According to a 2021 survey of American consumers, 71% are in favor of co-branding partnerships.
What does co-branding mean, exactly, and why it is so popular among consumers?
We’ll here to explain.
We’ll share how co-branding works, the most common types of co-branding strategies and explain why co-branding can be beneficial for your business. Plus, we’ll list three inspiring co-branding examples and five branding agencies that can help you make your project a success.
Table of Contents
What Is Co-Branding?
Co-branding is a strategic partnership between two or more well-known brands to establish synergy and gain profit through a new, unique branded product.
Combining resources and identities, the partnering brands create a product or service that adds value to customers and can be distinguished by a new brand identity, including colors, logo and co-brand identifiers.
Unlike rebranding, which involves a change of branding elements, such as logo and colors to redesign the brand’s identity in messaging and visuals, co-branding creates a combined identity of two or more partnering brands.
Co-Branding vs. Co-Marketing
Unlike co-branding where you co-operate with another company to launch a new product, co-marketing allows separate brands to create a combined communication campaign and promote multiple products from their portfolios.
Take, for example, the partnership between the mobility service provider, SIXT and the world-leading hospitality group, Accor. When booking a car rental, customers collect points that can be exchanged for various hotel benefits.
The co-marketing campaign allows the two brands to promote their services jointly, increase their reach and boost visibility and brand awareness across various communication channels.
3 Types Of Co-Branding Strategies
The most common types of co-branding strategies include:
1. Ingredient Co-Branding
Ingredient co-branding allows companies to combine matching or compatible elements and make a new offering that:
- Has better quality
- Gains more access to distribution channels
An example of ingredient co-branding is the partnership between Dell & Intel, where Dell produces the laptops and Intel secures compact and fast processors.
2. Composite Co-Branding
Composite co-branding allows two or more renowned brands to provide a product or service that adds value and seeks to maintain loyal customers rather than attract new ones.
Take, for example, BMW & Louis Vuitton. The two renowned brands have used their innovative, luxurious and sleek brand images to produce exclusive travel companions for BMW’s i-8 model.
3. National To Local Co-Branding
National to local co-branding allows national brands to collaborate with local brands to reach their respective target audiences.
Examples of national to local co-branding include various projects of Visa and small retailers or department stores. Or strategic partnerships of Groupon and local businesses to provide offerings to larger target groups.
If you are looking to create a co-branding strategy, contact a professional branding agency or an influencer management agency to help you get started.
How Does Co-Branding Work?
The three key steps in a co-branding project include:
- Two or more independent companies with similar values, cultures or target audiences decide to work together and launch a new product or service
- The companies use joint resources, such as funding, in-house expertise or technological advances
- The companies create and launch a new product or service, typically with its own logo and brand name
To create and launch a co-brand, partner with one or more companies of similar target audiences and values and use shared expertise and funding
3 Famous Examples Of Co-Branding
Some of the most well-known examples of co-branding include:
In 2015, UNICEF and general merchandise retailer Target co-branded based on similar values and missions, Target catering to children and parents and UNICEF aiming to protect the rights of children around the globe.
The result was a Kid Power Band, a bracelet linked to a mobile app. Sold at Target, the band allowed kids to complete fitness activities and earn points that unlocked food packets, while gaining knowledge about new cultures. After unlocking the food packets, UNICEF delivered them to malnourished children in various world regions.
The co-brand project was a huge success, with 193,000 + students taking part and 6.4 million food packets unlocked to feed 40,000 malnourished children in ten counties.
2. Spotify & Uber
In 2015, using their well-established names on the U.S. market and standing for modern solutions, Uber and Spotify launched a co-branding feature known as “A soundtrack for your ride.”
Initially launched in ten cities around the globe, including Sydney, London and Singapore, the co-brand allowed Uber passengers to choose and listen to their own Spotify playlists during their ride.
Reaching audiences between 16 and 25 years old, the project gained enormous publicity and increased the monthly number of Spotify’s active users from 68 million in the first quarter of 2015 to 96 million in the first quarter of 2016.
3. Taco Bell & Doritos
In 2012, Taco Bell and Doritos united efforts to create a new product: Doritos Locos Tacos.
Using the popularity of the two companies and aiming to target the crunchy snack food niche, the co-brand combined the Taco Bell taco shell with Nacho Cheese Doritos snack chips.
The result was impressive: 100 million products sold in only ten weeks.
