Every single day, companies are joining forces — co-branding — to market a new product, program or service. These strategic partnerships provide opportunities for both companies to reach new customers, raise awareness and create added value for both brands. A great example is Hilton’s strategic partnership with Uber, with the goal to “further simplify and streamline the travel experience for Hilton guests.”
But many companies are reluctant to pursue co-branded opportunities, under the impression that co-branding benefits are exclusive to large corporate brand pairings and big dollar budgets. But the fact is, with a smart, well-thought-out consideration process and clear evaluation criteria, co-branded relationships can contribute significantly to revenue and company image.
Co-branding is broadly defined as any relationship that creates a perceived connection between two companies and/or their brands. Co-branding can take many forms, from strategic alliances to short-term promotional plays, and everything in between.
How do you know if co-branding is right for your company?
First, consider the primary goal in co-branding should always be to build or enhance the business, and create relevant and positive associations for both brands. You should carefully consider every individual co-branding opportunity, weighing the potential benefits and risks.
Co-branding has real potential to generate new revenue, reach new customers and increase market demand. It can also:
- Increase visibility and awareness among both current customers and potential new customers
- Extend the brand into new product areas, categories and distribution channels
- Enable you to leverage the expertise and credibility of the partner company and brand
- Evolve perceptions about the company and the brand
- Increase perceived value for customers
- Reduce costs and risks of developing and launching new products independently
- Increase a company’s ability to demonstrate expertise and capabilities in new areas
- Improve perceived quality or selection
- Deliver cost and marketing efficiencies, especially in a soft economy
There is always inherent risk in choosing to tie your company to the reputation of another. Some potential risks to consider:
- Lack of control over partner actions and decisions
- Damaged reputation or credibility through negative association
- Potential confusion through a co-branded program that may not make sense to customers or prospects
- Inability to focus on a singular brand idea or unique selling proposition
- Lack of alignment with partner business or brand strategies
- Unclear expectations or lack of measurable success
- Tied up finances and resources for length of agreement
Keys to Co-Branding Success
With careful planning and consideration, you may clearly see that while some co-branding opportunities may make sense for your company, others do not. If you do decide to co-brand, following some basic guidelines can ensure a well-executed, successful relationship:
- Maintain the control of your brand’s intellectual property
- Gain agreement on equal strategic involvement from both companies, with equal risks and benefits for both brands
- Maintain a close working and collaborative relationship with partners throughout the length of the agreement
As you consider co-branding opportunities for your business, remember that a well-managed brand is a promise to the consumer to deliver on the expectations of what the brand stands for. If a potential partnership can enhance this promise and help you deliver a positive customer experience, then it has the potential to create significant value for your company and your customers. If not, it may be an opportunity best left alone.