I recently wrote a book review of the Real Deal, the autobiography of Sandy Weill. In building his financial empire, Weill changed the name of his company several times -- always when he struck a transformative deal: Primerica (1988), Travelers (1995), and Citigroup (NYSE:C) when he merged with Citicorp. Perhaps there is now another name change in the offing: according to a report from The New York Times, Citigroup might become Citi. However, it likely won't amount to much.
Citigroup spent about 14 months on the process and had the support of Landor Associates, which is a branding company and part of the WPP Group (NASDAQ:WPPGY). The plan calls for the elimination of the memorable red umbrella logo, which 137 years old and has lots of brand equity. But it does have issues -- it is a sign of bad luck for certain countries in Asia. Besides, isn't an umbrella a symbol of defensiveness? Doesn't Citigroup want to show it can still grow?
Citi will keep the arc (you can see it at www.citi.com). The nuance is that each business unit will have a different color. For instance, wealth management will have a red arc, which is certainly ominous (red ink?). The retail business will be blue and the investment banking arm will be black.
But is an arc really smart branding? After all, do you want a financial institution whose logo has a downward trajectory? It is a good bet Citigroup spent big bucks for the plan so, yes, there is probably some type of well-meaning symbolism.
Admittedly, I'm not a branding expert. So I interviewed a couple of people who are, like Donna Flagg, president of The Krysalis Group, LLC. According to her, "My high-level take on the change is that going from Citigroup to Citi identifies the brand back to its roots, which is commercial/retail banking. People still think of Citi or Citigroup as the Citibank on the corner."
In other words, it's a way for a massive, complex organization to get some focus. The problem: the name may not necessarily resonate with a lucrative part of Citi's business -- the ultra rich. For this segment, brands like Goldman Sachs (NYSE:GS), Credit Suisse (NYSE:CS), and Morgan Stanley (NYSE:MS) have much more power with this crowd.
I also interviewed Mark Stevens, the CEO of MSCO and author of Your Marketing Sucks. His opinion on the matter is straightforward: "It sucks. Why? A stupid waste of shareholders' money. Is the new better than the old? Why don't we just change Microsoft's name just for the hell of it."
If anything, the rebranding exercise highlights the difficulties in meshing the disparate businesses of Citigroup like hedge funds, investment banking, brokerage, retail brokerage, and so on. Simply put, it's tough to follow, as well as manage. And, as is usually the case, investors just want to see a compelling rationale that -- whatever the company is called -- it can still make its business work.
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Fool contributor Tom Taulli does not own shares of companies mentioned in this article. He is currently ranked 1,623 out of 19,864 in CAPS.
