It doesn’t matter that Citigroup acquired Travelers and the red umbrella along with it. The case will always be perceived as a stolen identity. The umbrella logo never worked for Citigroup, and every time I saw it I was reminded of the inadequate job Citicorp did in the merger along with its disastrous name change from Citicorp to Citigroup. When Travelers was spit back out it was without the red umbrella it had so carefully, lovingly, and appropriately built as its brand symbol for many years.
Citigroup might have gotten away with the theft if it had spent appropriately to rebuild its brand after the name change. Instead it allowed its name brand to languish in limbo and then was amazed that the company was underperforming in terms of brand image and financial performance.
Here is an example of its brand mismanagement on a quantitative basis taken from CoreBrand’s continuous benchmark research, the Corporate Branding Index: Citi’s BrandPower, a combination of familiarity and favorability ratings among U.S. business leaders, dropped from a score of 50 before the merger and name change in 1998 to 21 after the name change in 1999. Through 2006 the brand has recovered to a BrandPower rating of only 36. This compares with Wachovia at 37, Bank of America at 49, and J.P. Morgan Chase at 55, all in 2006.
Interestingly the numbers were all from a decline of familiarity, as its favorability ratings remained stable throughout the transition. In other words, those who were close to the company felt the same about it; there were just a lot fewer people who knew it well. Clearly this is a case of inadequate funding of a major identity change.
Throughout the acquisition of Travelers and the name change from Citicorp to Citigroup, communications spending on the corporate brand remained basically unchanged. According to TNS Media Intelligence, Citigroup’s corporate advertising spending averaged $44 million in the two years (1999-2000) following the name change. Considering the enormity of Citigroup’s task, this was peanuts.
Of course, now that it doesn’t matter nearly as much, Citigroup is spending significantly more advertising dollars on the corporate brand, averaging more than $500 million annually in 2004 and 2005 alone.
Companies that invest in communications in an inappropriate way are what we call financially driven firms; they spend when they are doing well rather than when the spending could have a meaningful impact. Companies that invest in communications to achieve strategic goals are called brand-driven firms. It is no surprise that Citigroup is clearly financially driven. It should also come as no surprise that financially driven companies generally underperform their peers in brand recognition and financial performance.
In CoreBrand’s Directory of Brand Equity, Citigroup is listed under the diversified financial services category. Between 2002 and 2006, Citigroup lost 0.5% brand equity as a percentage of market cap, while the industry group as a whole grew its brand equity 2.1%. Financially driven companies seldom get the value they think they will by saving rather than investing strategically in their brand.
Now that Citigroup is finally spending significant amounts on their brand, it has once again decided to change it name and logo. Don’t get me wrong, I think “Citi” is a clever and pithy name; it is just too bad the comany didn’t think of it through the first time around. Be that as it may, what should Citi do to build this new brand identity appropriately?
First, it needs to make the change from a strategic perspective. Do it once and do it right. It needs to set specific goals for the new identity launch. It needs to measure those constituencies that are critical to its success and identify return-on-investment metrics for achieving targeted results.
Then it must budget appropriately. Remember, it takes approximately three years to begin obtain the maximum ROI for a new identity. The returns can be huge, not only on stock performance but also in creating significantly greater revenue from new and current customers.
It will be interesting to see if the company learned its lesson as it changes to Citi.
James Gregory is founder/CEO of CoreBrand, a marketing and branding firm based in Stamford, CT, and the author/coauthor of four books, including “The Best of Branding: Best Practices in Corporate Building.”
Other articles by James Gregory:
https://chiefmarketer.com/disciplines/branding/branding_merger_08052006/index.htmlThe Eight Principles of Branding a Merger
https://chiefmarketer.com/improve_corporate_brand_07102006/index.htmlTwelve Ways to Improve Your Corporate Brand
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