Alphabet Clears the Path for Better Brand Management at Google

Google’s recent announcement — that it will no longer be “Google” but Alphabet, a holding company which will include the core Google business as a subsidiary — testifies to the importance of giving a brand room to breathe and grow.

Google has come to be associated with a lot of concepts — information, speed, ease of use, technology, innovation, and (to many) eccentricity. These latter two associations stem from the company’s renown willingness to fund new-in-kind projects and business segments.

That includes groups like Google Fiber, a growing high-speed internet service provider. There’s also Google X, the team behind closely scrutinized autonomous carsand Project Loon, which will soon bring high-speed internet access to the entirety of Sri Lanka via high-altitude balloons. And then there’s Calico, which conducts research for age-related diseases.

Fiber, X, and Calico — along with internet of things subsidiary Nest, Google Ventures, and Google Capital — are becoming their own companies separate from the pared-down Google, Wired reports.

To be sure, the reorganization has a lot to do with pleasing shareholders who aren’t thrilled with large investments in “moonshots,” as Google calls them. Innovation,crucial as it is to a company, isn’t always attractive to investors with a short-term outlook; less-so if it doesn’t seem to contribute to revenue-generating streams of business. Plus, it’s a way for Google’s leaders to simply create and fund new projects.

The announcement from the soon-to-be Alphabet, however, is also recognition that many of those segments were unnecessarily stretching the limits of Google’s brand identity. And it’s an acknowledgment that the Google brand name — valuable as it is — constrains non-core units from growing their own meaningful brands.

WHY ALPHABET BENEFITS THE GOOGLE BRAND: SIMPLIFICATION AND RISK MANAGEMENT

One of the more difficult parts of brand management is understanding what your brand should be. Logically, that would include what it shouldn’t be, too; but for a long time, Google has seemingly bucked that corollary, choosing instead to associate the brand with disparate organizations and activities.

Along the way, some of those investments ran pretty far afield from your typical information gathering and indexing. As we’ve said before, a brand isn’t just your product or your advertising. We define it as every interaction that an entity has. But managing those interactions becomes messy if your entity is a global, multi-hundred billion dollar, consumer-facing company.

Just ask Procter & Gamble. It’s on a mission to sell off up to 100 brands, and most recently entered into a deal to sell 43 of its beauty products, The Wall Street Journalreports. It’s a cost-cutting measure for sure; but there’s a general recognition that the company is struggling to manage the complexity of its giant brand portfolio. “P&G was looking to conquer the world of beauty but it went too far out of its comfort zone,” the vice president of a consulting firm’s consumer-products practice told The Wall Street Journal.

The brand management challenge is even more staggering for companies at the center of today’s technology revolution. For the Googles of the world, it’s already a complex process to manage the billions of people who rely on you every day on desktop and mobile for search, advertising, YouTube, maps, apps, and Android — the businesses that will remain in the new, “slim” Google, according to Wired.

Alphabet isn’t a way to cut costs; in fact, the company wants to retain the financial ties between all its segments. But like P&G, it’s a signal that the company needed to simplify brand management.

There’s another benefit for Google as a brand: risk management. Consumers and shareholders come to associate “Google” with the challenges non-related units come to face — like another traffic incident involving a self-driving car (even though it was the human’s fault) or an experimental product losing momentum once it reached consumers. Even if a company is fine with that risk financially, it’s an unnecessary chance from a brand management perspective.

In many ways, then, Alphabet will let the core business of Google simplify the brand management challenge it faces while minimizing the negative associations from other parts of the company that it can’t control. But those other parts benefit, too.

WHY ALPHABET BENEFITS EVERYTHING ELSE: THE OPPORTUNITY FOR GROWTH

For non-core business units, association with the Google brand can grant a luster that few other companies can hope to achieve; it acts as validation that one of the world’s largest companies believes its operations to be worthwhile.

At the same time, being considered part of “Google” means you’re not going to build your own, specific, brand value. If Nest — a 2014 acquisition of Google that will now become its own company — aspires to become known in consumers’ minds as the leader of interconnected home products, it would have only done so by conceding some of that mental association to its ubiquitous owner before Alphabet.

There may be a case study in YouTube: the company was acquired in 2006 when it comprised just 65 employees. Today, it’s seen as a central pillar for Google’s ad selling operations along with search — and until recently, was deeply integrated with Google+, even if as a whole YouTube operates more or less independently.

That’s another way in which ending the association with Google benefits units like Nest, X, and Fiber: there will be less of an expectation that they must eventually contribute to the core business. With a lower risk that operations will be changed to somehow further Google’s bread and butter, these units can focus not only on building a future-oriented business — they can concentrate on truly owning and managing brand.

Naturally, these brands will remain closely associated in everyone’s mind in the short term. But the formal reorganization is the initial step in splitting those mental links down the road. Ultimately, the announcement is a realization that you don’t have to share a brand to share finances.

When you realize that, you realize that your successful brand doesn’t need the extra complexity of endorsing disparate, possibly struggling operations — and you realize that your smaller operations deserve their own shot at growth.

Originally published on the Percolate blog.

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