Netflix Back Flips on Qwikster

Time to recover lost brand equity.

In another stunning move, Netflix announced today that it was abandoning its move to split websites for its DVD movie rentals and streaming businesses, and dropping the Qwikster name.

As we wrote less than a month ago, previous moves by the company’s management was effectively destroying its brand equity.

While the question of what the Netflix brand stands for still remains, this move today will undoubtedly put the Netflix brand back on firmer ground. Whether they regain the hundreds of thousands of lost customers is another question.

I guess every generation needs to have its “New Coke” moment. Hastings and his senior crew at Netflix have brought us ours, even surpassing the miscues made last year by the Gap logo saga.

What are your thoughts? Is the Netflix brand back on the road to salvation?

Netflix: Destroying Brand Equity

File this under the “what were they thinking?” category.

Netflix announced that it is splitting its DVD rental and streaming video businesses in an attempt to overcome the massive negative publicity and rapidly escalating customer attrition since it raised prices for both services in July.

Okay, that makes sense.

But here’s the killer.

In an attempt to “win back the trust of its customers,” the company is rebranding its DVD rental service to Qwikster.

Let’s see if I understand this correctly. Some 25 million customers signed up for Netflix as a convenient and preferred way to rent DVDs. And, until a couple of months ago, these customers seemed to trust Netflix.

So now, to win back the trust of the remaining customers (it has reportedly lost over 600,000 monthly subscribers since the July price hike), the CEO has decided to change the name of its DVD rental business and use the Netflix brand for its streaming services.

What could they possibly be thinking? Why not leverage the equity of the Netflix brand and call the streaming service Netflix On Demand, Netflix Streaming, Netflix Video, or even the Netflix Channel? Or anything else that created a brand extension and told customers “Netflix is a brand you can continue to trust.”

And if company management thinks the Netflix brand is not good enough to trust for those remaining 24 million customers who will now forcibly be shifted to Qwikster, what makes anyone think it is a brand that can be trusted for video streaming services?

Apparently even the Netflix DVD business will move to a new website. How confusing will that be to its customers?

I wonder how popular the search phrase “Netflix alternatives” is becoming?

In the past two months, the company has ineptly implemented a much maligned price hike to its existing customers (so much for customer loyalty), split its services into two, and dropped the Netflix branding from its most popular service.

So what does the Netflix brand stand for now? Who knows.

No wonder Netflix has lost roughly 50% of its market value since this series of blunders began in July.

If I were on the Board of Netflix I would be asking for the immediate resignation of CEO Reed Hastings on the grounds of destroying the brand equity of Netflix.

Product Unplacement

Abercrombie & Fitch Wants Clothes Off Jersey Shore

Product placement is an estimated $8-$10 billion industry, with brands often competing with one another to be pictured in movies, TV shows, sporting events and even theatre plays. But this is the first example I know where a company has actually offered to pay for its brand to no longer be displayed in a specific program.

Last week, in an unprecedented move, Abercrombie & Fitch offered to pay the cast members of Jersey Shore to stop wearing its clothes on air.

According to a statement released by the company, “We are deeply concerned that Mr. Sorrentino’s association with our brand could cause significant damage to our image. We understand that the show is for entertainment purposes, but believe this association is contrary to the aspirational nature of our brand, and may be distressing to many of our fans. We have also extended this offer to other members of the cast, and are urgently waiting a response.”

I wonder if A&F gave any thought to trying to legally stop the identification of its branded apparel, perhaps in the name of brand protection?

That would have been an interesting case (something I would have expected to see argued in the brilliant TV show Boston Legal).

Do marketers have legal recourse to protect their brand image and reputation by preventing associations they believe are damaging?

Any legal or trademark experts out there who can share their expertise or viewpoint on this?

BP: Brand Perfidious?

Perfidious – deliberately faithless, treacherous, deceitful. Of, relating to, or marked by perfidy. Synonyms: false, disloyal, unfaithful, traitorous, faithless.

