NAME GAME EARNS FAT FEES!
by Robert Faulkner,
Business Reporter, The Toronto Star,
August 19th, 2001 |
Customers need help remembering
what you sell
In the high-stakes world of corporate
identity, people like Naseem Javed earn huge fees for coming up with
just the right word. Think Celestica. Think Vincor. Javed, a
56-year-old corporate naming expert, helps companies as diverse as
the former IBM units and the wine giant present a fresh face to the
public by creating and registering a new moniker.
In 1990, his challenge was
Alberta Government Telephones. The crown-owned phone giant in
Calgary wanted a new name as it privatized and reconfigured itself
to compete in a global telecommunications universe.
The name had to please the company' board, Alberta's government and
AGT's customers worldwide. It had to look equally good in stock
listings and at company-sponsored sporting events. It had to
compete with the Baby Bells spawned by the 1984 breakup of AT&T
Corp. - Bell South, Bell Atlantic, Nynex, Pactel and others. It had
to imply - but not mention - a "telephone" company with a market
reach beyond its origins in Western Canada.
Javed squeezed telecommunications
and universality together for his solution: Telus Corp.
Names have to be meaningful, he says, "Whether you call yourself
Purple Mango or Click Mango or Red Rhino or Pink Rhino or Fog Dog or
Dog Pile or Dog This or Dog That. These things die and just fade
away."
Corporate name changes hit
boardrooms in record numbers during the first half of 2001,
according to Enterprise IG, and international branding consultant
owned by the WPP Group.
In a survey of 39 countries,
Enterprise found 1,993 corporate name changes from January to June -
7 per cent more than last year. Most changes were in the
financial sector (60 per cent), communications sector (11 per cent)
and energy sector (5 per cent).
The United States accounted for
almost all such changes (1,761), while the United Kingdom (65) and
Canada (41) were runners-up.
"When mergers and acquisitions
are at record levels, name changes are at record levels," Enterprise
chief executive Jim Johnson says from New York. "Companies are also
recognizing they have to cut through the competitive clutter."
But no firm should take a name
change lightly, experts warn. "It involves an enormous cost, because
you have to change your signs, cheques and legal registration in
many countries, then pay trademarking and legal costs," Johnson
says. "For a modest-sized company, this can cost $5 million to $10
million (U.S.), and in the hundreds of millions for large
companies."
Considering
the cost, choosing the wrong name is particularly painful. Experts
warn against corporate names that: Limit a company to a geographical
place, because it hinders global identity (Nortel Networks Corp.,
not Northern Telecom Ltd.). Link a company to a founder or owner,
because its fortunes may rise and fall with personal scandals (Trump
International Hotel). Stem from foreign words, because the can
alienate customers who speak other languages (Second Cup running
afoul of Quebec's language police). Are too commonplace or similar
to a competitor's name (Clarica Life Insurance Co., Clairol Herbal
Essences, Clarion Technologies Ltd.). No firm wants a blunder like
General Motors Corp. had with its Nova car - which means "won't go"
in Spanish. In Britain, it can be tough to get consumers to eat
Snickers with a straight face. When Vicks cold remedies entered the
German market, the company learned that the name was slang for sex.
Then there's the lasting stench of offensive names such as U.S.
restaurant chain Sambo's, which became No Place Like Sam's in the
1970's. Or Darkie toothpaste, an Asian product from
Colgate-Palmolive Co. that was renamed in the 1980s.
For Javed and others, the
well-intentioned name change of Andersen Consulting, the world's
largest consulting firm, to Accenture is a case of misplaced effort.
Javed says it violates another tenet of the corporate namers' creed
in that it doesn't say anything about what the company does.
After an arbitrator ruled that
Andersen Consulting would have to change its name to differentiate
it from Arthur Andersen, the company urged its employees worldwide
to "brandstorm" for one that fit the multinational's business and
marketing image.
The 2,677 employee suggestions,
added to those supplied by an outside naming consultant, were pared
down to a short list of 48 names, then tested for their availability
as trademarks and Web addresses. The company also looked at
cultural sensitivities and ease of pronunciation abroad.
At Andersen, notions of "bold growth" and "a great place to work"
inspired Oslo-based senior manager Kim Petersen to coin the name
Accenture, winning him a place in company history - and a golfing
trip to Melbourne. After that, there were 50 naming
teams to train 20,000 executives to re-educate, 6.5 million business
cards to print, 40,000 launch packages to send and a full-tilt
advertising campaign involving Super Bowl commercials, building
wraps and ads in airports, magazines, newspapers and on TV.
