Initials, the Branding Trap 

As always, branding = awareness (recognition) + meaning (feeling)  

Why do companies choose to use initials for their name? Good question, unfortunately without a pretty answer. Is it navieté? hubris? laziness? (You can tell where this is going, right?)  

Here’s the problem with initials: unless you are already know something about that company, you’re not going to have any idea what the initials mean what that company might do for you. Granted, even names that aren’t initials can be misleading, e.g., Apple (of course, we all know what they do, more on that below).

Brand equity

Brand equity is the amount of positive recognition or meaning a brand has. It can even have a monetary valuation attached to it. For example, Apple is considered to have one of the most valuable brands in the world. Think of it this way: would you be more interested in hearing about a new product from Dell or Apple? Generalizing, a product developed by Apple will probably have a better chance of getting traction than one by Dell. Why? Read on.

To build brand equity you need favorable impressions. The more the merrier. How do you do that? Well, it takes any combinations of time, publicity, or money. Take Shell Oil—they’ve built up impressions over a century of just being the corner gas station—we all recognize that scallop shell. Apple, on the other hand, hasn’t been around nearly as long, but they’ve compressed the time frame by creating lots of buzz; the press is generating those impressions for them. Of course, you can spend lots of money and run a Super Bowl ad, but that won’t have nearly the sticking power of free publicity or a century of good faith (it's partly a trust issue).

So, what about those initials?

Simply put, it takes a lot longer to build brand equity or just recognition. Even if your name doesn’t immediately give away what it is you do, a word is still easier to recall than initials, e.g., Apple vs TAC (The Apple Company). In Fortune's recent top 20 brands, only 3 have initials: IBM (4th), AT&T (15th), and BMW (16th). All three of those companies are over 90 years old, have millions of customers, have spent billions in marketing, get lots of press, have lots of meaning, and are household words.

Four ways to meaningful names 

There are a few trends you should consider: 

1. Use mnemonics, like Accenture (we don’t know what any of that has to do with consulting, but it sticks)
2. Use a generic name that hints at what you do, but with a twist, like Tekronix (techtronics)
3. Use a name that describes what you do. A few years ago we had an agricultural investment company come to with with a proposed name of Bluegrass Investments. We talked them into Agrashares.
4. Use someone’s proper name, as in Charles Schwab, or JP Morgan. But again, those can take time to become “known.”

Bottom line: don’t use initials. Yes, it will mean more effort to come up with a name, but not nearly as much to make it viable in marketplace.

True story.

We lost a branding project because of our stubborn stance on initials. A company with a wonderfully descriptive and long-standing name came to us to help them re-brand with just initials. We told them it was a bad idea and why. Well, they insisted and we lost the job to a firm that was willing to do what they wanted. They soon after launched with just initials. We kept an eye on them and sure enough, it wasn’t more than two years and they were back to old name. No initials. We never found out the reasons, but we have our suspicions. The proof is in the pudding.