The Ultimate Guide to Co-Branding

Co branding

Even on the good days, the business world can feel like it’s dog-eat-dog. Not even the biggest brands in the world can afford to rest on their laurels because there’s always a new competitor around the corner. The moat you build around your business has to be constantly maintained, and re-dug, over and over.

As difficult as it is to launch and grow a brand… staying relevant is where the real struggle begins.

And yet, this ultra-competitive, cut-throat culture is at odds with the purpose of business, which is to serve. With such a chimeric nature, it’s no wonder so many consumers distrust branded messaging and advertising.

Consumers want products and services that address their needs, but it’s hard to ignore the feeling that brands are motivated by simply getting money out of your wallet before their competitors can.

Are there underhanded, profit-driven brands and corporations out there? Of course.

But there are many trustworthy, well-intentioned brands that are committed to improving the lives of their customers, too.

Here at eBB, we’re evangelists for branding as the single best toolkit you have to not only signal to consumers your business is about more than money, but also helping keep your internal focus and operations fixated on providing more value, not just reaping more profit.

Inside of that toolkit are multiple tools to keep your brand human, like defining your brand’s core with a purpose, mission, vision, and values. Communicating with an authentic personality, and making sure you actually understand your target customers, beyond their demographics. One often overlooked tool is co-branding, or brand partnerships. Done right, a brand partnership is a strong signal that competition isn’t in the driver’s seat, and that your brand can set aside the lone wolf mentality when it creates more value for your customers.

What is co-branding?

It’s a mutually beneficial partnership between two or more brands to create a new product or service, or to collaborate on marketing. There are several types of partnerships (which are covered below), but essentially, co-branding is about leveraging the resources and influence of each partner to meet a shared goal.

That goal might be increased brand equity, greater brand awareness, new customers, or to generate buzz. When done well, co-branding is a win-win partnership that creates a “halo effect” for all brands involved.

Co-branding vs Co-marketing

In this article, we’re going to use the term “co-branding” as a catch-all for any type of brand partnership, but technically, co-branding and co-marketing aren’t the same practice.

Co-branding is specifically for brand partnerships that result in a new product or service being offered.

Co-marketing refers to when brands share marketing efforts, but no new product results from the relationship. Just another tip for your collection.

The advantages of co-branding

There are many common reasons you might want to collaborate with another brand, like exposing your products to a new or a wider audience.

You may have a vision for a product that you either can’t develop on your own, or you don’t currently have the resources to invest in. In this case, partnering with a brand that can meet you half-way and provide more value to both your customer bases is a win-win.

Whether you’re building a new product or simply launching a co-marketing campaign, partnerships reduce your operating costs, and split the risk involved, particularly if you’re working with a reliable partner your customers are already familiar with.

Partnerships are always a great way to generate publicity and buzz. The right relationship will get people excited, and that means talking.

Finally, the right partnership can also create a “halo effect” where goodwill, and positive associations with one brand spills over to the other, and the new product you’re offering.

In other words, a great partnership can supercharge your progress without having to shoulder 100% of the cost and risk.

The disadvantages of co-branding

Unfortunately, co-branding isn’t all sunshine and rainbows. There are potential downsides you’ll want to consider before jumping in.

First of all, the reality is that you are going to lose some amount of control. If you’re taking on a partner, understand that you’re taking on a partner, not a subordinate. This shift in mindset can be a challenge, especially if you’re used to being the decision maker for your brand.

But of course, the biggest mistake you can make is choosing the wrong partner. Co-branding with another company that’s a mismatch with your brand can create significant confusion in the marketplace and can erode trust.

Even with the right partner, understand that you are marrying your brand equity and reputation to theirs. Controversies or missteps by your partner down the road van reflect badly on your brand. Your fortunes will be tied together, even if your partners mistakes have nothing to do with your co-branding efforts.

Like any relationship, you can expect disagreements. It might be over an operational decision, or the quality of the product you’re offering. It may come down to a fundamental disagreement about morals, what the “right thing to do” is. While you will have to give up some control to function as a good partner, you also need to know what you will not compromise on. Hopefully product quality and your brand values are two of those things.

On the more serious side, if something really goes wrong, overexposure or improper use of your branding in a partnership campaign can expose you to the risk of losing your trademark rights.

And in some cases, a co-branding venture ends up increasing competition between partners after the agreement dissolves or expires.

Luckily, though, many of these challenges can be avoided by doing your due diligence in choosing your partner (which is covered below!).

Types of co-branding partnerships and examples

Product-based: in these partnerships, co-brands create and offer a product that compliments the individual identities of each brand.

Example: Taco Bell and Doritos

These 2 brands teamed up to create the Nacho Cheese Doritos Locos Taco, a taco shell made with Doritos chips. The partnership generated a lot of publicity and social media buzz. What made these two great partners is that they share a similar customer base without being direct competitors. Because their brands compliment each other, their co-branded product has a unique flavor that creates unique value for their customers.

Communications-based: another word for co-marketing, communications based partners jointly promote their brands, often in the form of a marketing campaign. This comes with the benefits of shared ad costs and can help enhance brand awareness of both parties.

Example: Casper and West Elm

Casper is the well-known online mattress company, and while they’ve certainly disrupted the retail market, there are still plenty of consumers out there reluctant to buy a mattress they haven’t tried in person. That’s where their partnership with West Elm comes in, West Elm is a chain of modern furniture stores that stages bedrooms with Casper mattresses. This partnership allows customers to try out a Casper mattress in person, and it allows West Elm to market their furniture at the same time. West Elm also includes Casper mattresses in their catalogue.

