Business Irish

Saturday 20 September 2014

Taxpayer counts the cost of re-branding exercise

Re-branding state-run bodies can be a costly and questionable exercise, writes Niall H Doyle. But what's in a name?

Niall H Doyle

Published 27/07/2014 | 02:30

  • Share
GONE TO THE DOGS: At a greyhound track run by the well-known IGB

THE shooting down of Malaysian Airline's flight MH17 over Ukraine, hot on the heels of Malaysia Airline's flight MH370 going missing in the Indian Ocean is more than a simple case of disaster following tragedy.

  • Share
  • Go To

Among the problems posed by the awful incident is the question over the future viability of the airline's brand.

Branding is central to the commercial activities of any product, service or organisation. The mere mention of a brand's name should, through effective marketing activity, conjure up a positive reaction with the consumer or user. The marketing department of any organisation are the custodians of the brand, tasked with maintaining, and enhancing its place in the marketplace.

Significant tranches of a marketing department's budget are allocated towards branding, which is fine if the product or service operates out of the private sector. Market forces and a vigilant eye on the bottom line should dictate the resources required.

Where spend on branding comes in for closer scrutiny is when a product, service or organisation originates from a state-sponsored body.

This scrutiny is applied most keenly when it comes to the thorny issue of 're-branding'. Often cited as a panacea to cure all corporate ills, 're-branding' while not always necessary, is nearly always a costly exercise. Last month Minister Leo Varadakar, ruled out a re-branding of Dublin Airport Authority, largely based on the likely costs it would entail. It had been estimated a DAA re-branding would have cost €3m. Back in 2004, re-branding the Authority from Aer Rianta to the present day Dublin Airport Authority cost €4m.

Public sensitivity to unnecessary re-branding exercises has never been higher. Eyebrows were raised earlier this year when RTE revealed it had spent €25,000 'refreshing' its news bulletins (essentially just some cosmetic changes to the graphics and a re-scoring of its signature tune). It seems unless a re-branding can be clearly demonstrated to be necessary, there is zero tolerance for unnecessary raids on the public purse.

Brand awareness in state-sponsored bodies is, of course, important. However, that importance should not be interpreted by the boards operating these bodies as granting them license to alter or overhaul the corporate image of an organisation in the often misguided belief that it will positively impact on their overall performance in the marketplace.

Although often seen as a drastic measure, there are many legitimate reasons why re-branding is often considered the best course of action for a brand to take, with 'proactive' rather than 'reactive' re-branding the ideal. Proactive re-branding generally anticipates a significant change in the marketplace; predicted growth, a new line of business, new market share. Whereas reactive re-branding is in response to external forces outside of the brand's control; perhaps a merger or acquisition, legal issues, or worst of all, negative publicity.

The latter is, unfortunately, all too common. It's also likely to be the most expensive to correct, particularly if the brand has gone toxic in the minds of the public. The need for swift re-branding in the marketplace hikes up the eventual cost considerably.

Remember FAS and the expenses scandal in 2008? The brand had become so toxic that the government was faced with no alternative but to breakup and re-brand the agency into INTREO ('a single point of contact for all employment and income supports') and SOLAS ('tasked with ensuring the provision of 21st century high quality Further Education and Training programmes').

Cost to the Exchequer? Well, according to the Department of Social Protection, the cost of rolling out the INTREO brand across 60 offices nationwide (consisting of new office fit-outs, signs, stationery and customer information materials along with updating its online presence) is in the region of €6m-€7m. The cost of developing the SOLAS corporate identity (including all branding materials) is "less than €20,000" according to the organisation. An upgrade of their website is currently out to tender.

Of course, there have been, arguably, more pernicious re-branding exercises impacting the Irish people (Windscale to Sellafield springs to mind), but nonetheless it is disquieting to think of vast sums being spent on agencies tasked with training and finding work for an out-of-work workforce.

In some instances, re-branding is imposed by one state agency onto another. The Commission for Energy Regulation insisted on ESB Customer Supply and ESB Independent Energy changing its name following the deregulation of the domestic electricity market a few years ago. Hence the emergence of Electric Ireland in 2011. At the time, estimated costs of re-branding were put at €6m-€8m, though critically, this estimate included the overall marketing budget for the new entity.

A cynic might conclude that including the two costs together (re-branding and overall marketing budget) is one way of concealing the actual cost of re-branding in the first place.

And who pays for all of this ultimately? The bill payer, of course.

Last month Bord Gais Eireann's new name, Ervia, was signed into law. This follows the sale of Bord Gais Energy to Centrica (owner of British Gas), earlier this year. Former Minister Pat Rabbitte said at the time that costs would be kept to a minimum and that there would be no marketing or public awareness campaign for the new entity. Ervia is, to all intents and purpose, just a corporate name for a group company; made up of the already established Irish Water and the newly formed Gas Networks Ireland, the re-branded name for what was previously the gas works division of Bord Gais Eireann.

Interestingly new owners Centrica have indicated they have no plans to re-brand Bord Gais, preferring for now to keep the faith with the brand its 650,00 residential gas and electricity customers, along with 30,000 business accounts, have become accustomed to.

It's not just the corporate world that is fond of re-branding, academia also falls victim to its charms. Earlier this year Trinity College Dublin changed its name to "Trinity College, the University of Dublin", owing to, amongst other reasons, confusion surrounding the word college in the international marketplace. One wonders what UCD made of the change.

Perhaps the most challenging re-branding exercise to be announced recently, was the one announced by IGB earlier this month. "IG who?" you ask? IGB, the Irish Greyhound Board, of course - or if you prefer, Bord na gCon.

Brand awareness for IGB has been virtually non-existent for the past number of years, reflected in declining revenues (down over 55pc since 2006 according to a consultants' report also published earlier this month) and falling attendances across the 17 tracks it licenses in the republic, 10 of which it owns and operates.

To date, IGB has commissioned a market research company, a communications company, an advertising agency, and redesigned both its website and its logo. It declined to divulge how much this major re-branding is costing, citing "commercial sensitivity", but it will be interesting to see if the integrated re-branding campaign of this state-sponsored body (under the aegis of Department of Agriculture, Food and the Marine) set to "feature a much more aggressive brand presence at greyhounds tracks as well as on digital platforms and social media" will arrest its decline and broaden its appeal with the public.

Sunday Indo Business

Read More

Editors Choice

Also in Business