Facebook: Rhymes With Trouble

by Wes Hanson on May 17, 2012

in Business, Internet, Social Media

Despite the worrisome erosion of equity markets anticipating renewed recession, Facebook’s impending IPO has the media in thrall, not to mention its own 900 million members.

It’s a small float (18-25%), so if just a small fraction of its fan base (a.k.a., the hoi polloi) try to snag some shares at market rate, the stock will be pressured to rise well beyond the initial $28-35 range set by the company. The payoff will be huge for early investors and insiders in any event. That sound you hear is Ferrari dealers and Realtors smacking their lips.

Facebook may be a dubious investment of your time, but is it a good place to park your dollars (setting aside the notion that time itself is money)? Facebook’s annual revenues last year were $3.7 billion — impressive for such a young company, but does that justify $100 billion in market value? As financial writer Henry Blodget has noted, at even $35 a share Facebook is priced at 11 times an extremely aggressive estimate of what earnings per share (EPS) might be in 2016. Apple is priced at 11 times this year’s earnings; Apple has 35 times as much revenue as Facebook but only five times the market value — and Google is worth only $200 billion on $40 billion in sales. Note too that an unusually large percentage of Facebook’s IPO shares will be coming from insiders and early investors, not company coffers. Why do they want out so soon? Maybe the sound they hear is a pop.

Facebook will try to keep the music playing by using its windfall to fund ambitious expansion, much as Google did after its 2004 IPO. Facebook is already throwing cash around (like spending $1 billion to buy Instagram, a new firm with a couple dozen employees and no profits). We’re also seeing such “innovations” as the compulsory Timeline, which records more of your life on the website, the better to sell you to advertisers and to commit you to the service. They wouldn’t want you to be tempted by a competitor, should one arise.

And one probably will. After all, Facebook wasn’t the first to run out onto the social networking field, or even the second. Remember Friendster? Remember MySpace? Facebook is a great company and deserving of awe, but if it came out of nowhere then why can’t something else appear to supercede it? (Let’s face it: Eliminating a future competitor was the real reason for snapping up Instagram. How long will Pinterest stay independent?)

Regardless, Mark Z. will be one wickedly smart and astoundingly wealthy dude, selling down his holdings to one-fifth of the company while continuing to control more than half the voting rights. He’ll never want for hoodies.

What the Facebook? Social Media Hegemon Claims More Words

by Wes Hanson on April 13, 2012

in Communications, copyright, Creativity, Entrepreneurship, Social Media, trademark

Face is about as common a word as you’ll come across, in any language. In English, that word belongs to a $100 billion corporation called Facebook. They registered it. So it’s theirs, at least as far as internet domains go.

They also own the letter “F.” Now they want to add the word “book” to their collection of intellectual property and patents.

Do you agree with this? Yes, you do – if you have a Facebook account. Why? Because all users must sign off on the company’s newest Statement of Rights and Responsibilities, which says:

“You will not use our copyrights or trademarks (including Facebook, the Facebook and F Logos, FB, Face, Poke, Book and Wall), or any confusingly similar marks, except as expressly permitted by our Brand Usage Guidelines or with our prior written permission.”

No one is forcing you to use Facebook, of course, and it’s a free service to boot (although with an increasing amount of lucrative advertisement, which is sold on the viewing habits of all those “free” users). Facebook isn’t worried about its users misusing its name or its components – the real gambit with the mandatory user agreement is that it bolsters its legal claim in courts against possible competitors.

Basically, the lawyers and other strategists figure might was well test to see how much we can get away with. When the law slaps us down, we’ll retreat a little and recalculate. But it can’t hurt to be aggressive, even presumptuous. And it might really pay off, so why not?

According to ArsTechnica, Facebook has 73 active trademarks with the US Patent and Trademark Office: the letter “F,” “Face,” “FB,” the number “0″ with a period, “F8,” “Facebook Developer Garage,” “Wall,” “Facepile,” “Nextstop.com,” “Facebook for good,” “Friendfeed,” Facebook Insights,” “Facebook Pages,” and “Facebook Ads.” “Book” doesn’t appear on the US list yet, and it probably won’t as others have tried unsuccessfully to register “book” with trademark authorities here and abroad.

