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Monday, December 31, 2012

From The Archives: Bungled "Live" Branding Costs Microsoft Millions

Intrinsic value that's never analyzed and often overlooked. Managing the Cost of Site Rebranding- I forgot about this one but has lots to justify the price of a great domain.

Bungled "Live" Branding Costs Microsoft Millions
Saturday January 27, 2007 12:10PM
by Preston Gralla in Opinion

Microsoft’s confusing and incomprehensible use of “Live” branding does more than just baffle users — it is also costing the company millions, because people don’t bother to visit Live sites because they can’t figure out what the sites do. When will Microsoft finally fix this nagging issue?’

CNet reports that last week Microsoft lowered sales forecast for its Internet services for the year from 11 percent down to between 3 percent and 8 percent. The company also admitted that its share of the search market has dropped, while Google’s continues to rise. The site notes, “Windows Live Search saw its searches drop nearly 10 percent from a year ago, while Google’s rose more than 22 percent, according to figures released this week from Nielsen/NetRatings. Google has 50.8 percent market share, followed by Yahoo at 23.6 percent and Microsoft with only 8.4 percent.”

This should shock no one. Microsoft has done everything it possibly can to confuse the world about what “Live” means. One the one hand, the company seems to say that “Live” services are those accessed online. But if that’s the case, why does its security product carry the Live moniker — OneCare Live? It’s a downloadable piece of software, not an Internet-based service.

Beyond what, why does it call its online service for small businesses Microsoft Office Live, when it has absolutely nothing to do with Microsoft Office?

As for Windows Live, it has absolutely nothing to do with Windows. It’s the search engine formerly called MSN Search.

Given that mess, who would want to get near anything with the word “Live” in it?

This confusion has hurt Microsoft’s bottom line, says David Smith, an analyst at Gartner.

“Microsoft’s Live branding has been tremendously confusing and has hurt the company, and it is very likely contributing to the situation they are in right now,” he told CNet. “They’ve created another brand and have not differentiated it.”

Will Microsoft eventually fix the “Live” mess? I’m not sure. Several years back, it similarly confused the world when it applied “.NET” to every product and service it could find. It hasn’t cleared that confusion up yet. So don’t expect it to fix the “Live” problem any time soon.
The recent announcement by B of A and FleetBoston of their intent to merge (the press release) was followed up by confirmation that all FleetBoston banks would be re-branded (AdvertisingAge, Nov 3, 2003). Offline, this means changes to all 1,500 branches and 3,400 ATMs, and changes to anything that carries the Fleet logo.

Online, it means, at a minimum, changing the look and feel of ~600 pages of Fleet's primary public site and 17 other domains that have "fleet" in their name. The first step of a rebrand is always to take a full inventory of all the sites and all their contents. There are two ways to do this: the hard, expensive way - throw people at it - or the easy way - automate the task from the outset to gain immediate visibility into the site.

For companies going through an online rebranding or content migration, site inventory automation will dramatically shorten the time to project completion and reduce the associated expenses. Just as an example, using automation to inventory Fleet's ~600 pages and all associated objects would take around 15 minutes - less time than it would take a person just to get organized to begin the task.

Bottom line: Throwing people at a website inventory is expensive, inefficient and unnecessary. If the people performing your rebrand or content migration are using this method, you are paying too much.

6 Billion in Rebranding costs??!?!?!?
Posted by pnanninga (See profile) - May 3, 2006 3:45 PM PDT

what a joke. this is why cingular continues to lose market share to verizon and sprint. i bet they will still try to charge "old at&t wireless" customers activation fees to sign a new contract with the "new at&t wireless". I wonder how that will go . . . "oh by the way, you will be charged an $18 activation fee per phone to go from at&t wireless to at&t wireless" . . . give me a break. any customers who want to be a part of this mess are nuts. its off to verizon wireless for me. . . Yet, what's probably more eye-opening is that the rebranding is even more costly when you factor in the daunting $10.5 billion in ad spend for promoting SBC, BellSouth and Cingular over the past five years, according to the Forbes article.

ootnotesAdjustments include one-time charges of rebranding costs of $13 million ... One-time items include rebranding costs of $144 million to rename the ...

djustments include one-time charges of rebranding costs of $13 million to rename the organization Accenture; reorganization charges of $58 million to complete the transition to a corporate structure and the initial public offering; $967 million for the one-time grants of restricted share units to partners, former partners and employees; and income taxes on the above plus tax costs of reorganization, which totaled ($13) million. Diluted earnings per share would have been $0.10 if shares outstanding at August 31, 2001, had been outstanding for the full year.

djustments include one-time items and amounts necessary to present results prior to May 31, 2001, in corporate form as if the reorganization had occurred on September 1, 2000. One-time items include rebranding costs of $144 million to rename the organization; reorganization charges of $705 million to complete the transition to a corporate structure and the initial public offering; $967 million for the one-time grants of restricted share units to partners, former partners and employees; income of $188 million due to the adoption of FAS 133; and the related income tax impact, for a credit of $106 million. The

Rebranding Costs

Charles Prince, the current CEO of Citigroup, announced plans to cut more than $1 billion in costs this year after shareholders complained expenses were growing too fast and profits too slowly. The company didn't say today how much the re- branding will cost.

