Costly rebranding in line with international trend

The problem with ordinary people is they are ungrateful wretches

The problem with ordinary people is they are ungrateful wretches. Companies can spend millions of euros researching, testing, launching and advertising a new brand name or logo, and ordinary people will turn up their noses and complain about how much money it cost.

But worse again, if the companies don't change their logos or names, the public comes to take the company for granted. After a decade or so the old logo begins to embarrass people, acting in a subliminal way as an unwanted reminder of the past, like a photograph of you wearing bell bottoms.

Telecom Eireann's new corporate identity - it is to be rebranded this spring as Eircom - has already come under fire from opposition politicians. But virtually every industry observer says that given the raft of changes facing the company, it would be crazy not to develop a new look and feel.

Most large companies now see their best course of action as being to refresh their corporate identities every five or 10 years - or certainly whenever there is a significant change in how their business is being done.

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In North America, this trend, driven by mergers, has reached fever pitch. In the telecommunications and banking sectors, customers have grown used to ever-changing designs and logos on their credit cards, cheque books and phone bills.

In Boston, for example, phone subscribers have in four years seen their local company change from New England Telephone to Nynex, then to Bell Atlantic. Soon, with the merger of Bell Atlantic and GTE, they will get a fourth name.

Canada's Northern Telecom - which has long had a major manufacturing and design unit in Ireland - changed its name to Nortel just four years ago. A few months ago it became Nortel Networks.

In Europe, while the pace has been less frenetic, companies are investing more and more in their brands. British Airways - itself a merger of BOAC and BEA - has restyled itself as a "world airline" with across-the-board image changes including exotic new airplane tails and wings. The Italian state telephone company, SIP, has become Telecom Italia; Sweden's Televerket is now Telia; Telecom Finland is Sonera; and Britain's Midland Bank is the HSBC.

Ireland has not remained untouched. There has been Allied Irish Banks's move to the colourful Noah's ark and AIB Bank, and more recently Aer Lingus's "tilting shamrock" rebrand, and First National Building Society's flotation and re-emergence as First Active.

Hardly any of this has been without controversy - these and other Irish companies came in for criticism from shareholders and customers for changing their old, familiar identities. The episode in 1997 over Bord Failte's rebranding reached what some in the industry saw as a new low point, when the Minister for Tourism, Sport and Recreation, Mr McDaid, actually forced the tourism agency to abandon its new logo.

"Brands have always been important, but they are now seen as being more important than ever," says Mr John Casey, chief executive of the Marketing Institute. "We're seeing branding extend into new areas, especially high-tech industries."

Until Intel began its "Intel Inside" campaign, no one really cared what computer chip was inside their computer, he points out. Now other companies, such as Dublin-based Iona Technologies, are building general brand recognition in the hope it will make corporate executives feel more comfortable about buying a product only their IT department truly understands.

Telecom Eireann's current name and logo date back to 15 years ago, when 95 per cent of the company's business was in straight-forward telephony. It is now in the technology business - by 2005, its strategists reckon, only 30 per cent of its business will be in telephony. This year, the State-owned company is facing a newly deregulated telecommunications market; massive, ongoing technological changes; a new strategic partnership plan that could make or break the company; a stockmarket flotation; and an employee share programme.

"Any one of these things would usually see a company developing a new corporate identity," says Telecom's director of communications, Mr Gerry O'Sullivan. "We have them all."

Telecom brought in a Dublin firm, The Identity Business, to develop the new identity and logo. The initial audit found more than 15 different logos, such as Telecom Internet, Eirpage and Telecentre, and more than 100 separate products and service names.

The new identity will be a strong "masterbrand", covering not only most of the subsidiary companies and services but everything down to the typeface used for advertising, says Mr Jim Dunne, one of the principals at The Identity Business. This is more in tune with the modern, solutions-based approach to business in the sector.

"Customers are saying `Just bring me a solution - don't tell me about the 15 bits,' and that is why we need a master-brand," Mr Dunne adds.

While Eircell, a strong brand on its own, will remain untouched by the process in its parent company, the new name alone - Eircom - acts as a shepherd's crook, dragging the mobile operator back towards the flock in time for the next technological wave, fixed-mobile integration.

While the company already spends around #25 million (£20 million) a year on advertising, sponsorship and PR, the change will cost money - it is understood an additional budgetary cost of between #5 million to #8 million. The challenge, Mr O'Sullivan admits, lies in generating internal change to match the new look.

"If the only thing that changes is the look, that is a disaster," he says.

Mr Casey agrees: "The downside is that you have to deliver. Take New Labour and "Cool Britannia" - if you persuade everyone you are an inventive, modern, Third Millennium country, then behave in Europe as if you still rule a third of the world, you have a disparity! And that can backfire."