But it doesn’t have to, for while the addition of “book” to the user agreement isn’t as strong as a registered trademark or copyright, it covers people who have ever used Facebook – including anyone who might ever want to start their own site with “book” in the name. Pretty clever work-around, no?

What’s in a Name? Kraft’s Distasteful Rebranding

by Wes Hanson on March 27, 2012

in Branding, Business, Marketing, Public Relations, Wordplay

Kraft, one of the great global brands, wants its snacks business to be known henceforth as Mondelez International.

Yes, Mondelez. That’s “Mond” from the Latin for world. And “Delez,” which rhymes with disease.

Pronounced “mohn-dah-LEEZ,” the new name is actually supposed to suggest delicious world, but the concoction is unappetizing.  The P.R. brigade rushed to explain that the company’s products aren’t going to be rebranded. Mondelez will just be the corporate name, in the background, on the back of the package. In small type. You’ll hardly notice it.

Then why do it at all?

Because Kraft Foods is dividing itself into two separate companies: a global snacking business (including Oreo cookies, Cadbury chocolates, etc.) and a North American grocery division (cheese, coffee, etc.). The Kraft name will stay with the U.S. operations.

Corporate rebranding isn’t a bad idea per se, but it can be tricky, especially when it involves creating new words. When former Kraft corporate parent Phillip Morris split itself into two companies (U.S. and International) the International group retained the Phillip Morris name while the U.S. operations recast itself as Altria, derived from the Latin altus, meaning higher — a nice departure from the weight of tobacco litigation, which is such a downer.

Getting the public to embrace a crazy new name is one thing, but companies that start life with oddball monikers are a different matter. Haagen-Dazs is a good example of something that is memorable because it’s weird. Google is a deliberate misspelling of googol, a huge number with lots of zeros.

Invented words are nothing new – it’s a great way to copyright and “own” a term. Arthur Andersen accounting firm spun out its consulting arm as Accenture — accent on the future, get it? (This turned out to be fortuitous for Andersen, which was soon destroyed by the Enron ethics scandal. You can see why it didn’t want to be associated with the past.)

Write This, Not That

I also run a blog called Write This, Not That over at WritingAdvisor.com. So in the spirit of suggesting alternatives (and not just criticizing) I would say the newly independent, international Kraft might try to hold on to its well respected name. How about KraftWorld, KraftMond, or even the prosaic Kraft International? Or SnackWorld or WorldSnaX or HapiSnax? Or “globalize” one of the better known products like Ritz — Ritz Int’l, that sort of thing. Alternately, if the idea behind Mondelez is “delicious world” then I think the more straightforward DeliciousWorld, or a variant, might work.

Let’s face it: English is the world’s crazy lingua franca, and there’s no reason to bastardize Latin in a way that needs a pronunciation guide.

The decision isn’t final; shareholders will vote on the name change on May 23. And it’s worth noting that the branding “experts” didn’t get everything wrong. Mondelez’s slogan will apparently be “make today delicious.” That’s an excellent tagline – well Krafted, you might say.

Sources: New York Times, The Week

What Does 11-11-11 Communicate?

by Wes Hanson on November 11, 2011

in Communications, Wordplay, Writing

Today is 11/11/11, a date that comes around every 100 years. When digits line up that way like little soldiers we snap to attention. All those ones seem auspicious, somehow. Did the Mayans have something to say about this (or is that next year’s numbers game)? Surely this marks an occasion to launch some new venture or reflect on our lives. Or hold a sale.
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Social Media: So Far So Good

by Wes Hanson on September 26, 2011

in Advertising, Business, Communications, Marketing, Mobile, Public Policy, Public Relations, Social Media, Technology

Social Media Week* unfurled at a dozen cities around the globe last week. I was fortunate to attend several events in Los Angeles and enjoyed the irony of finding pleasure and purpose in interacting with people in the flesh (real live human beings!) rather than via Tweets, blog comments, and Facebook messaging.
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