"A company will ask 200,000
employees to come up with a name. They will go through their heads
and come up with Boxxen? What is Codisma? What is Accenture?" says
Javed, who was not the naming consultant used by Andersen.
"Accenture sounds like adventure or acupuncture, and now they have
to spend $175 million to promote the name." Not so, the company
says. "When people critique the name as not being the right choice,
it makes me think the person hasn't been involved in a global
rebranding campaign," says Teresa Poggenpohl, Accenture's director
of branding advertising and research.
"Accenture tested well with our
executive group and the meaning of the name - an accent on the
future - seemed appropriate for the new direction we were talking."
Accenture dropped "consulting"
from its name so it wouldn't be limited to one field of work,
Poggenpohl says. The company, which Friday announced it was cutting
another 1,500 jobs on top of 1,400 trimmed in June, has spent about
$150 million this year to advertise its new identity, Poggenpohl
says.
Another complication in the name game
is the dynamic marketplace. What works today may miss the mark
tomorrow.
"With a new name, you have to
spend millions of dollars on advertising to make people aware that
the product is out there and create the right connotations when they
hear it," says David Dunne, a marketing professor and branding
expert at the University of Toronto.
"It can take years and, by the
time you do that, you could be in another merger period. So, you
take the corporate name and build on its equity."
That's why Hamilton-based
telephone directory publisher 701.COM Corp. is now 701 Media Group
Inc. - a slight name change made after an acquisition. Wall
Street's Morgan Stanley Dean Witter simply dropped Dean Witter to
become more streamlined. Cummins Engine turned off and discarded
its Engine.
Other companies want to shed their old skin completely.
Last month, Japanese tire maker
Bridgestone Corp. said it may drop Firestone from the name of its
U.S. unit, Bridgestone/Firestone Inc., after Firestone's massive
recall that was linked to fatal accidents.
In June, Jitec Inc., a Quebec
computer networking firm that lost credibility after issuing
misleading news releases, said it had "turned the page" by adopting
the name Advantage Link Inc.
Chris Yaneff is the man who named Square One Shopping Plaza, coined
the Commodore computer's "c" logo and rechristened Brewer's Retail
as The Beer Store. He says corporate name changes must be based on
extensive research.
When he's hired, Yaneff
interview's a company's employees, customers and competitors to find
a firm's image in the market. He studies the names of its
competitors so he knows what to avoid. And he ignores focus groups,
saying they are a waste of time created by clueless advertising
firms.
"When I did The Beer Store, I talked to people on the street and
asked them what they called Brewer's Retail - it was common sense,"
he says. Initial skepticism among brewery
executives, who thought The Beer Store was too down-market, prompted
a focus group to test the name. It passed.
Yaneff remembers how, in the
1960s, his compensation for the Commodore logo amounted to a used
typewriter and $600. Today, his fees for corporate name changes can
total tens of thousands of dollars.
That rate reflects his 40 years
of marketing experience, he says, and also covers international
legal searches - which can cost $50,000 - to make sure a name isn't
in use.
Sometimes, name changes are an
attempt to escape negative perceptions. The Enterprise survey of
the first six months of the year
found 49 companies dropped the ".com" from their names amid the
high-tech wreck.
Mail.com repackaged itself as
EasyLink Services Corp. Phone.com pulled the plug to become
Openwave Systems Inc. It's goodbye to Talk.com, hello to Talk
America Holdings.
"By and large, people think anything with a .com on it is a failure
- a bunch of people who don't focus on profits, who don't have a
sense of purpose and are just blue-skying it," says Johnson of
Enterprise.
That's a huge switch, notes Dunne
of the University of Toronto.
"A year ago, if you had .com, it
was almost enough to go to venture capitalists with, and on the
strength of that, they'd give you money. Now, when you put .com on
the end of your name, there's almost a negative connotation, saying,
"We are a shell company and not here for the long term." The
challenge now is what you deliver."
But Javed and Yaneff say it's too
soon to abandon .com. They cite successful Web sites such as
Yahoo.com and note that dot-bomb companies are often peripheral to
the corporate giants they supply.
Almost tongue and cheek, Yaneff
also questions the motive behind the Enterprise corporate naming
survey. "You know why companies do these kinds of surveys?" he
asks. "They do them to get their name in print."
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