Holding on to the Yahoo Brand Identity

By Ericka Chickowski  |  Posted 2008-02-08 Print this article Print

Microsoft has long been known for acquiring companies and converting them in to Microsoft-branded products. Should a deal transpire, can Microsoft really do the same thing with a web-only brand as well-known as Yahoo? Baseline takes a deep dive in to the effect branding might have in this deal and after one.

While Microsoft would understandably be interested in attaining a synergy between its online brands and Yahoo, branding experts such as Robert Frankel agree with the tech analysts that this shouldn’t come by way of an integration that would subsume the Yahoo identity.

 “If I were a betting guy, based on past performance, I would bet that Microsoft would keep the Yahoo brand identity in the same way that they kept Hotmail,” said Frankel, who consults regularly with Fortune 100 companies regarding their brands. “They would be foolish to throw away all of that brand equity because it is a very high awareness name “In fact, depending on what the egos are in place at Microsoft it makes more sense to fold MSN into Yahoo than it does the other way around.”

This is if an integration even needs to happen. Frankel believes that Microsoft might be most successful if it doesn’t even attempt to link its brand to Yahoo at all. Nurturing an illusion of a choice between two brands is not an uncommon practice after an acquisition. One need only look at Microsoft’s crosstown neighbor Starbucks for a successful example. When Starbucks acquired Seattle’s Best Coffee (SBC)  in 2003, the coffee goliath did nothing to signal to consumers that it had picked up this scrappy little competitor in a corporate buyout. To this day it allows SBC to operate under its own identity, giving unaware consumers the perception that they still have an alternative to Starbucks for a fancy cup of joe.

“The fact of the matter is that you could make a case for keeping Yahoo as Yahoo and MSN as MSN and let them live happily ever after,” Frankel said. “What do you care what portal these people come in on as long as they use it?”

On the whole, though, Frankel wonders whether the deal is a very smart idea from an identity perspective. Though both Microsoft and Yahoo rank well on big branding rankings, he believes that both brands suffer image problems at the moment.

“You've got two incredibly horrible brands that enjoy no user loyalty because both of them, though being successful in some regard, have never accomplished what brands are supposed to accomplish—that would be to turn their users into evangelists,” Frankel said. “Nobody is real happy with Microsoft; that doesn't mean they’re a bad company, but they've completely neglected their brand. And Yahoo is the brand that really deserves to go broke because they had the market and they let it all slip away, so they never understood what their brand was about either.”

Contrast these user loyalty issues with Google’s ascending star as a brand. Google may well have both Microsoft and Yahoo licked in terms of identity awareness online. Even though Microsoft is number two this year in the Interbrand ratings, none of its Internet subbrands scratch into the rankings. Meanwhile, Google sits at as brand number twenty—well above Yahoo’s slot. And in the Millward Brown Optimor ranking, Google sits atop the heap  as the number one 2007 brand, over both Yahoo and Microsoft. On top of this, Google also succeeds in turning users into cheerleaders, which is the true mark of a successful brand according to Frankel.

Google’s brand also has a leg up over both Microsoft and Yahoo in that it manages to maintain its identity as a search company while nibbling away at its competitors with small but successful forays into ventures tied to its core competency, primarily by way of easy-to-use and free Web applications.

Meanwhile, as a proprietary software company Microsoft has tried to compete with Google through similar applications, but many of these are outside of Microsoft’s breadth of experience as a software developer. Similarly, Yahoo shifted strategies away from search long ago to attempt to become more of an entertainment company than an information company. Frankel believes that both companies’ urges to branch outside of their core competencies has impacted their brands negatively, as this clouds the perception of what each brand really stands for. He says the tendency is analogous to the performer Jerry Lewis, who has always been a world-class comedian but continues to try to sing instead.

“Nobody ever tells him, 'Dude, you're not a singer; stick to what you know,'” Frankel said. “That is the exact problem that Microsoft and Yahoo have. Despite the image complaints, Microsoft is really good at software and Yahoo was really good at search, but both of them neglected their main focus to try and branch out into the other areas which they are just not good at.”

He also believes that both companies have a habit of acquiring brands and destroying them.

“That overall is basically a recipe for disaster,” Frankel said. “You have two non-brands whose cultures are different, who really haven't been good at acquisitions other than destroying them so who knows what you’ll be left with.”

Frankel is not alone in wondering how the merger will affect either company’s brand images. According to Schmelzer, the matter is as much up in the air as the deal itself.

“Is this going to be an Adobe/Macromedia deal, where the two brands are so strongly connected with each other and the synergy was so great that those brands were elevated because of the merger?” Schmelzer said. “Or is this going to be an AOL/Time Warner deal, where the merger of the two companies tarnished both brands? It was a complete failure with a huge amount of money lost; the idea made only tentative sense going in and on the way out it didn't make any sense. I don’t know, who knows right now?”


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