In its full-year results on Wednesday, merged FTSE 100 bookmaker Paddy Power Betfair PLC (LON:PPB) revealed that it was planning to change its corporate name to Flutter Entertainment to reflect the “increased diversity” of its brands and operations.
Paddy Power isn’t the only large firm to have tried its hand at an image re-shaping, and some have had to make the switch back, but why take the risk of changing the brand in the first place?
The good
When a firm rebrands, it is sometimes to pre-empt a change in the way it does business. This includes changes like entering a new business line or market, which may leave the previous branding too restrictive or not fit for purpose.
For example, Apple Inc (NASDAQ:AAPL) was originally known as Apple Computers, but once it began expanding into music players with the iPod and eventually mobiles with the iPhone, the name was shortened to give it a broader cover for the new variety of products.
International growth across separate markets can also cause a company to rebrand to maintain its consistency and image across multiple territories, hence why you always know a bottle of Coca-Cola even if it’s written in Chinese.
The bad
While a firm can choose (and would usually prefer) to proactively rebrand, sometimes external factors can force a company to rework its public image.
A big driver of reactive rebranding is negative publicity following a scandal or other events that have tarnished the company.
Andersen Consulting, now known as Accenture, rebranded itself following a split from its accounting arm, Arthur Andersen, which was implicated in the collapse of US energy giant Enron in the early 2000s after revelations of fraud.
Other reactive rebranding is used in less turbulent circumstances such as a merger or acquisition, like FTSE 100 spirits firm Diageo PLC (LON:DGE) which was formed from leisure group Grand Metropolitan and brewer Guinness in 1997.
The ugly
While rebrands are often carefully thought through before they are implemented, they don’t always go to plan and can sometimes lead to the company switching back.
A good example is Royal Mail PLC (LON:RMG), which in 2001 - before it became a PLC - changed its name to Consignia, with then-chief executive John Roberts telling customers the new name “describes the full scope of what the Post Office does in a way that the words 'post' and 'office' cannot".
Perhaps predictably, the new name became a laughing stock and Roberts left the firm, with the original branding restored soon after.
However, that wasn’t before the whole exercise had cost the company a cool £2mln.
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