Co-branding is when two (or more) companies partner up to profit from a joint product. In theory, the popularity of one brand can reach customers who may know the other brand, and vice versa, thus expanding both their customer bases.
But as simple and good as this may sound, co-branding has drawbacks and is often mixed up with co-marketing.
To clear up any misunderstandings, this article will go through everything about co-branding — from co-branding definitions, its types, and how it works to its pros and cons and how it differs from co-marketing. We’ll also list three inspiring co-branding examples and five branding agencies that can make your project a success.
What Is Co-Branding?
So, what does co-branding mean? Also known as a brand alliance, 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, logos, and co-brand identifiers.
Unlike rebranding, which involves redesigning branding elements, such as logos and colors, to change the brand’s identity, co-branding creates a combined identity of two or more partnering brands.
Co-Branding vs. Co-Marketing
Unlike co-branding where you partner with another company to launch a new product, co-marketing allows separate brands to launch a combined campaign where they can promote multiple products from their respective 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
There are multiple ways two companies can join forces and create a new product. However, the three strategies below are the most used:
1. Ingredient Co-Branding
Ingredient co-branding is when one recognizable product (ingredient) from one brand is added to the other brand. Essentially, companies combine compatible elements and make a new offering with better quality and gain more access to distribution channels. In turn, you get one product that showcases both brands instead of two separate products.
Some examples of ingredient co-branding are:
- The partnership between Dell & Intel, where Dell produces the laptops, and Intel secures compact and fast processors.
- Coca-Cola and McDonald’s where almost every meal comes with a Coke.
- Milka and Oreos where both brands merged their signature products to create Milka Oreo.
2. Composite Co-Branding
Composite co-branding occurs between two popular brands. It allows them to provide a product or service that adds value and seeks to maintain loyal customers instead of attracting new ones.
Take, for example, BMW & Louis Vuitton. The two renowned brands have used their innovative, luxurious, and sleek brand identity to produce exclusive travel companions for BMW’s i-8 model. Another example is the “Adidas Yeezy” collection, which is a collaboration between Adidas and Kanye West.
3. National-To-Local Co-Branding
National-to-local co-branding allows bigger brands to collaborate with small local brands to reach their respective target audiences. The idea is to increase the national brand’s reach while also helping the local business climb higher on the awareness ladder.
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're looking to create a co-branding strategy, contact a professional branding agency or an influencer management agency to get you started.
How Does Co-Branding Work?
Although there’s a lot of internal work and strategizing that both (or more) brands must go through to reach a co-branding agreement, we can separate all tasks into three key steps. They are:
- 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, brands usually partner with one or more companies of similar target audiences and values. This way, they can use shared expertise and funding to spread the word about each brand individually while also boosting their joint project.
3 Famous Examples of Co-Branding
We already brushed upon some examples of co-branding above, depending on their type. In this section, we’ll dive deeper into three other well-known examples of co-branding, focusing on how they came to be, and the results of their collaboration.
1. UNICEF & Target
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 around the world.
The co-branding 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 10 countries.
2. Spotify & Uber
In 2015, Uber and Spotify, both well-established brands known for their modern solutions in the U.S., 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-branding 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 their efforts to create a new product: Doritos Locos Tacos.
Using the popularity of the two companies and targeting the crunchy snack food niche, the co-brand combined the Taco Bell taco shell with Nacho Cheese Doritos snack chips.
The result was impressive, with 100 million products sold in only ten weeks.
Advantages and Disadvantages of Co-Branding
Partnering with other brands to create a product that is practically the best of both worlds is the biggest advantage of co-branding. But it’s not the only one. Companies can lower their marketing costs and risks, target other buyers, increase trust in their own brand, and so much more.
However, co-branding also has some downsides. In particular, creating a new product that has ingredients or names from separate brands may confuse customers — have they merged? Is it an acquisition?
Moreover, we’re talking about partnering up two separate bodies, i.e. there’s a chance they don’t agree on everything. This can create a riff and bring the whole project down.
To understand the pros and cons of co-branding better, let’s dive into each category in more detail.
Co-Branding Advantages
Let’s first start with the advantages. Co-branding can bring the following benefits:
- Lower Marketing Cost
- Lower Marketing Risks
- Broader Target Groups
- Improved Customer Acceptance
- Added Value
- Increased Competitiveness
- Enhanced Brand Recognition
- Increased Trust
1. Lower Marketing Cost
Since two or more brands are working together, co-branding allows you to distribute the marketing costs between the co-branding partners. Ideally, you can double your return on investment at half the price.
2. Lower Marketing Risks
Co-branding allows you to share the marketing and advertising risks. This is particularly useful for small business branding as it reduces the risk of failure and allows them to test new markets and products with less risk.
3. 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. If we’re talking about brands that work in the same industry, the companies only get to contact more people interested in the services or products that can be created in that market. For example, the Milka and Oreo co-branding we mentioned above. Here, both brands can reach customers looking to buy sweets.
However, in other cases, co-branding can broaden the scope to customers in other industries. Take the Spotify and Uber mix. Both companies can now cater to music listeners and those traveling via the driving service.