``As an investor, I would rather see results on the bottom line than see them doing things more on a cosmetic level,'' said Amit Kumar, an analyst with Minneapolis-based FAF Advisors, which oversees more than $100 billion and owns Citigroup shares. ``The brand is pretty strong; all they're doing is tweaking it a bit.''

Weill fought to keep the umbrella when he spun off Travelers from the bank, spending millions on advertising, stationery and signs, according to Monica Langley's book ``Tearing Down the Walls.''

Fate of Sculpture

``I would say good riddance,'' said Jack Trout, president of Old Greenwich, Connecticut-based Trout and Partners Ltd., a marketing strategy firm. ``It belongs with the insurance company; it certainly doesn't belong with Citi.''

The bank's new logo will be silver with a red arch over the last three letters. Divisions including the corporate and investment bank, the wealth management group and alternative investments will begin using the new brand in the second quarter. The consumer bank will keep its blue logo.

``For the first time since the creation of Citigroup, we will present a unified brand to our clients around the world,'' wrote Prince in an internal memo to employees. ``Our research continued to show that the trademark red umbrella was more connected with insurance, specifically St. Paul Travelers.''

No decision has been made on the fate of the large red umbrella outside Citi's Tribeca offices on New York's Greenwich Street, said Michael Hanretta, a bank spokesman. Fishman said he hoped to buy the sculpture in a separate transaction.

Time Warner, Broadwing, Change Names After Losses

By Peter Robison

Oct. 16 (Bloomberg) -- Richard Ellenberger, then-chief executive of Cincinnati Bell Inc., told investors in November 1999 that his company's name change, to Broadwing Inc., symbolized its new image.

"The broadwing hawk soars at about 1,000 feet above its prey," Ellenberger said on a conference call. "And when it strikes, it strikes."

Then the dominant local-phone company in Cincinnati lost $4.9 billion over three years by trying to become a national Internet provider. In May, Broadwing reverted to the name Cincinnati Bell, which spokeswoman Libby Korosec said was easier to explain to the public.

"We all thought, gee, how about Cincinnati Bell?" said Korosec. "That's what we are."

Enron Corp., WorldCom Inc. and other U.S. companies, smarting from accounting scandals, strategic missteps and a 31 percent drop in the Standard & Poor's 500 Index since its peak in March 2000, are also turning to more traditional names. Time Warner today drops "AOL" from its name after the 2001 merger with America Online led to a $75 billion drop in market value.

Some investors aren't impressed.

"Do I think it works? I think it's humorous," said Rich Turgeon, who helps manage $65 billion as director of research at KeyCorp's Victory Capital Management in Cleveland. "If a company's been around for any period of time, it's going to have trouble distancing itself from its legacy."
Temporary Increase

The new appellations may not help share prices either, according to a 1994 study of 147 U.S. companies that changed their names. The study, by University of Washington finance professor Jonathan Karpoff, found that the companies got an average stock price boost of 0.4 percent over two days that then dissipated.

"You don't get magical effects," Karpoff said.

Changing a corporate name can take a year and cost tens of millions of dollars. BearingPoint Inc. estimates it spent $28 million, almost triple its most recent quarterly net income, to change its name from KPMG Consulting Inc. last October.

"Institutions have become shaken, and people want something solid," said Anthony Shore, creative director of naming at Landor Associates, a San Francisco-based consultant whose clients include Microsoft Corp. and Motorola Inc.

In July 2002, WorldCom filed the largest bankruptcy in U.S. history after overstating sales by $11 billion. The Ashburn, Virginia-based company plans to adopt the name of its long- distance phone unit, MCI, around year's end.
Enron = CrossCountry

"We wanted a new name that would make us proud," WorldCom Chief Executive Michael Capellas said in a statement in April.

Enron now calls its North American natural-gas business CrossCountry Energy Corp, which plans to emerge from bankruptcy next year. The name CrossCountry was chosen to suggest a "normal, regulated pipeline," said spokesman John Ambler. "After the meltdown, we felt very strongly that what we did had to be credible and reasonable, nothing over-promised."

Prosecutors have charged 23 people in connection with Enron's collapse. Among them is former Chief Financial Officer Andrew Fastow, who faces 109 securities-related fraud charges. Enron, based in Houston, was the seventh-largest company in the U.S. by sales until investors discovered it had hidden $1 billion in losses in off-the-books partnerships.
Philip Morris = Altria

In January, Philip Morris Cos. changed its name to Altria Group Inc., three months after a jury ordered it to pay $28 billion in damages to a woman with lung cancer, the largest award ever for an individual smoker. A judge later reduced the award to $28 million.