Perfidious is the word that leaped to my mind when I read this opening paragraph in a post on the Fast Company web site:

“There’s no question that BP has lied extensively over the past few months about the growing Gulf oil disaster. The company has bullied journalists, fudged numbers, and even deployed fake journalists to the Gulf to write about how everything is fine. Now BP may be literally trying to cover up oiled beaches by dumping sand on top of them.”

Over the weekend, the Financial Times (FT) and CNN were reporting that BP is bracing for a shake-up at the top, with both the Chairman and the CEO expected to be replaced within weeks.

However, unbelievably, the CNN story reports that the Chairman is being “singled out for criticism by shareholders for his perceived lack of decisive leadership during the crisis and his failure to support Tony Hayward, the embattled chief executive.”

I guess these shareholders have their heads stuck in the same sand that BP apparently is using to cover up the oil-stained beaches in Louisiana.

Mr. Hayward’s performance before the U.S. Congress, in which he tried to handball blame for this disaster to BP’s subcontractors, did nothing to enhance trust in the BP brand or its leadership. Neither did early reports that soon after this disaster BP was offering US$5000 payments to residents affected by the oil spill if they waived their rights to sue for any damages.

The high-powered institutional investors in the UK that own the majority of the BP shares apparently do not have a clue about Corporate Image Management and the impact of the corporate image on share prices.

Both these investors and the BP Board need to understand this finding from the PriceWaterhouseCoopers report Reputation Assurance: The Value of a Good Name:

A single-minded focus that seeks only to satisfy shareholders may ultimately lead to crises and erosion of shareholder value.

Looks like an updated definition of the word perfidious might need to include “can lead to crises and erosion of shareholder value.”

BP’s Brand Hyprocrisy

The Beyond Petroleum positioning of BP may have been little more than hundreds of millions of dollars spent in greenwashing.

According to The Power Grid column in yesterday’s New York magazine, BP’s investment in hydrogen, wind, solar, and biofuels amounts to just 6 percent of its overall capital expenditures.

While this is certainly a significant amount in terms of dollars (or pounds) spent, it pales in comparison to what BP spends annually on oil exploration and production.

And this does not include, writes John Heilemann, “the tens of millions of dollars that BP has spent on lobbying against safety regulations, even as it’s compiled the most abysmal safety record of any major oil company.”

One key point in the article: safety violations by BP over the past five years totaled 760, as compared to only one for Exxon Mobil.

As we wrote yesterday, media monitoring firm General sentiment calculates that BP has lost $1 billion in brand value since the Gulf Oil spill.

It’s not the fact that BP had an accident that makes this brand suspect; it’s the manner in which they have tried to pass off blame and responsibility that bothers most.

Add to the above the 700,000 “friends” who have signed on to one of the three Boycott BP pages on Facebook, and you have a brand that is approaching free fall.

Sadly, the BP Board doesn’t seem to get this yet. By the time they do, it will be too late. (Another reason why Marketing needs to be brought into Corporate Boardrooms.)

The tombstone for the BP brand is being readied, and the graveyard of Enron, WorldCom, HIH Insurance, and myriad others awaits.

BP Drops $1 Billion in Brand Value

Media firm General Sentiment estimates that BP has dropped close to $1 billion in brand value.

That’s roughly four times the impact on the Toyota brand earlier this year, according to the firm.

General Sentiment uses sophisticated software to scour and analyze over 30 million sources of content on the Internet, including from news, social media, blogs, and web sites.

According to an article today in MediaPost’s Marketing Daily, General Sentiment’s CEO Greg Artzt is pessimistic about the impact of this drop in BP’s brand value. “It will cost BP a fortune to dig itself out of the hole it is in just on the media side,” he says, adding “At the retail level, it will affect them. They are clearly worried about their brand. They do a lot of advertising. But look at their market cap, they won’t recover.”

Based on the comments about BP at the brand social networking site Brandkarma, I would have to agree with Artzt. Comments about BP are generally not favorable and the BP brand ranks poor to bad on all five criteria (planet, customers, employees, suppliers, and investors).

Additionally, the three Boycott BP pages on Facebook have accumulated over 700,000 “friends.”

The General Sentiment one-page report on the effect the Gulf Oil spill is having on the BP brand value is available on their web site. However, it wasn’t working this morning when I tried to download it.