I came across an article on Hacker News that discussed a major layoff at a logo and design company called Looka. According to the article, the company laid off 80% of its employees. The layoff followed a corporate rebranding, as the company changed its name from Logojoy to Looka. Interestingly, the Looka.com domain name was acquired via Sedo in September of 2018 for $65,150.
Apparently, the domain name change that went along with the rebrand was the culprit behind a major loss of traffic. Here’s an excerpt from the article found on BetaKit:
“The CEO explained that with the rebrand the company expected and was ready to see a 20 to 30 percent drop in organic traffic due to the domain switch. “That was sort of the standard [of] what to expect, 20 to 30 percent. And expected to recover in three to six months,” Whitfield told BetaKit.
Unfortunately, that recovery never took place. Whitfield claimed that with the domain switch from logojoy.com to looka.com, Looka ended up losing 80 percent of its organic traffic, which had previously accounted for 50 percent of the company’s revenue.”
From what I understand, the company undertook the rebranding effort because it was expanding its offering beyond logos. I can see why the company wanted to go with a more generic brand name in Looka rather than the original brand name, which was more specific to logo making.
When selling domain names, domain investors often tout the benefits of a domain name upgrade, and I think this article highlights one of the perils of a domain name switch. I presume there are plenty of companies that successfully rebranded, but investors should understand that there is a lot that goes into a rebranding decision.