In 1963, the Batman titles were in trouble. Exactly how much trouble is up for debate. Common comics histories generally state they were on the verge of cancellation, and indeed this is what staffers remember being told at the time.
But looking at the published sales numbers, it appears that while it is true sales had dropped by 30%, the Batman books were still in around the top ten of comics published in terms of sales (the bottom of that top ten, but still). There's also the fact that DC comics couldn't really cancel the Batman books - doing so would mean ownership of the character would revert to his "creator", Bob Kane, due to a lucrative contract Kane had signed in 1947.
But it was clear that something needed to be done about the books. Jack Schiff's era of the Batman Family, complete with Batwoman, Bat-Girl, Bat-Hound, Bat-Mite and so on, had to come to an end. The endless outer space adventures and interdimensional menaces had run their course. And by 1964, Sheldon Moldoff's Bob Kane-alike art style looked hopelessly out of date.
Compared to the revolution being wrought by Stan Lee and Jack Kirby over at competitor Marvel Comics, DC's line looked stiff, silly and childish, and none moreso than Batman and Robin. Clearly this was proof that Jack Schiff had been right all along, that the Dynamic Duo had never been a good fit for sci-fi, that the character needed to return to his roots as a pulpy urban avenger of the night!
DC agreed, so they fired Jack Schiff for being right, and chose a new editor to helm the rebirth of Batman -- their top sci-fi guy, Julius Schwartz!!
Schwartz was given six months to revive Batman's lagging fortunes, and the man who had ushered in the Silver Age at DC with Flash, Green Lantern, Hawkman, and Justice League of America knew that what Batman was in need of most was modernization.
Immediately gone, of course, was the sci-fi stuff. No more aliens, no more monsters, no more bullshit. Batman was back to fighting gangsters and earthbound human criminals - granted, they were still allowed colourful gimmicks or other characteristics that elevated them above common criminals, but they were human and they were believable. Once again, emphasis would be placed on Batman as a detective, a solver of crimes and mysteries.
Also excised was the supporting Bat-cast - gone were Batwoman and Bat-Girl, and their ugly costumes and poor excuses for "romantic interests". Gone was Ace the Bat-Hound, and especially gone was Bat-Mite. It was back to just Batman and Robin.
Other details were updated - the Batmobile, the Batcave, etc. given an aesthetic overall to bring them more in line with the 1960s. The Bat-Signal replaced with a "hotline" to Police headquarters inspired by the hotline between the White House and the Kremlin. Robin was to be drawn to look more like a high school age teenager than the puffy-cheeked cherubic pre-adolescent he had been for the past twenty-five years.
Also in need of updating was the art. Schwartz decided to bring on DC's golden boy artist, the man who had really helped sell the new Flash - Carmine Infantino. Infantino was definitely a cut above Sheldon Moldoff -- his characters looked more real, less cartoonish and more defined, and he had a stylishness to his drawing that was unique and identifiable.
Certainly this presented something of a problem - Infantino's art could not be more different from the ghosts of Bob Kane, and definitely could not be signed by Kane. So what to do?
Well, here's where things get interesting - DC had told Schwartz that Batman was in danger of cancellation. And they had also told Kane the same thing. They were firm that a desperate shake-up was in order, and therefore got Kane to agree to allow Infantino on art duties. Kane's studio was still guaranteed a certain amount of work - Infantino would do every second issue of Detective, while Sheldon Moldoff would do the others and Batman, and Joe Giella would ink both in order to create a kind of artistic link between the two.
By allowing this, Kane essentially loosened the conditions of his contract with DC for the first time. Infantino became the first Batman artist who's work was NOT signed "Bob Kane". It was a small step, but it was enough.
When Schwartz had revived Flash and Green Lantern, he had given them newer, more modern costumes. With the art changes brought on by Carmine Infantino, it made sense to update Batman's appearance as well. But being a huge icon of DC as he was, obviously the costume could not be changed much. Infantino altered the way the ears on the cowl looked, changed the shape of the mask a little, but the only big change he and Schwartz got away with was the symbol on Batman's chest -- a yellow oval now encircled the Bat logo, mirroring the look of the Bat-signal (and also coincedentally allowing DC something to trademark, as it was more unique than just a bat sillouhette).
This one change, the yellow oval, visually signifies the end of the old era of Batman, and the beginning of the new -- dubbed in house ads "The New Look".
Mark Waid's Foreward to The Dynamic Duo Archives Vol 1
"The New Look Batman: Back to Basics"
"The Legend of Batman's New Look"
"How Bad Were Batman's Sales in the Early 1960s?"
"What Really Rescued the Caped Crusader"
"Secret Origins of the Batman TV Show"