The rebranding of Facebook has been greeted with a firestorm of commentary and opinions (mostly negative) and even laughter by many. But what if what Facebook is doing isn’t so dumb after all?
First, Facebook has defined a white space opportunity or new territory into which it seeks to position itself. Isn’t that a classic and proven example of a good positioning strategy? A brand resides in consumers’ mind, and positioning is about identifying and defining a place that a brand can occupy in consumer’s mind and how it distinguishes it from competitors.
Positioning is hard, mostly because most positioning territories are crowded places with many competitors. Facebook identified an empty space, a future. And it did not do this in a hurry. I read that Marc Zuckerberg already thought of rebranding Facebook in 2014 and he waited his time to do it.
Second, it might be a brilliant strategy after all because it depositions competitors. Aren’t we tired of upgrading to the new iPhone, only to realize that the camera is only negligible better from the previous one, the screen promises too much and all we get is a phone that costs so much more than the previous version. Facebook is in the crosshair with Apple, and this time around in history, it is Apple that is left behind. Remember that’s the company that was always far ahead of everyone. Others also feel the itch. Microsoft, now the most valuable company in the world, just entered the metaverse race with 3D avatars and immerse meetings, says the news of today.
Third, it does not follow the mistakes of Google with Alphabet. Facebook instead follows a branded house strategy. When Google rebranded and created Alphabet, it built a masterbrand with no narrative and no story. The metaverse is a powerful story for Facebook in contrast. It has consumed the news cycle for many months now and it will for years to come. In my book on brand leadership with David A. Aaker, we described the power of the branded house strategy, already two decades ago.
Years after the rebranding of Google, it has not accomplished much. There is still no brand called Alphabet and it still faces the same tribulations with the SEC and the FTC concerning its antitrust challenges. On the stand and in court is not Alphabet but Google.
Fourth, the strategy helps Facebook to compartmentalize and isolate the toxic part of its business, namely Facebook. By creating a strong umbrella brand, Meta, it puts its focus and that of the media and the street on Meta which naturally will take the emphasis off Facebook. It will help its other major brands such as Whatsapp and Instagram.
Fifth, it diversifies its revenues and changes its business model, while it still grows massively. Did you know that Facebook recently reported revenues of $29 billion (for the quarter), up 35% from the previous year? Did you also know that $28.3 billion or 97.5% came from advertising? Facebook is smart to think of alternative sources of revenues and this is where the metaverse comes in. If you listened to the announcement of Facebook last week or read about it, you know that Facebook isn’t interest just in selling advertising in the metaverse. Instead, Meta is interested in enabling the metaverse, in developing products and services that help creators and developers make new experiences and digital items and that unlock a massively larger creative economy. Those are the words of Mark Zuckerberg.
If that is true, Meta will benefit enormously from the metaverse but not just from advertising or connecting people as it did with Facebook but also by developing the tools to this new world. Examples already exist, namely the Oculus devices. This is just another playbook from good strategy that is hundreds of years ago. If you remember during the Goldrush, it wasn’t the hundreds of thousands of fortune seekers that got rich, it was those who provided the tools, the shovels, buckets and Gold pans that made out well. It is also a strategy that works so well for Apple with the iPhone and Amazon. Amazon makes most of its profits in its Amazon Web Services division as it is well known where it offers cloud computing services to companies who wants to be on the internet.
Sixth, Facebook solves an important and unmet consumer need, a social strain of society today, that funnily Facebook itself helped create. Did we forget that social media has all its ills and harms? Multiple studies have shown a strong link between heavy social media use and various mental pathologies such as depression, anxiety, loneliness, self-harm and even suicidal thoughts. Young consumers increasingly experience feelings of inadequacy about their lives or appearances.
In my recent book, The Interaction Field, I wrote about how companies need to build interaction field businesses. These are companies that bring together multiple platforms to solve major challenges and needs of consumers and society at large. Mark Zuckerberg says that the metaverse is not created by just one company. In the spirit of the interaction field model that I proposed, this means that it will have an open architecture of participants and partners that innovate, and collaborate and solve for the problems of consumers and society. In a way, Facebook is doing just that or so it promises.
So, what’s wrong with Facebook’s announcement? Is it possible we merely followed the social media pundits that love to hate Facebook?
It is true that Facebook has a lot of negative momentum. This happens when there seems to be nothing you can do right anymore. Here is my list of things that went wrong the week of Facebook’s big announcement:
- It probably was the worst timing for such an announcement. But is there really good timing for a rebranding when it is necessary?
- Love or hate him but Mark Zuckerberg just should be a more likable spokesperson for his company. He can’t help himself to appear pretentious. I liked his hoodie persona more than his attempt to be a bit more like Steve Jobs, see the look-alike sweater he wore.
- The context of his announcement also wasn’t helpful. He looks as if he already lives on a space station, it makes him look removed from reality.
- Where are his communications and PR staff? Where are all the talented people of Facebook. Where is Sheryl Sandberg?
- The speech wasn’t well written. Zuckerberg spoke mostly about his company, and his plans and Facebook. It is all about him, the billionaire that can, not because he should. While other billionaires explore space in reality, Mark Zuckerberg goes to the virtual space.
- The name. Calling your company Meta is already pretentious. Apart from that, there are many others who use this common name. They all scramble now.
- The entire circus around the announcement was classic PR overkill and overreach. It feels like the big elephant that can sit anywhere. And it appears it can. There seems to be nothing that can slow down Facebook or Meta, massive growth, massive profits, huge cash reservoir.
So, if you look at the social media feeds, opinions and commentaries, everyone talks about what went wrong. Perhaps we should take a second look at Meta?
If I were Mark Zuckerberg and hundreds of thousands of employees of Meta, I would worry far less about the news of the last week and much more about what is at stake really. In the end, a company or brand can only survive in the longrun, if it builds trust, and gains the trust from consumers and other stakeholders.
This is the real challenge, Meta faces. Stephen Covey, the author has a good take on trust. He says that there are two components of trust. One is competence and the other is character. If you have the competence, people will forgive you for a lack of character. They still trust you with their attention or their business. That is, you might not like a brand or company, but as long as it delivers, you are okay with it.
The problem happens when you don’t have the competence, or you promise something that you can’t deliver. If you fail on competence, you lose the trust, and then what matters is your character, what I would call your brand. And this is the real problem for Facebook, Meta and Mark Zuckerberg. It fails on character, so it now needs to deliver on its promises.
In short, there is nothing more wasteful than to communicate an empty promise.