No, Facebook hasn’t rebranded. Facebook branded its holding company. Their press release mentions clearing up the confusion between the company brand and the consumer app, but the real reasons behind this go deeper.
Facebook has branded to protect its acquisitions from negative associations
Facebook has been under scrutiny for breaching data privacy and protection laws (or rights?) of millions of its users. It’s been involved in two of the biggest political crises in the world: election of Trump and the Brexit referendum. Those two events have affected the lives of millions of people living in the US and Europe, with repercussions extending far and wide. It’s not surprising then that Facebook is the face of scandal when it comes to data privacy. Google, Twitter, Amazon and most big tech aren’t necessarily more ‘good’ than Facebook – Facebook just set the precedent. This explains why its users are falling out of love with the brand. In the US, growth had been stagnant for the past couple of years. Instagram and WhatsApp account for most of the growth within the Facebook group. But the other underlying reason behind Facebook losing its fans is purely product related.
The real problem: the Facebook platform is losing essentiality
The purpose of the Facebook platform is to connect people and communities. However today, there are numerous platforms of connectivity that allow people to stay in touch, communicate and express themselves: Twitter, Instagram, Snapchat, WhatsApp, YouTube, LinkedIn, Skype, Pinterest, etc. In its expansion, Facebook fell for a product-led strategy, proliferating to create new features and functions without much thought of whether these provide real use and fit nicely as part of people’s online experience. As a result, the Facebook platform has become a generalist platform. Status updates, photos, community groups, business pages, videos, and everything in between – Facebook has it all.
But instead of becoming a one-stop shop for all thing connectivity, the Facebook platform has become superfluous and complex. The News Feed design as the ultimate destination for all of your online browsing is now riddled with ads, irrelevant updates, and out-of-date posts. And with the introduction of an older generation into the platform, the user experience, features and users of the product have become too wide and far apart. Younger users as a result have flocked to fresher and more niche platforms that give them exactly what they need without all the extra stuff.
Is Facebook on the right track?
To counter these issues and keep shareholders and investors happy, Facebook has gone on the offense, initiating a three-fold strategy to protect its turf and continue the upward growth.
Productising the platform: The Facebook team has been productizing features outside the newsfeed to provide longevity to the platform: Watch, Dating, News, Marketplace, Messenger, Oculus, etc. Because of its large user database, Facebook is able to create enough momentum for each of these products to generate revenue and keep users engaged with new content and functionality. But will these ever be as big as some of the brands they were created to complete against?
Investing in the virtual: Facebook has recently launched Facebook Horizon, which is essentially a virtual community of people interacting in a 3D reality-augmented environment. The Oculus tech is at the heart of this, indicating Facebook is placing large bets on VR and AR. The Oculus headset currently stands at £400, which seems high-enough of a barrier for adoption. Will Facebook be able to commercialise AR and compete with Amazon and Google who already have direct access to homes through the Google Assistant and Alexa?
Growing outside the US: Facebook has excellent reach in international markets but hasn’t been able to monetise its equity in those markets in the same way it has in the US. That comes down to several reasons, but notably, limited internet access in these markets is probably one of the biggest. Being a latecomer to the digital advertising model also comes with its challenges, especially in big markets such as India and Brazil.
While these tactics are all commendable, Facebook has missed the elephant in the room: addressing the negative reputation around data privacy and the downward trend in user engagement. By elevating its corporate brand, Facebook has made a choice to invest in the future of the group rather than that of the consumer brand. But this is quite the conundrum as FACEBOOK and Facebook are one and the same. By keeping the same name (as opposed to the Google/Alphabet strategy), Facebook hasn’t created enough distinction to protect the first from the failure of the second.
What can other brands learn from this journey?
Whether the Facebook platform is here to stay or fade under complexity and privacy issues, only time will tell. Given its high profit margin, the Facebook group can afford to experiment and fail, exploring new ventures and acquisitions that make up for platform losses and extend the life of the group business.
For other brands looking to expand into their next cycle of growth, this presents several lessons that can redirect their business to a safer path of growth.
Keep the user experience intuitive and focused on a central purpose:In our day and age, simple and powerful design has become an expectation. Apple pioneered it and many other brands followed suit. It’s not uncommon for new products and services to get it right the first time. It may be easier for startups given the low baggage and higher appetite of risk, but established brands must always keep the user experience in check: can it be simpler?
Extend the brand in response to customer needs rather that NPD capabilities: Having a good customer base and high engagement rates gives you the permission to step outside your core offering to tap into adjacencies that keep customers coming back. But linked to the above point, this shouldn’t come at the expense of your existing user-base. Most established companies suffer from internal silos, ultimately giving product development teams the power to push out their engineering marvels onto the world. This is sometimes necessary, but in most cases, it backfires, leading to the erosion of your core customer base.
Keep innovation alive as a means to diversify: The few times where product development plays a key role is when it is strategic and well-executed. Diversifying your business to ensure continuity is critical for survival. Soon enough, early successes become harder to maintain, competitors rise, and customers flock elsewhere. Strategic expansion into promising new territories as a response to macro-trends is quite different than constant product proliferation that only adds complexity.
Take swift action to safeguard the equity of your brand: All the above is good and well, but if you don’t act fast, you may miss the boat. A brand in crisis needs swift, solid measures to get it to the finish line. When your brand is in the limelight, it’s hard to control the narrative, but when you are seen to take serious action and making the difficult choices, people will listen. Time is of the essence.
Hopefully the mishaps of Facebook serve as a lesson for other brands on what not to do. Don’t get me wrong though - it’s not easy to keep a 2 billion dollar business growing year on year – it’s unprecedented and in many ways, it’s what Facebook has done so far. It’s now looking to the future in its strategy of ventures and acquisitions, but if there’s anything to watch out for is this: keeping your business on a growth momentum is a balancing act between what works now and what works in the future, so be sure to keep it in check.