One risk is that the name change may fail to resonate with customers. In 2007, US electronics retailer RadioShack rebranded as “The Shack” in a bid to make it sound more relevant in the digital age. However, the change didn’t go down well, and the company eventually filed for bankruptcy.
Mergers and Acquisitions
When companies combine or split up this often triggers a corporate name change.
Hewlett Packard acquired Compaq in 2022 and combined the power of their brand names to form “HP Compaq” to leverage the recognition and reputation of both companies. After AOL merged with Time Warner, the combined company changed its name to AOL Time Warner. However, the name change was eventually reversed back to AOL after the merger ran up against significant challenges to reduce the harm to the brand.
Another reason is to establish a more uniform identity among a bunch of unrelated firms that have been acquired over time. D.G was an Italian holding firm, which had grown from a motorcycle production company into an industrial packaging company through multiple acquisitions. However, each of these businesses was just operating on its own and there was no uniformity. By grouping all these companies under the name Coesia in 2005 they established a common identity and shared values.
When a company breaks up, it often faces the question as to whether to keep the name of the parent company. In 2021, German automotive company Daimler decided to split into two companies, spinning off its commercial business into Daimler Trucks and renaming the part that focusses on passenger vehicles the Mercedes-Benz group after the name of its well-known car.
Rebranding is always about choice
What is evident is that rebranding is always about choice. While there is often no single reason for a rebrand, by changing their names, companies have to be aware of what the move signals about its future direction and what they are sacrificing as a result.
Some companies can have the luxury of being associated with many different brands. This if often true for consumer groups like Nestlé and Unilever which are home to many well-known businesses in their own right and it makes little sense to be associated with just one.
Other organizations will elevate one brand to become the name of the parent company while keeping the others. Online travel agency Booking Holdings renamed itself from the Priceline Group in 2018 after its popular brand bookings.com even though it also owns Kayak, Agoda, Priceline, and OpenTable among others.
So why didn’t Musk keep Twitter’s brand name, and launch additional products?
The change to X fits with Musk’s goal to turn the platform into an “everything app” modelled on China’s WeChat. The company’s CEO Linda Yaccarino has outlined the company’s vision for X to become a site for audio, video, messaging, payment, and banking.
It is possible that Musk felt the Twitter brand, was too established as a social media platform, and could act as a straitjacket on his bigger vision.
Critics have described the rebranding as a mistake since the name had come part of the modern culture with verbs like “tweet” and “retweet” part of everyday language.
Yet, Musk may have considered these benefits to be overblown. After all, the fact that we used to say “xerox” to signal that you were photocopying something didn’t stop the company’s decline after it failed to capitalize on growth opportunities in the digital age. In a similar vein, we might soon start using “ChatGPT” as a verb just like we use “google” today.
While there’s no doubt that there is massive value to a strong brand, particular one that can trigger certain emotions like Apple and CocaCola, Twitter’s strength is also in its user base and limited competition. Despite Meta’s recent launch of Threads there aren’t that many social media platforms in the world.
For companies that have this kind of power, a name change is simply less of a risk.