The business world was in for quite a surprise this past Sunday. Elon Musk, a name synonymous with radical innovation, announced an unexpected overhaul of Twitter, a platform closely interwoven into our daily conversations and culture. Musk’s decision to not only rename Twitter to ‘X’ but also to discard its globally recognized bird logo and all related terminologies such as “tweet”, has left both analysts and the market in a bit of a spin.
This transformational move has an estimated cost attached to it, and it’s not insignificant. Experts from brand agencies and financial analysts suggest that this change could eliminate anywhere between $4 billion and $20 billion in brand value. This comes at a time when Musk’s company has already witnessed a substantial drop in value since acquiring Twitter for $44 billion last October. The rebranded ‘X’ debuted with a sleek black logo on Monday, crafted by a fan over a weekend.
CEO Linda Yaccarino articulated the future vision for ‘X’ as a hub for a myriad of services, ranging from audio and video to messaging, payments, and banking. However, this ambitious plan hasn’t pacified analysts and brand agencies who are skeptical about the renaming move.
Todd Irwin, the founder of brand agency Fazer, reminded us that Twitter was one of the most recognized brands in the world of social media. Twitter’s iconic bird logo had achieved universal recognition, akin to the likes of Instagram and Facebook.
The significance of Twitter extends beyond its logo and name. Joshua White, assistant professor of finance at Vanderbilt University, pointed out the cultural and linguistic footprint that Twitter has established. ‘Tweet’ and ‘retweet’ are now part of our contemporary lexicon, shaping how we perceive and describe online communication. This cultural capital will need to be recreated with ‘X’ – an endeavor which is as daunting as it is necessary for the brand to regain its standing.
Renaming, however, could also be a strategic move to allow ‘X’ to be perceived without the baggage of its Twitter history. As Yaccarino mentioned in a tweet, second chances to make a big impression are a rare commodity in both life and business.
The tech industry has seen its fair share of rebrands: Google became Alphabet Inc., and Facebook morphed into Meta Platforms Inc. These changes were strategic, intended to emphasize a new focus for the companies, but their consumer-facing brands remained unaltered.
So, what’s the actual value of a brand? Brand Finance, a consulting firm specializing in brand valuation, puts Twitter’s brand value at approximately $4 billion. In contrast, estimates from Vanderbilt University range from $15 billion to $20 billion. It is essential to note that brand valuation is a complex and subjective process, as indicated by Dipanjan Chatterjee of Forrester Research Inc. Despite this, many analysts concur that Musk’s takeover has negatively impacted Twitter’s brand value.
Another concerning factor for Twitter’s financial future is the decline in advertising. With Musk’s reputation for stirring the pot and his acceptance of rule-breaking users, advertisers are reportedly pulling back. Twitter’s advertising revenue has seen a steep fall of over 50% since October, according to Musk.
To sum up, we are now witnessing the dawn of the ‘X’ era, where a familiar name vanishes, giving way to a new identity. The financial implications of this decision are still unfolding, and the industry keenly watches how ‘X’ will navigate the road ahead.