The Value of a Good Company Name
Bloomberg recently covered an unexpected surge in the stock price of small-cap British company called On-line Blockchain Plc, formerly On-line Plc. The company’s offerings and outlook hadn’t changed, nor was it acquired or acquiring –just adding the word “blockchain” to its name was enough for shares to surge 394% in a single day.
It might be an extreme example, but it’s also a perfect demonstration of the value that a well-chosen name can bring to a company. Naming is one of our firm’s most popular services for retail and packaging clients, and with the growth of the cryptocurrencies it’s only a matter of time until financial institutions start similarly rethinking the names of their products and services.
The purpose of a naming exercise is to define a brand and its place in the marketplace while effectively communicating its position against a cast of competitors. For companies exploring the need to rebrand themselves by leveraging a new name, it’s important to understand that building equities for a name takes years unless you have enormous marketing clout and can tap into a pent-up market need.
That said, On-line Blockchain Plc took advantage of a recent trend, particularly popular in fintech. By adding a descriptor to indicate where the company is focusing its investment, companies can easily align themselves with the most innovative processes and technologies shaping the industry.
Other popular descriptors that companies might want to hitch their wagons to include “AI,” “IoT,” “Immersive,” and “Engagement”. These areas are seeing massive growth and having a significant impact on companies’ market value.
Ultimately, a good name and the reputation tied to it can be more valuable to a company than the products or services it offers. In most acquisitions, a particularly effective name can represent more than 30% of a company’s value.