4. Improved Customer Acceptance
As we said above, co-branding allows you to spread the word about your brand to customers who might not be familiar with your products or services. Partnering with their preferred brand may increase your acceptance among those customers.
5. Added Value
Co-branding allows you to use the innovative methods and tools of your brand partners and create a new experience for your customers. This is especially helpful to smaller or local businesses since they don’t always have the means to give the same value to a product that a bigger brand would.
6. Increased Competitiveness
Co-branding allows you to combine the best features of the partner brands, collaborate strategically, appear holistically stronger, and create an entirely new experience. This way, both brands can present themselves better on the market, meaning even their individual brands get a boost among the industry competition.
7. Enhanced Brand Recognition
One thing we emphasize is the brand recognition a company gets by entering a co-branding agreement. It allows you to maximize your reach and promote your brand, establishing your name as an industry leader.
8. Increased Trust
Co-branding allows you to team up with other credible and aspirational brands and strengthen your position on the market. Even if your brand is not well known, being practically backed up by an established business gives you credibility and helps build trust among customers.
Co-Branding Disadvantages
On the other hand, potential downsides of co-branding include:
1. Confused Messaging
Co-branding, when not carefully executed, can lead to incoherent brand messaging and a lack of unified brand experience.
An example of incoherent brand messaging is the combined project of the retail store Target and 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.
2. Reputation Discrepancies
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 dependent on 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 produced 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 submerged in crude oil, Lego announced the project would be discontinued.
3. Agreement Fallouts
When partner brands are not fully aligned from the beginning, co-branding can lead to disputes of the established agreement based on authority, invested amounts, or profit percentage. Sometimes, brands can disagree halfway into the project and end the co-branding even before it has begun, potentially leading to negative campaigns that can hurt both brands in the long run.
Top 5 Branding Agencies To Engage for a Co-Branding Project
Thinking about a co-branding project? Reach out to a top-notch branding agency to help you with your strategy, communication platforms, and other details. The top five on our list for the job are:
1. Digital Silk
Location: New York City
Digital Silk creates superior digital experiences for brands across industries. This agency can help every step of the way on your co-branding journey — from creating the brand strategy to working on the brand design, messaging, and finally, marketing.
Other areas where Digital Silk can help are:
- Digital strategies
- Web design & development
- Results-driven digital marketing
- Mobile app development
- and more
Digital Silk’s clients include HP, Xerox, IBM, and PUMA.
2. CydoMedia
Location: Cranford, New Jersey
CydoMedia specializes in web design, animation, and digital marketing strategies. Their unique approach can help you form a creative strategy for your logos and other illustrations needed in your co-branding project. It also covers:
- Branding
- Web design
- Website development
- Brand strategy
CydoMedia’s clients include Lashed, Odysey Hair Saloon, BEL Engineering, and PritchardPeck.
3. INOVEO
Location: Bucharest, Romania
INOVEO is the perfect choice for innovative brands looking to form a co-branding partnership. It can make the whole process easier for all parties by suggesting names for the collaboration, creating the brand strategy, and helping with the brand design.
Aside from this, INOVEO also does:
- Environmental branding
- Brand communication
- Package design
- Brandbook
- Visual identity
- and more
INOVEO’s clients include Biofarm, Envisia, and Stellaris.
4. Social Media 55
Location: Montreal, H3B 4G7, Canada
Social Media 55 specializes in social media management of Twitter, LinkedIn, Facebook, Instagram, and Google My Business. It offers a plethora of services ranging from SEO to web design.
For those planning a co-branding partnership, Social Media 55 can help with brand naming, messaging, design, strategy, and more, guiding you through the whole process from start to finish. Additional services you can get from Social Media 55 are:
- Niche-specific marketing
- Social media services
- Web design & development
- and more
Social Media 55’s clients include Arby’s, Two Bears, and CRECCAL.
5. Pulse Pixel
Location: Birmingham, United Kingdom
Pulse Pixel focuses solely on digital marketing. It combines storytelling and marketing expertise to create strategic videos for your co-branding project that are sure to grab viewers’ attention.
The services Pulse Pixel offers are:
- Branding
- Video production
- Video marketing
- Digital marketing
- and more
Pulse Pixel’s clients include One Firefly, Roche, and Interset.
Co-Branding 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. It helps businesses:
- Lower marketing costs
- Lower marketing risks
- Broaden their target groups
- Improve customer acceptance
- Add more value to their products
- Increase competitiveness in the market
- Enhance brand recognition
- Increase trust
Of course, there are some downsides but overall, co-branding is a great marketing strategy that many companies have benefited from. If you’re considering a co-branding project, turn to a professional branding agency that can help you plan and execute your project, from start to finish.
Our team ranks agencies worldwide to help you find a qualified partner to implement the latest AI solutions. Visit our Agency Directory for the Top Branding Agencies, as well as:
- Top Brand Strategy Agencies
- Top Brand Positioning Firms
- Top B2B Branding Agencies
- Top Corporate Branding Agencies
- Top Cincinnati Branding Agencies
Our team also curates standout creative work in our Awards section, where you can explore award-winning branding, web, and digital design projects to see what strong execution looks like in practice.
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