Is Co-Branding Right For Your Business?
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 Benefits
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
Co-Branding Risks
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.