Could Facebook's latest renaming effort prove a double-edged sword in the long run?

Facebook recently announced that it is renaming Instagram and WhatsApp in an attempt to be clearer about the products and services it owns. As a result, both apps will be known as "Instagram from Facebook" and "WhatsApp from Facebook". This move comes at a time when the company's image has taken a hit after it was embroiled in privacy issues such as the Cambridge Analytica scandal, a data breach that impacted about 50 million Facebook accounts and storing data on facial recognition from photos without the permission of users. Most recently, it was fined US$5 billion by the US Federal Trade Commission over privacy breaches.

On the other hand, WhatsApp and Instagram have remained relatively scandal free, save for outage issues and a data breach in May on Instagram affecting approximately 50 million users. While it is clear that Facebook is trying to connect its master brand equity to both apps, some industry players called this a "bold move" due to the issues Facebook has faced so far. They also weighed in on whether the move will impact brand equity negatively or positively and result in users heading back to the Facebook platform.

In a statement to Marketing, Rika Sharma, managing director, ASEAN Digitas said the latest move will cause "significant reputational damage" for WhatsApp, especially among consumers who are not aware that both apps are owned by Facebook.

"For those who are aware of the association, it will cause further scepticism. There are chances that we will see consumers start to boycott apps such as WhatsApp and Instagram given their mistrust for Facebook and see a move to other apps such as Telegram and new platforms," she explained.

Nonetheless, she said this is not a surprising move, but rather a masterbrand marketing strategy inherent in branding architecture, which enables the parent company to link its product lines or sub brands. The advantage of this move by Facebook, Sharma said, is that it allows for greater alignment of the company's purpose and culture across all its businesses.

"It also enables greater recognition of Facebook amongst consumer, drives consistent marketing efforts, helps in building a unified narrative and enables integration across its different acquisitions," Sharma said.

Although the intent to leverage brand equity across all platforms and products could yield shared effect in the longer term, Derick Ng, CEO and co-founder, Clickr Media told Marketing that this is a "double-edged sword", once again citing the impact on users who are unaware about the two platforms' ownership.

As a result, he explained that pro-privacy users who saw Instagram as a "safe haven" could potentially feel threatened and leave. "This is similar to when users switched to Telegram upon finding out that Facebook [had access to their activities on WhatsApp], causing the platform to be used mainly as a work chat," Ng said.

While multiple media reports have speculated that the renaming is an attempt for Facebook to turn its image around, Ng said it is unlikely for Instagram and WhatsApp to positively affect the Facebook brand. He explained that users are savvier these days and will eventually understand that such a move means that data across the ecosystem of platforms are now "more shared" than ever. Ng also said that it is unlikely for the younger crowd to be drawn back to using the Facebook platform.

"Beyond the privacy considerations which have become more apparent with the younger crowd, the usage of platforms are mainly associated with the experience and type of content being produced. If content producers end up focusing mainly on Facebook, then perhaps it will see more usage by the younger consumers," Ng explained.

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Managing the integration of data

While there is a possibility that the reputation of Instagram and WhatsApp might be impacted by being associated with the parent Facebook brand, Daniel Posavac, CEO, Bonsey Jaden said that their reputation will be "more heavily impacted" by the way each of the platforms are managed in their own right. Also, how the overall Facebook brand manages the integration and sharing of personal data among the three platforms is also crucial to the apps' reputation in the eyes of consumers.

Like Ng, he is doubtful that the renaming will draw the younger crowd back to Facebook as they are now on seeking a different experience. "The way they communicate, create content and engage has shifted, and while Facebook is still more relevant to this demographic than a lot of people think, I don’t believe they will draw the young masses back to the Facebook platform with this move," he explained.

Nevertheless, Posavac said that the association will certainly help showcase Facebook’s vision to users who are not aware of their full ecosystem currently. The message Facebook is sending is that as an organisation their ecosystem is bigger than just Facebook, and they want their users to understand this, he said. Posavac added:

If they roll this out in a subtle way, then there should be more positives than negatives for the overall brand perception.

Also weighing in on the issue is, Peter Haarmark, CEO of Ydigital Asia, who agreed that merely adding the Facebook brand to Instagram will not compel a former Facebook user to get back onto the platform. Haarmark is also sceptical that this move will draw the younger crowd to Facebook. He explained:

Facebook's chance in bringing consumers back is in how they integrate the platforms.

He also called the move a "bold and controversial" one, adding that it makes sense to focus efforts on increasing brand equity for one brand instead of three. However, even though the Facebook brand might benefit from associating with the "two innocent younger siblings", Haarmark said the impact on the other two apps might be negative.

"I don't see any way Instagram and WhatsApp will benefit short term from being associated with Facebook, but it seems that Facebook is ready to take whatever big or small hit to Instagram and WhatsApp the move will cause," he added.

Branding experts weigh in

At face value, Andrew Crombie, managing director of Crombie Design said it does not make much sense from a brand portfolio perspective, adding that "it seems so clumsy as to make one wonder as to the real motive". He noted that there is little complementary benefit passed from Facebook to its portfolio brands, especially as suggestions of antitrust and perceived data misuse weigh heavy on its social licence. He added:

This is a one-way transfer of brand equity value that only superficially supports the Facebook brand whilst potentially slowing two rising stars from their separate trajectories.

According to him, shareholders know of the connection among the apps and users "probably do not care". Users bought into the respective Instagram and WhatsApp brands for what they offer, not because they are from Facebook. However, he noted that WhatsApp's core proposition of encrypted personal communications could be tainted when overtly associated with the brand linked to the recent data scandal.

"I suspect Instagram’s credibility will be less tainted and the connection possibly seen as more logical, but it does start to narrow the perceived distinctiveness of Instagram as a social vehicle and, again, that reduces perceived value," Crombie added.

From a brand architecture perspective, the decision to add a parent brand endorsement to other operational units is generally driven by considerations of equity and efficiency, Graham Hitchmough, regional chief operations officer, Bonsey Design said. Ideally, he said sharing and extending the value of existing equities across the portfolio should be the main driver, followed by enhanced communications and operational efficiency.

In this case however, the move by Facebook seems to be based on the twin expediencies of repelling anti-trust challenges in the US and, potentially, preparing the ground for the future integration of Messenger, WhatsApp and Instagram messaging service.

"The toxicity of the Facebook brand right now means that more overt communication of their ownership is only likely to be a negative for the WhatsApp and Instagram brands, and as strong as these two brands remain for their billions of users, their closer association will also do little to build bridges between Facebook and its disaffected audiences," he explained. Hitchmough added:

If the anticipated fallout of this move demonstrates anything, it’s that users should become aware of the ownership and inter-relationships of the apps they use every day after they start to brand themselves more consistently.

Although improved brand communication and legislation is required, Hitchmough said it is ultimately up to consumers to take greater responsibility to know the origin and interests of the apps they are downloading, just as they would in selecting a product from a supermarket shelf.

Read also:
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Facebook value takes US$120bn hit following lower profit forecast
Facebook cleans up privacy measures in new update
Mark Zuckerberg addresses Facebook user data scandal, vows to fix issues

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