The eBay Effect -- Names that Grow on You

"eBay" is an extraordinarily valuable brand, yet it's not an intrinsically wonderful name. It's not really evocative of the service offered. It isn't that fun to say. It incorporates a cliché-ed use of "e-". (On the plus side, it is short and has unambiguous spelling.)

Names do grow on you. More precisely, with time and investment of marketing resources, a name can acquire meaning and associations, and usually grows in attractiveness.

Acela now seems inspired.
Freakonomics is now a valuable franchise.
Prius is nearly synonomous with hybrid cars.

(Although the hydronic heating company Wirsbo recently changed its name to Uponor...and I'm not sure either name would grow on anyone.)

There are two practical implications for naming and branding a product, service, or organization.

1. If your name exhibits some basic positive attributes (some combination of short, easy to say, evocative of the right brand associations, and unambiguously spellable) it will eventually seem natural and appropriate.

2. An existing name that has been in use by you or a competitor will almost always test more positively in market research than its intrinsic attributes would warrant. Indeed, the status-quo bias is so strong that "working names" for products and companies often stick and are hard to displace.

I serve on the advisory board of an interesting company that scans, stores, and organizes paper documents. The working name of the company was Pixily. We agonized over alternative names. We had concerns about ease of pronunciation, spelling ambiguity, and about associations with "pixels." Yet, we could never displace the working name with anything that seemed better. It's now grown on us, and customers now seem to think it's pretty natural. So, on the one hand, be careful with working names as they are likely to end up your permanent name. On the other hand, most names will eventually seem just right.

Is the word "Saturn" worth billions?

With the bankruptcy of General Motors, several brands will be sold off, including Hummer, Saab, and Saturn. The sale of Hummer may include hard assets like facilities, tooling, equipment, and inventory, in addition to intellectual property like product designs and patents. However, some brands are likely to fetch the majority of their value solely from the brand name itself. 

On June 5 (2009) General Motors announced it had agreed to sell the Saturn brand and dealer network to Roger Penske. Some have speculated that the brand name Saturn is worth more than a billion dollars (although I'm guessing a sale price of hundreds of millions). That's a billion for the right to use six particular letters in association with the manufacture or sale of automobiles. How can brands be so valuable?

A brand has positive equity if consumers react more favorably to the branded product than they do to the same product when it is attributed to a fictitiously named or unnamed version of the product. Penske's plan is almost certainly to source vehicles from manufacturers who make very good products, but who have not established significant brand equity. (How anxious are you to buy a Samsung car? How about a Magna?)

Are consumers stupid? Don't they know that a Samsung car is still a Samsung car even if it has a Saturn brand on it? In part, yes...really not so much stupid, as overwhelmed with information and not able to keep up with exactly who makes what. (Recall that GM's version of the Toyota Corolla-- made by Toyota in the same plant, with the same design as other Corollas-- sold for $2000 less than the Toyota-branded car.) 

But even savvy consumers may be willing to pay more for a Saturn-branded Samsung than the same car sold directly by Samsung. This is economically rational because the purchase of Saturn by Penske is what we academics call an honest signal, a commitment by Penske to deliver on the brand promise. Penske was quoted in the New York Times as saying: "For nearly 20 years, Saturn has focused on treating the customer right. We share that philosophy, and we want to build on those strengths." Penske is unlikely to have paid a billion or even 100 million for the Saturn brand unless he planned to take actions that are consistent with the associations of that brand in the mind of its customers.

An interesting twist on this particular deal is the value that the brand Penske brings to Saturn, and indeed to the seller GM. Penske's reputation is solid gold, both in the business world and in the minds of consumers. Consumers may have increased confidence in buying a Saturn car, knowing that Penske is behind the company, and selling Saturn to Penske may make other suitors think again about the value that may be latent in some of GM's other brands. Consider how different this reciprocal effect is from that of Fiat's purchase of Chrysler, which if anything, further tarnished perception of value in Chrysler's assets.

Verbing Up

With the announcement of Microsoft's new search tool Bing, CEO Steve Ballmer coined an interesting phrase related to naming and branding. In response to a question from the audience at the D7 conference about his thoughts on the qualities in a good name, he said:

“I am not what you would call the creative side of life. Short matters. Being able to verb up can be helpful.”

Being able to verb up.

I suppose his response verbed up the word verb. Although the best names just verb; they don't verb up.

As in "I googled that guy and turns out he's the VP of biz dev at Nanodyne."

The general principle for naming and branding is that an organization wishing to inject its brand into popular use benefits from the ease and utility of adopting the brand as an element in everyday language. If people find the brand useful and if the brand is easy to incorporate into language, then it will be mentioned more frequently, thus enhancing brand awareness.

What makes a brand useful in language?

• Efficiently describes an emerging activity or thing like Twittering (or, close enough, tweeting).
• Provides a useful brand association for the communicator. By saying I googled someone, I am gently branding myself a googler.
  

What makes a brand easy to incorporate into language?

• Requires few syllables, like eBay not Commission Junction.
  
• Rolls off of tongue, like Apple not Prilosec.
• Is fun to say, like Snapple not Fruitopia.
  

Some good names don't verb up. You don't blackberry someone, do you? (Too long, right?) And you don't eBay an item ("ebay" evokes a place not an action, right?) But, if a name that otherwise works well can also verb up, that's a good thing. (Incidentally, nouning up is much more common-- Where did I put my blackberry?)

Will Bing verb up? I doubt it. It does not really describe an emerging activity. I do not believe it will be cool enough to provide brand benefits to the user of the term. It is easy to incorporate into language, but that's probably not enough.

Some brands that have verbed up:

Did you tivo Grey's Anatomy?
I googled him.
Billy fedexed the contract.
Skype me at 3.

Finally, while verbing up is a start-up's dream, it can in rare cases be a behemoth's nightmare. If in the very unlikely event you are so successful verbing up your brand that it veers towards becoming a generic term (Kleenex, Xerox, Hoover, Bandaid, Aspirin, Nylon), you risk the loss of trademark. You'll be long dead before that happens, so I wouldn't worry about it.