A Quick Dive into Co-Branding

Night time picture Times Square, New York
Night time picture Times Square, New York

Co-branding is a common marketing strategy for brand extension in the field of brand management. A marketing partnership is made between two or more different companies to collaborate on a new product or offering.

Table of contents

Co-Branding Definition

So, what is co-branding? One of many co-branding definitions is ‘a form of co-operation between two or more brands with significant consumer recognition, in which all the participants’ brand names are retained’ (Blackett & Russell, 1999).

As we'll see, co-branding can be an extremely beneficial strategy. Not to be confused with co-marketing, which, whilst similar, is two or more brands coming together to promote existing or mature products and services. The general rule is that if you’re collaborating on a new offering then you are co-branding.

This marketing tool is nothing new, in fact throughout history these brand collaborations have catapulted brand names into the hearts and minds of consumers otherwise out of their customer base. For example, in 1975 Dr Pepper teamed up with Bonne Belle (US make-up brand) to produce a Dr Pepper-flavoured lip balm, although considered a strange collaboration at the time, it was so successful that you can still buy the product today.

Types of Co-Branding

There are various co-branding types, but the most common ones are ingredient co-branding and composite co-branding. Let's take a closer look at those two forms of collaboration.

1. Ingredient co-branding

With this form of co-branding, advantages are created through partnering with companies whose products are used in your products. For example, Intel is the ingredient brand to Dell, a computer technology company that uses Intel’s core processors.

2. Composite co-branding

This involves a partnership between two or more companies to invent and produce a new product or service for their target audiences. For example, British Airways and Citibank partnered up to release a credit card that automatically registers members to the British Airways Executive Club.

What Are The Benefits of Co-Branding For Brands?

1. Improves credibility

If your small brand meets a popular, more well-known one, the audience is likely to trust you more due to the credibility of that bigger brand. It also raises your brand awareness which will help grow sales in the long-term as the audience will have you in mind if they look for a particular product or service category. 

Media monitoring tools can measure the sentiment of the buzz on social media and in news, giving insight into whether people trust the brand or not. We can dig deep into what people are saying about your brand, if they have positive associations or if they generally approve your marketing content.

If there is negative sentiment surrounding a particular brand, it would be better not to start a brand partnership as that negative buzz or press could reflect onto your brand. It also sets you apart from other competitors and makes you more memorable particularly if you are collaborating with another brand they already love!

2. Injects cash 

A top benefit of co-branding is that there is more money available for marketing purposes. If both companies spend their usual marketing budget each on a joint campaign, then the campaign is likely to be much bigger and better than an independent campaign. However this is dependent on the agreement between the two businesses. Especially for new products or markets this cash injection can be rewarding strategy as you are able to unlock content seeding campaigns on a new scale.

PR budget

3. Boosts visibility

Co-branding also increases reach. Two partnered brands advertise one product or service to both of their audiences, therefore increasing the number of people that the message is communicated to. It might be possible that you find completely new co-markets thanks to your strategic partner's outreach. In parallel, it's a great way to test out new markets and exposes you to these markets in an easier, faster way utilising the resources and assets of both companies. In any case, you should monitor your cooperation at anytime to spot potential growth for your branding as early as possible. 

4. Exciting for customers

Loyal consumers will be more engaged with the brand and excited to share new product updates particularly if the partnership is with another brand they love. A great example of this is Taco Bell teaming up with Doritos to create the Nacho Cheese Doritos Loco Taco, two powerful American institutions coming together to produce a product with worldwide acclaim, so much so it took YouTube by storm and even had its own fan pages.

Co-Branding Examples

There's more co-branding around than you would guess. We'll present two examples to point out the advantages of mutual branding.

1. Apple Watch Nike

The Apple Watch Nike is a good example of composite co-branding. Based on the Apple watch, Apple and Nike developed custom Nike-Apps that make the watch an exclusive gadget for athletes who want to track their exercising results. It's kind of rare that two world famous brands combine their corporate design to create something new. In this case, the partnership pays out. There are several types of Nike-designed wrist bands exclusively for the Apple Watch Nike and there are many more examples of how effective this co-branding of Apple's elegance and Nike's dedication to power and accomplishment is.

Apple Watch Nike

2. Versace and H&M

The fashion industry is especially famous for its co-branding partnerships. Usually it's about a branding between a well-known fast fashion company and an exclusive, luxury design brand. H&M kind of invented this strategy by introducing unique pieces of well-known designers in a limited store edition. Most customers bought them on the first day and emptied the stock immediately. This raises exclusiveness and brand awareness.

Versace and H&M co-branding advert

Things to Consider When Creating a Co-Branding Strategy

1. Size matters

Large companies are better able to compete with small businesses as they can transfer their successful and popular brand names to their new products. However small businesses that haven’t fully established themselves in the market aren’t able to do this. Therefore it’s important for small businesses to partner with other small business, or focus on areas with little competition. We can use media monitoring tools for social listening to find which brand names of a particular product category are popular and have a positive buzz. If they’re being mentioned frequently and positively on social media and in the news, it gives us a good indication as to whether they’re recognised in the market and might be worth co-branding with.

2. As in real life, finding the right partner is tough

A customer will be put off buying if they are unaware of the company you’re partnered with. In order to create a product that will lift off, it is important to make sure that the two companies complement each other in terms of recognitionbrand image, and values. Media monitoring tools such as Meltwater can be used to determine aspects such as the partner’s key messages, their brand perception, and if they are known in the geographic market where we want to set up shop. We can use this information to assess whether or not a partnership with that company would be advantageous.

3. Make your goals and objectives clear

Vague, undefined goals can cause conflict within a co-branding agreement. It is important to identify and define these from the beginning ensuring they suit both companies. Beware, this doesn’t happen overnight. It is also important to agree upon a resource split, not just budget but actual manpower, this is a great time to identify any skills gaps within either team or where marketing tools could help.

Media monitoring tools can support you throughout your co-branding journey, from measuring sentiment around your chosen brand partner, giving insight into whether people trust the brand or not. Also, measuring the impact of your co-branding marketing by digging deep into what people are saying about your brand collaboration gathering valuable feedback enables you to reflect on the success of your co-branding partnership.

If you want more help, why not fill in the form below and let Meltwater help you discover your perfect co-branding partner.

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