Ravaged by an endless hurricane of unflattering coverage, Facebook aims to transform its image with a new corporate name, Meta — and hopes to define itself as a new kind of cutting-edge company investing billions of dollars into what it believes to be the future of the internet.
Founder and CEO Mark Zuckerberg on Thursday made the name change official at the company’s developer conference Connect, saying that Meta hopes to reach 1 billion people in the next 10 years. Branding and marketing experts, however, agree that the Facebook name is too deeply entrenched at this point and the company faces an uphill battle to recast in a new and more transparent light.
“Shakespeare wrote, ‘What’s in a name? That which we call a rose by any other name would smell as sweet,’” author and tech expert Dave Pell told TheWrap. “Even if Facebook changes its name, their current branding or legal problems will stink to high heaven. … Maybe they should change the name to Facebook Universe. The initials would certainly be on brand.”
The Facebook motto was always to “move fast and break things,” and now Meta will expand the company’s reach beyond software and social media into building a futuristic metaverse world. Much of those new product lines are years down the road from actually happening, or from generating the revenues the company has enjoyed from its core social-media platforms, but Zuckerberg made it clear that he wants to drive Meta in that direction.
“Today we’re seen as a social media company,” Zuckerberg said on Thursday. “Right now our brand is so tightly linked to one product. … Over time, I hope we are seen as a metaverse company.”
Meta, which will start trading under the new ticker MVRS by Dec. 1, will center around what Zuckerberg has been trumpeting as the “metaverse,” a future version of the internet made up of shared 3D virtual spaces. Practically, it’s an extension of his push into the hardware space with augmented and virtual reality products. The company purchased gaming headset company Oculus for $2 billion in 2014, and it has been building out a virtual world called Horizon.
So why now? According to Platformer, the company has been in serious talks about rebranding in the last two months — just as it’s faced mounting criticism from politicians from both political parties about its size, dominance of social media, and handling of content moderation over everything from COVID information to the Jan. 6 Capitol riot.
“While a rebrand for a company that’s faced a firestorm of criticism is long overdue, it’s doubtful that a new name will completely shift the public perception,” Eric Dahan, CEO of influencer marketing firm Open Influence, told TheWrap. “You simply cannot place a new name Band-Aid, hoping to cover up years of privacy violations, negative effects on mental health, misinformation, and hate speech. … For a true rebrand, Facebook needs to take a hard look at its senior leadership.”
And a rebrand could help bandage Facebook’s reputation as the company fights increasing backlash from regulators and a devastating series of investigative reports based on the Facebook Papers supplied by whistleblower Frances Haugen. The company is still reeling from years of criticism around its role in the 2016 and 2020 presidential elections and the Cambridge Analytica privacy scandal. Plus, it is battling an ongoing FTC investigation and antitrust regulation.
According to Platformer, former chief marketing officer Antonio Lucio also pushed for Facebook to separate itself from the corporate brand three years ago, but the idea was shelved as its metaverse efforts were not as mature back then.
But Meta is beginning to position its new metaverse offerings from its social platforms — which include Instagram, WhatsApp and Messenger. Earlier this month, Meta said it plans to hire 10,000 employees throughout Europe over the next five years to work on metaverse initiatives. Starting in Q4, the company will break out Facebook Reality Labs, its hardware division, into separate financial reporting — with an estimated $10 billion reduction in its overall operating profit expected this year.
“This is not an investment that is going to be profitable for us any time in the near future, but we basically believe that the metaverse is going to be the successor to the mobile internet,” Zuckerberg said on this month’s earnings call.
The second reason for this pivot is actually a signal that the company knows the Facebook platform faces challenges as its user base ages. Even Instagram, which has a younger user base, is showing signs of weakness as the company’s own research shows teens are instead flocking to Snap and TikTok. As the Facebook Papers have made clear, teenage users on Facebook in the U.S. declined by 13% since 2019 and usage is projected to drop 45% in the next two years.
“The only benefit I can see to a corporate renaming for Facebook is if they are branching out in a serious way beyond social media, to make the point that they are more than social,” sales and marketing expert Eric Riback said. “For the typical Instagram user, Facebook is old media. They are leaving Facebook because they don’t like it, and the younger cohort isn’t going to view the connection positively either.”
Investors basically shrugged at the name change on Thursday; Facebook stock ticked up 1.5% by the close of market, to $316.92.
A good parallel might be Google’s restructuring to Alphabet in 2015 as the tech behemoth spun out separate divisions to focus on self-driving cars, health tech and other products beyond its core search and advertising business. But regardless of the change, there’s a good chance consumers may continue to associate Meta’s future endeavors with Facebook.
“I doubt many Google users are aware that Google is part of a corporation called Alphabet,” Riback said. “That name change may have had some meaning for the stock market as Google got into some wide-ranging businesses that had little connection to the core search and productivity products.”
This isn’t the first time a well-known corporation has changed its name, for a variety of reasons. In 2001, maker of Marlboro cigarettes, Philip Morris, changed its name to Altria Group in an attempt to dissociate its brand with deaths and diseases caused by tobacco. Also in 2001, Andersen Consulting became Accenture after a court ordered it to separate Andersen Worldwide with Arthur Andersen. The accounting firm was indicted for approving Enron’s books and went out of business after the scandal.
There may also be a financial component here for Meta. Some studies have shown that during the dot-com boom in the 1990s, company stocks performed better if they added “dot com” to their names. There’s been similar results recently when companies added “blockchain” to their names.