Once again, this is an example of a partnership between two complimentary brands, it works for Casper because it gives them a retail presence without having the excessive costs of opening their own locations. And for West Elm, the opportunity to try out a viral product might bring a few more people through its doors, or delight shoppers who are already looking at bedroom furniture.

However, this partnership does come with a caveat. The partnership lasted a year before West Elm parted ways with Casper and signed a new deal with Leesa, another online mattress brand. The reason was that West Elm were tempted by Leesa’s One-Ten donation model (where they donate a mattress to a family in need for every 10 sold). It’s a reminder that the best partnerships aren’t just made over mutually beneficial business outcomes, but also over shared values.

Distribution-based: in this case, partners reach an agreement to cross-market and bundle a co-brand’s product or service. Most influencer marketing falls under this category, for instance.

Example: Fabletics and Bliss

In 2017, Fabletics and Bliss partnered to boost their social followings on Instagram. The brands offered “the ultimate #SelfCareSunday prize package” which included prizes from Fabletics and Bliss. All contestants had to do was follow both brands on Instagram, like the contest photo, and tag someone else in the comments to qualify. This example demonstrates that partnerships don’t always have to be formed around a new product or an expensive marketing campaign. A social profile giveaway is a good way to dip your toes into the world of co-branding.

Digital/Content-based: An excellent option for eCommerce brands, a content-based partnership is an agreement between a brand and a digital publisher with a similar audience. It provides the publisher with relevant content, while also getting the brand in front of a larger audience. Two brands can also partner to create content as well.

Example 1: Buzzfeed and Best Friends Animal Society

You’ve probably seen some of these videos on YouTube, they feature celebrity interviews with Buzzfeed, except the interviewee is sitting on the floor playing with kittens or puppies while answering questions. It was a great way for the Animal Society to reach Buzzfeed’s 200 million readers, and increase the likelihood their animals would be adopted, while giving Buzzfeed highly clickable content.

There’s never a bad reason to add cute, baby animals.

Example 2: GoPro and Red Bull

Although GoPro and Red Bull have partnered on several ventures, their enduring relationship is over content. Red Bull sponsors a lot of action sports events, and GoPro equips the athletes with cameras. It’s additional footage that compliments Red Bull’s coverage.

These two are a picture-perfect example of brands that appeal to remarkably similar lifestyles and complement each other beautifully without being direct competitors.

Charity-partnerships: A partnership between a for-profit brand and a charity. While there are still significant business advantages to co-branding with a charity, a partnership of this kind should only be undertaken if the charity aligns with the brand’s values and therefore feels authentic.

Example: Target and UNICEF

Target and UNICEF partnered to create the Kid Power campaign. As part of the program, Target sold kid-friendly fitness trackers. Kids were then encouraged to complete activity goals. For every community goal reached, Target donated food packets to underprivileged children. The partnership helped UNICEF raise awareness of global malnutrition and allowed Target to encourage kids to have a healthier lifestyle, therefore giving back to their local communities.

How to make co-branding work for you

The success of your co-branding venture is going to made or broken on the strength of the partner you choose. Nothing you do will save a mismatch. So it’s important to know what to look for in a co-brand.

Here are the 4 points of compatibility to consider:

  1. Target customers and lifestyle: your partner brand should serve a similar customer base to your brand. In other words, both brands need to be relevant to each other’s audience. The more similar a lifestyle both brands are selling, the better the fit (think of the synergy between Red Bull and GoPro). And does your audience trust the potential partner? You should have a firm understanding of their perception of candidate brands.
  2. Level of competition: while you want to be talking to the same customers and selling the same lifestyle, you don’t want to be direct competitors selling the same products. To be mutually beneficial, customers should conceivably be interested in both of your product lines. Another tip to keep in mind: your partnership should reach a specific niche of untapped customers. If you’re expending the cost and energy only to reach your existing customers, it’s probably not worth the trouble. Make sure that the intersection of both brands offers a new market.
  3. Brand values: maybe the most important element of a successful brand partnership comes down to shared values. Being able to agree on what’s most important should be a deal-breaker. While you will need to accept the loss of some control in a partnership, that shouldn’t mean you lose your soul, either. Your customers will still hold you accountable to your values, and won’t accept a compromise in order to please a business partner. This is precisely why you have brand values in the first place, to put a stake in the ground about what will not be compromised for any benefit. Your values should never be up for debate, because they are what your customers are really counting on when they buy from you. A poor fit on this front will damage your brand equity long-term.
  4. Brand size/scale/background: research has shown that partnerships often sour when one partner is significantly bigger in terms of company size and industry scale, than the other. Probably because it creates a power imbalance toward the larger brand. Just as you want to choose an indirect competitor, also choose a partner who adjacent in size and scale. Additionally, according to studies brand with a different country of origin also appear to be at greater risk of doing sideways, language and culture barriers may be to blame, so do your homework and make sure your audiences overlap, and you have a solid base of shared values.

Before you go…

Before you enter the wild world of co-branding, there’s one pre-requisite: you need to have a strong brand.

The branding process ensures your brand has strong core values, that you understand your customers inside and out, and that you have a clear picture of the competitive landscape in your category. All of which are essential ingredients to successful co-branding.

If you’re new to branding, we suggest you start here. Co-branding is just one element of a comprehensive brand strategy, and you won’t unlock it’s potential until you have a brand supporting your efforts.

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