Why tech giants like Meta change their names
Yahoo Finance's Allie Garfinkle details the weight and importance of name changes for large tech companies, what went into Facebook's shift into Meta, and companies' performance after rebranding.
Video Transcript
RACHELLE AKUFFO: Welcome back, everyone. As the famous Shakespeare line goes, what's in a name? That which we call a rose by any other name would smell just as sweet. But can the same be said for companies when they decide to change their names? Let's bring in Ali Garfinkle to take a closer look as she joins us now. Ali.
ALEXANDRA GARFINKLE: Hello. So we are actually at the six-month mark of Facebook's name change to Meta. It was October 21, 2021, where the announcement came out. And, you know, I actually started asking around, being like, did this name change work? And more to the point, did Google's name change work to Alphabet all those years ago? And, you know, I think how we feel about the Facebook name change-- I'm sorry, now Meta-- is sort of inextricably tied to not only the way it was done, but the press Facebook was getting at the time.
The name change was on October 28, 2021, right? And then Frances Haugen's bombshell whistleblower interview was actually on October-- early October. So it's-- so I started asking around to see if it worked. And the answer is, eh, sort of. The consumers seemed to really think that the name change was actually to offset negative press, mostly.
DAVE BRIGGS: And so did it work in the end? I mean, are people still focused on the negative news? Ultimately, that's the big question for now Meta.
ALEXANDRA GARFINKLE: So Facebook has really struggled in the Meta era, as you can see. We think of name changes as actually geared towards consumers, but they can also be geared to shareholders. They can be geared to investors. They can be geared to employees. The Facebook name change was actually a lot of things all at once. It was to offset negative press. And in that sense, maybe it hasn't worked. But in the sense that it is communicating that Facebook's actually a house of brands, that actually maybe has worked.
One of the experts I talked to said it can actually be really limiting for a company like Facebook, which owns WhatsApp and Instagram, to just be viewed as Facebook. I mean, and that's one thing that, actually, Facebook and Google have in common. Both started as these iconic brands with one product-- Google search, Facebook, which everyone had when I was in middle school. And there is-- but there is a sense that they grew, right?
Like, for instance, acquisitions, organic growth, and at a certain point, Facebook has become what is called a house of brands, right, where it's-- there is one top brand, and then there are a bunch of others that aren't necessarily connected. The converse would be Disney, which is-- was called branded in-house. So the answer is, did it change for consumers? No, but did it actually signal something completely true to the market? Experts actually say yes.
BRAD SMITH: And so going forward from here, in some of the other companies, what can they learn from how Facebook, Meta, went through their own rebranding, their name change, as we had also seen with Alphabet? Of course, that was years prior, but more recently, perhaps, that we've seen with Square going to Block now. What can they learn from these instances in order to enact the right strategy that actually parallels and matches up with the product that they're hoping to really bring to the market and saturate the market with?
ALEXANDRA GARFINKLE: Well, name changes can be aspirational. In some cases, the Meta name change was. It was an effort to kind of claim competitive space in the Metaverse. But experts say that the name changes that work the most, the thing that companies should always know, is that a name change really works when it is authentic to the company. For instance, one of the ones that multiple experts pointed to as really successful was Starbucks dropping coffee from its name, or Dunkin' Donuts dropping donuts. Those are things that people were calling it anyway. That was something that people was-- that it was things people were saying.
So when the name change is really authentic, when it's something that is inherently built into the cake and is kind of a symptom of what the company has become, that's when it does work the best. That said, there's no guarantee these name changes take. One expert I was talking to spoke about Altria, which owns, among other things, you know, Juul and Philip Morris. And those actually didn't take quite as well. So sometimes, it works. Sometimes, it doesn't. But the most important thing is that it's authentic to the brand.
BRAD SMITH: Oh, na, na, what's my name, is what Rihanna would say. And now we know even more about what went into the names for some of these tech companies. Ali, really appreciate the time and the breakdown here on this anniversary from Meta Platforms now. Appreciate it.
