumers to catch up.
And, as evidenced, a name change is not enough in and of itself to turn around a bad reputation.
Based on the data, if rebrands were to consistently play out like those we’ve analyzed above, brands could stand to lose:
While this is by no means a statistically significant analysis – after all, no brand is made the same, and correlation doesn’t equal causation – brands should expect an uphill climb when trying to live up to the engagement created by their predecessors.
Brands can be listed on financial statements, making brand equity a legitimate asset.
In fact, L’Oreal bought Aesop in its most expensive acquisition largely due to the power of its brand.
If rebranding causes a company to lose awareness and dominance, it could be a lot less appealing to investors.
If you’ll believe some studies, rebranding can in fact boost the value of a company.
The University of Nebraska Omaha observed “An average increase of 2.46% in stock prices, which is equivalent to an average gain of $31 million in market value of the sample firms.” and concluded that “investors appreciate and reward firms’ rebranding efforts”, and “rebranding produces significantly positive changes in firm value.”
But, as we’ve seen, a rebrand doesn’t come without risks.
In the case of Pearl Milling Company, it could take the brand two decades to reach the awareness it once earned on social media – and even if that awareness was built cumulatively, half of that time is still a long stretch to get the brand to where it once was.
Rebranding is not a decision to be taken lightly.
Leaders should seriously weigh up the cons of confusing audiences, losing demand, and damaging revenue against the pros of building new positive associations and getting in front of new audiences.
Enter any topic, term or url to search to see BuzzSumo in action. It’s free!
100% free. No credit card required.