In a world where seemingly everything has been done before, collaboration allows us to create something truly innovative. This is where co-branding comes in. But what is co-branding exactly? What forms can it take and what are its benefits and risks? Let’s find out together and look at many examples along the way.
What is Co-branding?
Co-branding is a strategic partnership between two or more brands that jointly develop a product, service or customer experience.
By leveraging each other’s strengths and resources—like expertise, funding, and brand image—the main goal is to benefit from each other’s reputation and customer base. This, in turn, can lead to increased visibility, broader market reach, and boosted customer loyalty for all brands.
Is Co-branding the Same as Brand Collaboration?
Not quite. Co-branding is a specific form of brand collaboration.
Brand collaboration refers to any relationship a brand can engage in, for example:
- brand-to-brand (including not-for-profits)
Co-branding always leads to a shared product, service or experience. Brand collaboration, on the other hand, can take different forms, such as joint marketing or joint support of charitable causes, without necessarily resulting in a product.
Types of Co-branding Plus Examples
There are different ways to co-brand and countless examples. Here are just a few of them:
Two or more brands collaborate to create a new product or service that combines the strengths of all partners.
- Adidas and Allbirds jointly design the lowest-CO2 performance footwear ever made by either brand. This collaboration shows both brands’ commitment to the fight against climate change.
- Nike and Apple joined forces co-develop the Nike+ iPod Sports Kit to integrate fitness-tracking technology into running shoes—to allow users to seamlessly track their workouts and performance.
- Lego and Ikea collaborate on a storage system that combines the playful nature of Lego with the functional furniture of Ikea.
- Apple partnered with Goldman Sachs and Mastercard cooperate to develop the Apple Card, a digital credit card with real-time transaction visibility, a daily cash rewards program and no fees.
- Lego and Airbnb create a unique experience where people can stay in a Lego house filled with millions of bricks.
Ingredient co-branding involves adding a specific ingredient or component of one brand to another brand’s product.
- Gore-Tex works with outdoor and sports brands to integrate its materials into their garments. As a result, brands such as Mammut and Nike increase the performance of their products, while Gore-Tex gains awareness and sales.
- By using Intel processors, Dell benefits from Intel’s trusted reputation and high performance, while Intel profits from Dell’s distribution channels.
- Tesla and Panasonic have a similar partnership. Tesla improves the range and performance of its electric cars by using Panasonic batteries. In return, Panasonic gains influence and sales.
- Nike and Headspace partner to add meditation and mindfulness features to Nike’s fitness apps.
- Uber and Hilton’s partnership allows Hilton guests to book Uber rides to and from the hotel through the Hilton HHonors app.
Joint Venture Co-Branding
Here, several brands establish their own legal entity to jointly develop and market products or services.
- Hulu is formed by several media conglomerates, including NBCUniversal, The Walt Disney Company, 21st Century Fox and Time Warner, to provide a streaming service with broad offerings.
- Sony and Ericsson joined forces as Sony Ericsson, combining their expertise in consumer electronics and telecommunications to develop cell phones. The joint venture was dissolved in 2012 when Sony bought out the cell phone business.
- Star Alliance is a union of several airlines to provide long-distance travellers with more seamless connections and other benefits.
In this partnership, brands with complementary products or services join forces to complement each other’s offerings. The result is usually a better customer experience—not always a product or service.
- Casper and West Elm team up to offer customers the opportunity to test Casper mattresses in West Elm beds. This benefits Casper’s customers and saves West Elm from purchasing display mattresses.
- Spotify and Uber partner to let passengers play their favourite Spotify playlists during their Uber rides. This collaboration creates a more seamless experience for Spotify and Uber users.
Brands from different regions collaborate to gain access to new markets, or large international companies join forces with smaller, local brands.
Different brands collaborate by jointly sponsoring or organising events to create an experience.
- Visa partners with Uber Eats to offer more sustainable packaging for takeaways.
- GoPro and Red Bull team up for the “Red Bull Stratos” event, filming Felix Baumgartner’s skydive from the stratosphere. The brands also form a global partnership, with GoPro being Red Bull’s exclusive camera and content partner.
This type of co-branding is more of a special case. Same-company co-branding means that a company uses its established brand name to introduce new products or services. One example is Courtyard by Mariott. In this case, the Courtyard hotel chain benefits from Mariott’s brand name and image.
Benefits of Co-branding
Co-branding offers many benefits to the companies involved, including:
- Reaches more people through increased visibility.
- Enables entry into new markets and segments.
- Enhances a brand’s reputation by collaborating with other trusted brands.
- Creates new and unique offerings by combining knowledge and resources.
- Shares research, development and marketing costs.
- Retains customers by creating brand experiences. According to one study, 71% of consumers find it enjoyable when brands collaborate to create unique products.
Risks of Co-branding
Like anything, co-branding has some risks you should be aware of, including:
- Combining multiple brands can weaken the identities of the individual brands involved.
- If the partner brands don’t share the same values and beliefs, customers may become frustrated with the partnership.
- Negative press for one brand can impact the reputation of the other brands involved.
- Creating detailed contracts can be time-consuming and costly, especially for smaller brands.
- Dealing with the differing perspectives of all parties can be challenging.
Let me give you two negative examples:
- LEGO ended its collaboration with Shell because of the latter’s polluting reputation. Previously, the Shell logo was featured in Lego sets.
- After the partnership with Microsoft and the introduction of the Windows operating system in their phones, Nokia experienced a drop in demand due to the unpopularity of the system.
What Makes a Successful Co-branding Partnership?
A successful co-branding partnership is based on shared values, beliefs and target audiences, as well as similar strategic direction and mutual trust.
In addition, there should always be a clear legal agreement regarding responsibilities, intellectual property and financial aspects.
- Co-branding is a strategic partnership between two or more brands to create shared products, services or experiences.
- Successful co-branding is based on shared values, target audiences, similar strategic direction and mutual trust.
- Different types of co-branding include:
- Product co-branding
- Ingredient co-branding
- Joint venture co-branding
- Complementary co-branding
- Geographic co-branding
- Sponsorship co-branding
- Same-Company Co-Branding
- Benefits of co-branding include greater brand reach and visibility, entry into new markets, increased credibility, product innovation, cost sharing, and increased customer engagement.
- But co-branding also poses risks such as the potential weakening of individual brand identities, value conflicts, reputation conflicts, complex legal agreements, and stakeholder engagement challenges.
If you enjoyed this article, you might like my article on personalisation for small brands, too.