Lessons from United and Yahoo on branding and the value of brand equity
It’s over. We won. Designers have won the day. Most newspapers probably won’t write about it that way, but that’s what happened.
With Verizon’s fire sale acquisition of Yahoo, Marissa Meyer’s efforts to turn the company around have failed by all objective measures. Analysts might offer a number of reasons for this, but I’m here to tell you: it’s the branding, stupid.
Why would I say that? A similar story has happened at United Airlines, which lazily appropriated Continental’s branding post-merger in 2010 after a short meeting between CEOs, before relenting to public pressure to do something (slightly) better. Aside from a new typeface and improved airport signage, the latter company’s 1991 design and livery went unchanged.
What happened? The company’s market share shrank relative to its peers, and the company is under enormous pressure to improve profit performance despite cost-cutting measures and a superior route network compared to its peers. Why would fliers choose other airlines even if one has a better route network? Branding! Branding is what gives people a reason to choose one competitor over another, and for things like airline travel that have become commoditized, the branding is what provides customers with a superior experience.
Branding is about more than the logo (amenities & on-time performance, in the airlines’ case), but the logo is a good symbol for what your company does in general. Lazy branding reflects lazy leadership. Good brands inspire passion. They inspire period. They make people want to give your company money, and to spend time on your Web site because it’s pleasant to look at. They help move industries forward, and they spend on advertising, but they could grow through word-of-mouth alone if they wanted to. Because your stuff is just that good.
Counterpoint to United, when Delta merged with Northwest, they rebranded entirely, combining elements from both brands to create a classy logo. They promised through ads not just to build a bigger airline but a better airline. Those ads not only gave customers a reason to choose their company over others; it infused the corporate culture with a promise that every employee could be empowered to live up to. Delta followed through on that promise, and customers have rewarded them with their business. American Airlines rebranded too—even stealing much of United’s old brand imagery. They too have been winning customers.
What’s amazing about this turn of events is that United actually has a superior product—on top of their more convenient route network, they fly newer planes. Customers voted with their feet and chose the brand that spoke to them more, despite United’s operational advantages (United’s tone-deaf ads bragging about their size alone probably didn’t help either).
Brands define the way people think about your company, and whether they think about your company.
You’ve heard of something called mindshare? Brands occupy that space. They define the way people think about your company, and whether they think about your company. When United took Continental’s branding in 2010, in what was the design crime of the century, they vacated an important mindspace in airline travelers’ minds. American’s rebranding, which relied heavily on sky imagery and patriotic themes, moved into a space that United vacated. Now United can’t get it back. It lost decades-old brand equity. It’s become Generi-Airline, Inc. (United? Who’s that?). Its old patriotic, sky-based branding was the only thing it had going for it. Why would anyone fly United otherwise? Your brand is an investment that should be protected like any other.
Your brand is an investment that should be protected like any other.
The early 2010s were a dark period for design among large companies. When Yahoo replaced its funky, personable logo with a decidedly boring Optima-inspired typeface, it relied entirely on the opinion of one person: the CEO. It was an excellent reflection of Marissa Meyer’s style. But it was disastrously out of step with the times. A fun company like Yahoo rebranding to a staid, conservative typeface, and United’s wholesale appropriation of Continental’s branding post-merger were unprecedented in American corporate history for their carelessness and ignorance of modern design trends (most companies use mergers as an opportunity to refresh, rethink and retool their brands into something better. That didn’t happen in United’s case—and Yahoo ignored testing to choose a logo the CEO liked).
Before rebranding, Yahoo cycled daily through a bunch of random logos, anticipating backlash when it changed and seeking to neutralize it (remember when Gap tried to change its brand?), seeming to say the logo didn’t matter. And for a while there, it looked like branding didn’t matter. When Shell converted thousands of Texaco gas stations in the early 2000s after the latter’s merger with Chevron, business continued as usual. A press release even bragged about the smoothness of the transition. Maybe branding didn’t matter, it seemed—but I would argue it still did: what happened is that those gas stations went from one good brand to another. That’s why sales weren’t affected.
Branding is subjective. The evidence I’m offering here isn’t hard, and it can’t easily be quantified. But if Yahoo and United are any indication, and analysts can’t find a hard explanation otherwise, I would argue it’s the brand that makes the difference. It’s the x-factor that helps bring all the others together. The French call it the je ne sais quoi (the “I don’t know what”). American businesspeople need to embrace the unknown and make brands great again by listening to their designers.