Rebranding has been a popular topic for a long time. As consumer preferences and expectations change, there comes a need for innovation and differentiation to set a brand apart from the rest to maintain a competitive edge. Companies spend 5-10% of their marketing budget on rebranding. But little has been explored in regard to the effects of rebranding. Often, the benefits and risks are unknown.
Strategic considerations are similar across a multitude of industries. Most will agree that successful brand extensions embrace the company’s core brand. In so doing, they protect the consumer perceptions of what they have come to know about that brand, despite the introduction of something new. For a rebranding to succeed, it is of the utmost importance to know who the target audience or consumer is and what they truly want and deliver.
The most comprehensive information we came across in our research, is from a 2018 study from the Academy of Marketing Science that focused specifically on how rebranding effected stock returns in the short term. However, the information they attained from analyzing 215 rebranding announcements was relevant to rebranding as a whole. They recognized rebranding efforts as “being multifaceted and composed of both brand identity change and brand strategy revision” and it can come with benefits and/or risks.
Market conditions and overall strategy effect rebranding. An example provided in the study is Starbucks having changed their logo in 2011 without changing their overall strategy in a competitive market. The stock market responded with a negative 2.86% CAR. The study suggests that strategy plays an integral part when the brand has a challenging competitive positioning or when competition is high.
In contrast, Apple Computer Inc rebranded to Apple Inc. in 2007 with a positive stock market response with a growth of 10.87% CAR. The growth is attributed to the consumer and shareholder understanding that the new brand offers more electronic products than Apple Computer Inc.
The study notes that rebranding is “not a one-time announcement, but rather a more systematically planned, structured, and implemented process”
A vegetable drink start up named “Get Wonkey” had problems with their original branding because they did not clearly convey what was unique or superior about their product. After rebranding their business as Flawsome, they were able to market the right idea to their consumer base to create a positive perception and has enjoyed a 500% growth because of it.
An online homeware company called Audenza invested $14,000 in a nine month rebranding project that fixed the disconnect between their brand and their product offerings. The change ultimately increased their revenues by 75%.
Rebranding in Media
1. Leighton Broadcasting
Leighton Broadcasting, who considers themselves branding experts, teaches a system for local businesses to build their brands successfully. Consistent with the findings of the Academy of Marketing Science as cited above, they have identified four critical tenants to consider when building a brand: strategy, strategy-based Message, dominant frequency and consistency .
They rebranded one of their own stations in Minnesota called, “Lite Rock 99.9” to “More FM” to fit their audiences preferences. “More FM” offers content that engages a diversified audience. Leighton Broadcasting threw a New Years Eve party with 700 guests to make the announcement, which they considered a soft opening to gauge reaction as well as build both excitement and support for the change. No information was given as to how this change impacted revenues or audience engagement.
Perhaps the largest media rebranding that comes to mind is Clear Channel, a media giant rebranded in 2014, to iHeartMedia.
Clear Channel’s name change to iHeartMedia represented the unification of all the platforms they had built over the years.
Critics felt that Clear Channel needed more than just a name change. A restructuring was needed.
The new iHeartMedia had an emphasis on the ever growing digital platform as XM and Sirius Radio became great competitors. The CEO acknowledged that “You have to follow fast the consumer, not the competitor” but their continuation of radio and outdoor advertising eventually caused them to claim chapter 11 bankruptcy in 2018 when Internet advertising was booming and the traditional radio ad sales they still depended on were on a steady decline. iHeartMedia was not able to offer the diversity and choice in advertising that XM and Sirius was able to provide.
Data from Statista shows a relatively flat revenue growth from 2015 to 2019. Their research shows revenue growth in 2018 and 2019 came from digital and podcasting.
iHeartMedia eventually went on to restructure their organization to strengthen their position in a digital age. The restructuring was completed in May 2019.
Our team scoured through many blogs, studies, and articles to find statistics on how rebranding or brand extension has impacted sales growth and the consumer market. Information is lacking in that area. Many studies suggest however, that strategy is key. Among other variables, market conditions, consumer preferences, the size of a company and the strength of the original brand can impact rebranding efforts favorably or negatively depending on each unique situation. We provided examples of how rebranded was successful through strategy. Additionally, in our research, iHeartMedia is the largest example of a rebranding effort in the media industry and shows how strategy is indeed an integral part of the rebranding process.