Branding: more than just a name
By Giles Delaney*
“A rose by any other name would smell just as sweet” intoned Will Shakespeare’s Juliet, in a desperate attempt to downplay her lover Romeo’s allegiance to the rival Montague clan.
In the corporate milieu, plenty of boards globally have taken the view that their reputation would look all the more rosier with a change to their company’s moniker and/or logo. The results have ranged from outstandingly successful to downright disastrous, sometimes hilariously so. Even if it’s just a subtle tweak, rebranding a multinational company can cost millions – or even hundreds of millions – of dollars. Yet just as it’s a good idea to spruce up the porch come spring time, astute companies need to ensure that their name and branding remains aligned with their activities and values – as well as community expectations. Companies embark on rebranding's for any number of reasons – and they don’t involve running from trouble. Technological change might have made their core activities and corporate identity redundant, or their market positioning may have become confused because they expanded into other activities.In some cases, the transition is foisted on them legally because the entity needs to be distanced from the greater body corporate. But change for change sake? Throw out the corporate baggage from the garden shed by all means, but be wary of the full makeover (especially when the concept is being pushed by pony-tailed designers).
Seventeen years after the fact, Marketing 101 courses globally still teach the salutary lesson of Royal Mail, which changed its name to Consignia in a millennial revamp.
After sustained public outrage, within a year Britain’s postie again was known as Royal Mail.
Rebranding is also synonymous with masking over dubious past (or present) activities: in 2001 tobacco company Philip Morris adopted the confected name of Altria, ostensibly to push the point that the company owned non tobacco concerns including Kraft Foods. There are a few pertinent branding lessons here, because the company sought to adopt a name that would mean as little as possible to consumers. The company also acted because as Philip Morris was seen solely as a tobacco company, its shares were undervalued.
On those measures, the ploy actually worked because Altria remains de-linked to tobacco in the eye of the consumer. And the New York listed Altria shares have soared from $US4 at the time of the rebranding to $US70 – a 1650% gain. Sin stocks, it seems, still have a following even in these more enlightened times. The lesson here is that while the name change was driven by cynical motives, it was well thought out. The rebrand reportedly was mooted a decade earlier and involved screeds of consumer research and a phalanx of public relations advisers.
Arguably the ‘award’ for the makeover misfire of all time goes to British Petroleum, which adopted a sunburst logo and the slogan of Beyond Petroleum to position itself as an environmentally friendly entity. The $200m effort backfired in 2010 after the Deepwater Horizon disaster in the Gulf of Mexico that killed eleven workers and devastated coastal communities. Greenpeace was quick to doctor the logo with black silhouettes of birds covered in slime – and it’s not hard to guess which version attracted the most internet hits! Maybe BP simply suffered bad luck by being responsible for the world’s worst oil spill.
But the lack of urgency in the company’s initial response suggests that behind the sunny image this leopard lacked real intent to change its environmental spots. Speaking of Kraft -- itself rebranded to Modelez – the food multinational committed the cardinal sin of tinkering with Australia’s yeasty spread Vegemite, with an extension line called Vegemite iSnack 2.0. That one lasted about a week and unequivocally was not well thought out. After all, Vegemite stood for goodness and was a trusted name that just needed to be tinkered with.
“To my knowledge, no other biotech company has had to change its name because of some bunch of lunatics somewhere else,’’
In the biotechnology space, there are many instances of rebranding and renaming, ranging from a full makeover to a nip and tuck. Many of the name changes have been spurred by large global acquisitions. For instance, Novartis was created via the 1996 merger of Ciba-Giegy and Sandoz, while GlaxoSmithKline was formed from the union of Glaxo Wellcome and SmithKline Beecham.
For the California based ISIS Pharmaceuticals, rebranding to Ionis was born of necessity after the terrorist group Islamic State purloined its name.
“To my knowledge, no other biotech company has had to change its name because of some bunch of lunatics somewhere else,’’ CEO Stanley Crooke said at the time.
For the ASX-listed drug developer Suda – soon to be renamed Suda Pharmaceuticals – it was a case of the board realising that the Suda name alone gave no indication about the company’s activities. A simple measure -- albeit requiring shareholder approval – with no attendant change in corporate philosophy and direction. But one that positions Suda as a drug developer, away from an amorphous name shared by a Melbourne tapas bar and the Japanese actor Masaki Suda. Sometimes a name change can mean much more than a directional tweak. the very least, boards should be aware of the likely reaction of investors and employees, who may be disconcerted by a new, odd-sounding alien name or revamped identity. They don’t want reactions such as “a howling waste of money”, as the Royal Mail-Consignia rebrand was dubbed.
It should go without saying that the new name and logos should be formally unveiled, with a cogent explanation as to why. But given the number of dud rebranding's, we’ll say it anyway. Ideally, the refreshed brand should signal something for the better, rather than suggesting a company is hiding from past misdemeanours. Most of all, the brand needs to reflect the virtuous aspects of one’s corporate values. This is especially the case in a climate in which professional investors are assessing companies not just on their financial metrics, but on ‘softer’ measures such as the investee entity’s approach to corporate governance, social responsibility, workforce diversity and the environment.
For CLINUVEL, it’s also time for a makeover as the company moves from research and development phase to commercialising its pharmaceutical pipeline. Last year CLINUVEL chalked up $12m of revenue from SCENESSE®, which is approved for use by the European Medicines Agency for the debilitating light intolerance, disorder erythropoietic protoporphyria (known as EPP)1.But the CLINUVEL name remains. For CLINUVEL, reinvention is nothing new, given the company shed its original name of EpiTan. This measure was much more than skin deep, given the company’s decision to move from developing a safe-tanning drugs to tackling some of the most serious skin disorders such as EPP. For CLINUVEL, it was a case of management mulling how the company would like to be defined now and in the long run. Thus, the branding is a mere reflection of that thought process, the underlying philosophy being the company’s successes to date does not justify retaining the status quo. It will be interesting to see whether the subtle repositioning rubs off directly on CLINUVEL’s valuation and investor attitudes. The company can’t – and doesn’t – expect a ‘one day wonder’ re-rating on the back of it. More likely the share price will take care itself after further clinical and sales success: the result, in turn of the corporate philosophy espoused by the rebranding. Ultimately, by maintaining robust and well-executed values, pharma companies such as CLINUVEL will attract investors attracted not just by the existing technology and products, but management’s thought processes and integrity. That way, management can be confident of support for tomorrow’s innovations rather than just today’s. The danger, of course, lies with companies straying from these values and trashing their market brand. If it’s thoughtfully executed, a branding tweak can work wonders even for a well-established consumer brand – and it doesn’t need to involve changing an existing name and logo. Take McDonald’s, which a decade or so ago was seen as a stale fast-food chain selling unhealthy foods from shabby outlets. Simple measures such as introducing healthy options and overhauling the restaurant led to a sales turnaround – all without touching the golden arches. For a biotech not selling directly to the consumer market, a subtler approach is required. But a makeover can be highly effective – as long as it genuinely correlates with the company’s corporate philosophy and direction.
*This is the first column in a regular series about the big issues that affect CLINUVEL and the broader biopharmaceutical sector.