Just a year ago, search engine GoTo.com Inc. thought enough of its trademark to take on Walt Disney Co. in court, alleging that the logo of the entertainment giant's Go.com Web site was confusingly similar.
The hard-fought case earned the Pasadena company a near-record $21.5 million settlement and legal protection for its snappy logo a green traffic light with the company's name in white.
That's the same name and logo that was unceremoniously dumped earlier this month. In its place, the company is calling itself Overture Services Inc.
It's a name devoid of dot-com connotations, but also the brand recognition that the search engine spent years developing a recognition that is expected to result in the first-ever profitable quarter to be announced later this month.
Likewise, Westlake Village-based NetZero Inc. has distanced itself from its moniker, less successful than GoTo.com but still one of the Internet's most well-known. NetZero, which merged last month with New York-based Juno Online Services Inc., has selected United Online Inc. as the name for the combined entity.
Hurting brand recognition?
So why change names of such well-known brands? Will the companies have to start over to build new brands obliterating any progress they have made?
Quite the contrary, say Overture officials.
Rather than helping, they maintain that the old name could have hindered future growth. Not only were users still confusing it with the moribund but still operating Disney site, but GoTo found that the letters "goto" formed a common surname in Japan, where it plans to expand.
"Overture" is an acknowledgement of the business model, in which companies bid to have their names listed at the top of search results. Every time a consumer clicks on a company, that is deemed an "introduction," hence the name "overture."
"We wanted something that was memorable and had personality," said Jayne Studenmund, Overture's chief operating officer.
The possible loss of brand recognition is not seen as a big deal because the company has changed its business model. And to prove the point, Overture is spending less than $1 million on the change. That includes all internal costs, as well as marketing and advertising.
The company has some experience in going with the flow. Over the last 18 months it has switched from being a consumer, Internet portal to a B2B company in which 97 percent of its revenue is derived from licensing its results to other search engines run by MSN, AltaVista, America Online Inc. and others.
Lanny Baker, an analyst with Salomon Smith Barney, agrees that the name change should not be harmful, given that the vast majority of revenues come from other businesses. But he also doubts it will help that much either, leaving him puzzled as to why it would pay for a full, back-page ad in AdvertisingAge announcing the change.
"It's hard for me to figure out how the name will make that much difference," he said.
NetZero's case is somewhat different. It had yet to post a profit.
Both NetZero and Juno made their mark by providing free Internet service in exchange for streaming banner ads into members' computers. But the collapse of the Internet advertising market, along with users' tendencies to ignore such ads, proved the model unworkable.
Even prior to the merger, both companies had cut back on the number of free hours they offered, and had attempted to switch users to their discount but paid Internet service, at $9.95 a month about half the price of AOL.
The new business plan calls for retaining NetZero as the free service, while converting Juno to the paid service, thereby retaining the brand names as ISPs, if not corporate monikers.
"They are trying to reinvent themselves and start over," said Richard Varner, president of Biz-Net Brokers, a Glendale, Ariz.,-based mergers and acquisitions consulting firm. "It makes sense for them to do that, but the verdict is out if they are going to be a viable business."
Mark Goldston, chief executive of United Online, said the idea was to come up with a name to reflect the fact that free Internet service is no longer a core operation.
"The NetZero brand name is highly recognizable but it is synonymous with free Internet access," he said, scoffing at any possible confusion with other Web sites, including one for United Airlines. "Rather than call it one or the other we felt like we wanted to tell the consumer and investor that this was something new and different and they ought to give it a fresh look."
The company, which declined to reveal how much it is spending on the change, will have 6.7 million users. Only 1.1 million current United users actually pay for service.
Nan Budinger, principal at Metaphor Name Consultants, a San Francisco-based consulting firm, said that business name changes initially can be off-putting, but often make sense if it occurs after a merger or a change in the company's business model.
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