Philip Morris defied the trend in more familiar names by choosing "Altria." Derived from the Latin word "altus," the new name reflected the New York-based company's goal to "reach higher," it said in a statement.

Investors kept focusing on cigarettes, sending Altria's stock down 26 percent in the first quarter after a $10.1 billion judgment against its subsidiary, the Philip Morris USA unit, in a consumer-fraud lawsuit in March. The stock, which got a 1 percent boost over two days when the name was first proposed in November 2001, has dropped about 5 percent since then.

In April, shareholders of Paris-based Vivendi Environnement SA, the world's largest water company, voted to change the utility's name to Veolia Environnement. The company's former parent, Vivendi Universal SA, had spent $77 billion on takeovers in an unsuccessful bid to become a global media company before the ouster of Chief Executive Jean-Marie Messier last year.

Veolia's shares dropped 6.7 percent the day the new name was announced. They have since recovered, touching a 52-week high of 20.10 euros ($23.39) yesterday, up 10 percent since the name change.
Time Warner Minus AOL

Time Warner shares rose 14 cents to $16.45 on Sept. 18, the day its board approved dropping AOL. The shares then declined to as little as $15 within two weeks. The stock rose 16 cents to $15.85 at 10:12 a.m. in New York Stock Exchange composite trading.

"Time Warner isn't going to sell more Time magazines or get more viewers of HBO because they changed their name," said George Gilbert, who owns 312,000 company shares in his $445 million Northern Technology Fund in Chicago. Still, he said that a change can't hurt in rebuilding a reputation. "When your name is tainted, maybe it's the easiest way."

Time Warner Chief Executive Richard Parsons said in a statement last month that the change would "end any confusion" among investors between the corporate name, Time Warner, and the America Online brand.

Last year, 2,346 companies adopted new names, according to New York-based Enterprise IG, part of a worldwide cottage industry of "identity consultants."
Google's Free Ride

There are at least 250 naming consultants, charging fees as high as $1 million, said Jay Jurisich, creative director at Igor International, a naming firm in San Francisco. He warned that more familiar names now being adopted may backfire, noting that quirky monikers are often cheaper to market because people remember them.

Google, the most popular site for searching the Internet, has spent nothing on marketing to consumers since the company was founded in 1998, according to spokesman David Krane. Google doesn't buy television or newspaper advertising, preferring to grow by word of mouth, he said.

The name comes from the word googol, or the numeral one followed by 100 zeroes, and suggests the vast amount of information on the Web.
$110 Million Name

PricewaterhouseCoopers Ltd.'s consulting unit said last year it would spend $110 million to advertise a new name, Monday, meant to signify "fresh thinking." International Business Machines Corp. bought the unit last October and opted for a more prosaic name, IBM Business Consulting Services.

IBM spokesman Ian Colley said the name was the "best way" to describe a business the company has been building for years.

At BearingPoint, a team of 12 employees pored over 550 possible names in the course of a year, according to Shelia Chapman, marketing director for North America. They interviewed workers, canvassed clients and weighed the names with focus groups. BearingPoint got the nod in part because many people disliked words coined from Latin roots, she said.

"They said if you're going to go this route, give us a name that's easy to pronounce, easy to remember and that has a meaning," Chapman said.

The McLean, Virginia-based computer consulting company, spun off from the accounting firm KPMG LLP, changed its name at a time when U.S. lawmakers were calling for more scrutiny of accounting standards after Enron's collapse.
One More Candidate

The new name may be one reason BearingPoint is generating more interest with investors and gaining more awareness from clients, said John Schneidawind, a spokesman. The company's stock has risen 34 percent since the name change.

In coming months more companies may try distancing themselves from their past. One candidate: Qwest Communications International Inc., according to Guzman & Co. analyst Pat Comack of Coral Gables, Florida.

Qwest, the No. 4 local-phone company, has said it overstated sales by more than $2 billion and faces ongoing investigations by the U.S. Securities and Exchange Commission and the U.S. Justice Department. Comack said the company's executives have told him they might change the company name, perhaps to U.S. West, a company it acquired in 2000.

"The brand has been damaged beyond repair, so they have to change it," he said, adding that the company will likely wait until the probes are over.

Steve Hammack, a spokesman for Denver-based Qwest, denied any plans to change the name.

Turgeon of KeyCorp, which owns almost 300,000 Qwest shares, said such a change wouldn't make any difference to him. "I don't think about the world that way," he said. "When it happens, it's cause for a few jokes."

About The Author: Owen Frager is an Internet marketing expert ready to help take your company to the next level.

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