Again a trend, naming rights also have risks for brands

After Kopi Tuku bought the naming rights or Naming Rights for the name of the Cipete MRT Station, now it is the turn of the band D'Masiv to buy the naming rights for the Petukangan Transjakarta Bus Stop. The reason, both have in common is that the locations chosen have memories that follow their history. However, Naming Rights also have risks.

According to the CEO & Founder of Tuku, Andanu Prasetyo, the Cipete area witnessed the beginning of the founding of the Tuku Coffee brand. He and his family admitted that they had lived in the Cipete area since 1967. It was also in this area that the first Kopi Tuku shop was located. Therefore, he decided to buy the naming rights for Cipete Raya MRT Station to become Cipete RayaTuku MRT Station.

Meanwhile, Rian, the vocalist of D'masiv, said that the Petukangan area was a witness to him and his friends starting D'masiv. The streets of Petukangan, which are almost always filled with vehicles, have always been motorized since 2003, when this band was formed. The bus stop was changed to the Petukangan D'Masiv bus stop.

Purchasing naming rights for public facilities is nothing new.  This marketing strategy is said to have emerged since 1912. It is John I. Taylor who is said to be the pioneer of the branding strategy using the naming rights method. John, who owned a real estate business in the Fenway-Kenmore Road area,  Boston, Massachusetts, built a baseball stadium for his Red Sox team in that area. 

The stadium was later called Fenway Park. John deliberately chose this name so that his family's real estate business would be promoted and known to people. 

Those of you who live in Jakarta are definitely familiar with the brand names embedded in all MRT stations, from Grab Lebak Buluk, Indomaret Fatmawati, to BNI Dukuh Atas Station.

Why do brands buy naming rights to public facilities? 

Naming Right not only increases brand visibility but also creates emotional connections with fans or consumers and the local community. This is an example of how naming rights can be used as an effective branding strategy, linking local identity to public image.

Especially for the Petukangan D'Masiv Transjakarta Bus Stop, I see the D'Masiv band's efforts to build a legacy in the area. Because this band doesn't seem to need visibility anymore.

However, buying Naming Rights, as is done by the Kopi Tuku brand, D'MASIV, and other brands, not only can provide many benefits, but also has potential risks and challenges:

Brand Reputation: If a brand is involved in a scandal or controversy, this can have a negative impact on the image of the public facility that bears their name. On the other hand, problems or incidents that occur at the facility can also affect the brand's reputation.

Changes in Taste and Popularity: Brand popularity can rise and fall over time. If a brand's popularity declines significantly, the value of Naming Rights may also decline, and the facility may be deemed less attractive or relevant.

Public and Consumer Response: Not everyone may agree with a brand's decision to purchase Naming Rights. Some fans may feel that it does not fit the band's image or values. Brands need to be ready to face criticism and explain the reasons behind their decisions.

In 2011, Newcastle United owner Mike Ashley, changed the name of St James' Park to Sports Direct Arena to promote his personal business without consulting fans.

As a result, fans were furious, feeling that the club's traditions were being destroyed for business gain. Eventually, the classic name St James' Park was returned after public pressure.

Regulatory and Policy Changes: Changes in government regulations or public policies may also impact the value and sustainability of Naming Rights. Brands need to monitor these developments and adjust their strategies if necessary.

Naming rights can strengthen brand existence, but they need to be executed carefully — from location selection, contract duration, to communication strategies when risks arise. If brands dare to enter this realm, it is important to have a solid crisis mitigation plan.

By: Wiko Rahardjo