How Much Is a New Company Logo Worth? MasterCard Hopes Plenty

 

When well-known brands change their logos, it can have tangible benefits — and risks.

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For the first time in 20 years, MasterCard (MA)  recently unveiled a new logo — this one with a flatter, cleaner look with the company’s name written in lowercase letters. The company hired design firm Pentagram to help it remodel from its older 3D look.

The change comes as digital payment platforms are rapidly proliferating, forcing credit card companies to compete against the likes of Apple Pay (APPL) , PayPal (PYPL) and Venmo. MasterCard’s new logo now more closely matches the look and feel of such rivals.

Take our interactive quiz to see if you can recognize some famous companies’ original logos.

“The whole category of credit cards itself is being challenged by mobile payments,” said John Paolini, executive creative director at Sullivan, which calls itself a “brand engagement” firm.

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MasterCard has its hands full marketing itself to a generation that is increasingly saying no to credit cards. Despite this trend, MasterCard’s stock has climbed almost 200% in the past five years, due to the increased use of debit cards as well as increases in consumer spending following the recession.

“Credit cards have become so commoditized and new generations of consumers are not finding value in them,” Paolini said. “This is the right time for Master Card to signal a significant change in their identity.”

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The credit card giant joins companies such as Netflix (NFLX) and Facebook’s (FB) Instagram, which both also revamped their company logos in the past six months, moving to cleaner, flatter images.

Calculating how a logo change will actually affect a well-known company like MasterCard’s bottom line is difficult, according to Paolini.

“When people talk about value, our mind immediately goes to quantifying it in terms of dollars,” he said. “[But] it’s much more about the value it adds to the relationship between a brand and its customer.”

And long-established brands like MasterCard face particular challenges when they try to update their logos.

When PepsiCo’s (PEP) Tropicana decided to roll out its redesigned logo and package in early January of 2009, the look was so different that confused consumers didn’t know what to reach for on the shelves. Sales of the Tropicana Pure Premium line fell 20% between Jan. 1 and Feb. 22 that year, costing the brand $35 million, according to AgencySpy. Tropicana announced it would roll back its re-design on Feb. 23 and revert back to the original logo.

“They had one giant position of evolution and the brand basically disappeared from the shelves,” said Ken Nisch, president of JGA, a retail design and branding firm.

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The Gap (GPS)  learned from Tropicana’s mistake by wasting no time to abandon an unpopular new logo. Soon after introducing a new, digitized design in October 2010, the clothing company backtracked after a storm of criticism demanded the company revert back to its old logo. The new logo only lasted a week.

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Of course, not all change is bad. A logo change or re-brand can revitalize a company and promote brand recognition, according to Nisch. Coca-Cola (KO) , for example, did not compromise the value of the brand when it unrolled a series of changes over the past few years, including adding more color to its packaging and putting customers’ names on the can, the latter of which was a marketing campaign geared to millennial customers.

“They didn’t lose a real threat to brand continuity,” he said. “That’s probably the classic evolution that has worked well and kept that brand vital even though it’s ubiquitous.”

SOURCE: TheStreet