Advantages And Disadvantages Of Co-Branding
So, why do so many brands prefer to combine efforts and form strategic partnerships with other market leaders? And, is there risk associated with this potentially powerful combination?
To find the answers, we need to explore the advantages and disadvantages of co-branding.
Lower Marketing Cost
Co-branding allows you to distribute the marketing costs between the members of the co-branding partners. Ideally, you can double your return on investment at half the price.
Lower Marketing Risks
Co-branding allows you to share the marketing and advertising risks, which can be beneficial for all parties involved.
Broader Target Groups
Co-branding allows you to target a customer base consisting of the target markets of each of the participating partners, widening your reach.
Improved Customer Acceptance
Co-branding allows you to reach customers that might not be familiar with your products or services. Partnering with a brand that may be their favorite helps you increase acceptance among customers.
Co-branding allows you to use the innovative methods and tools of your brand partners and create a new experience for your customers.
Co-branding allows you to combine the best features of the partner brands, collaborate strategically, combine creativity and innovation, appear wholistically stronger and create an entirely new experience.
Enhanced Brand Recognition
Co-branding allows you to maximize your reach and promote your brand, establishing your name as an industry leader.
Co-branding allows you to team up with other credible and aspirational brands and strengthen your position on the market.
While co-branding offers many advantages, there are some risks involved. Potential disadvantages of co-branding include:
Co-branding, when not carefully executed, can lead to incoherent brand messaging and lack of a unified brand experience.
An example of incoherent brand messaging is the project of the retail store Target and the luxury clothing brand Neiman Marcus. The target groups of the two brands could not identify with the products sold by the co-branding partners and an imminent failure followed.
When the partners aren’t the right fit, co-branding can lead to a reputation imbalance, where one of the brands can negatively impact the other.
An example of this is the partnership between Shell, a company exploiting natural resources and Lego, the symbol of creativity, safety and innovation for children.
In 2011, the two companies decided on a co-branding project where Lego was to produce Shell-branded racing cars, lorries and petrol stations while Shell offered the products in their network.
After a Greenpeace campaign featuring a video of a Lego world submersed in crude oil, Lego announced the project would not be continued.
Co-branding can lead to disputes of the established agreement, based on authority, invested amounts or profit percentage, when partner brands are not fully aligned from the beginning.
Top 5 Branding Agencies To Engage For A Co-Branding Project
Thinking about a co-branding project? Reach out to a professional branding agency to help you with your strategy, communication platforms and other details. Here are the top five branding agencies on our list:
1. Digital Silk
Headquartered in New York City, Digital Silk creates superior digital experiences for brands across industries.
Digital Silk offers:
- Brand & digital strategies
- Custom web & app development
- Integrated marketing strategies
- Cutting-edge software development
Digital Silk’s clients include IBM, Xerox, NASA, Microsoft and Sony.
Headquartered in Cranford, New Jersey, CydoMedia helps you conquer the digital abyss through mobile apps, animation and digital marketing strategies.
- Web design
- Website development
- eCommerce development
CydoMedia’s clients include Android Authority, Lala Taqueria, CMTI Training, BEL Environmental Engineering and Pritchard Peck.
Headquartered in Bucharest, Romania, INOVEO is a magnet for innovative brands.
- Logo design
- Graphic design
- Business consulting
INOVEO’s clients include the National Bank of Romania, Zestria, Agys, First Bank and the Romanian Cyclist Tour.
Headquartered in Montreal, H3B 4G7, Canada, Social Media 55 specializes in social media management of Twitter, LinkedIn, Facebook, Instagram and Google My Business.
Social Media 55 offers:
- Digital marketing
Social Media 55’s clients include Nissan, Arby’s, Two Bears Coffee, Century 21 and Creccal.
5. Pulse Pixel
Headquartered in Birmingham, United Kingdom, Pulse Pixel combines storytelling and marketing expertise to create strategic videos for your brand.
Pulse Pixel offers:
- Video production
- Video marketing
- Digital marketing
Pulse Pixel’s clients include One Firefly, Roche, Medullan, Endereum and Interset.
What Does Co-Branding Mean? Key Takeaways
Co-branding allows companies with similar values and missions to form partnerships and launch new products and services to reach a broader audience and promote their brands.
The advantages of co-branding include:
- Lower marketing costs
- Lower marketing risks
- Broader target groups
- Improved customer acceptance
- Added value
- Increased competitiveness
- Enhanced brand recognition
- Increased trust
If you’re considering a co-branding project, a professional branding agency can help you plan and execute your project, from start to finish.