There's no denying the benefits to be gained from a careful co-branding strategy. By marrying your brand with another firm's to create a new product or service, your company may better focus on customer needs, increase its ability to communicate with the customer, better differentiate your offering, leverage assets, and even improve revenues. But mostly co-branding builds your brand name.
So, let's say you start by making the decision to have a co-branding strategy.
Don't automatically assume that by working with another company you'll get co-branding benefits. In fact, most firms on the net today mistakenly believe they are engaged in a co-branding campaign when in fact they aren't.
It is more likely that they are conducting a strategic partnership - a marketing approach with far different benefits than those of a co-branding campaign.
Below are five warning signs that your co-branding campaign may be a strategic partnership in sheep's clothing. By understanding these five points, you'll be better able to guide your firm towards smart co-branding strategies.
You May be an Affiliate and Not Even Know It
You've tossed Amazon's link and logo onto your site under the agreement that any Amazon customer coming from your website earns you some commission. That makes you co-branded with the firm, right?
Wrong.
This pay-per-click referral system is nothing more than an affiliate program. Co-branding, on the other hand, creates a unique and differentiated new product that focuses on the customer's explicit and hidden needs. An affiliate program does none of this.
Affiliate programs can create good partnerships - it can be a good way to generate revenue for one's own site - and it can arguably improve a site's image. But it's a far stretch from Internet Co-branding. Ask the 500,000 "Co-branded" Amazon sites. They don't get many two-way referrals back from the largest shopping site on the Web.
Sharing Content is not Co-Branding
It is not uncommon for online companies to "partner" with firms who can provide high-quality content for their site. CD-NOW.com, for instance, receives exclusive music reviews from MTV to legitimize their core community-building and music-sales business in the eyes of discriminating music fans.
Despite these benefits, buying content from MTV does not make the arrangement a co-brand. It's not a new product or site. It's not independently promoted. And it doesn't equally benefit both partners. In fact, MTV doesn't even sell CDs on their website. Instead, they sell advertising space to CD-NOW's competitor, SonicNet. There's simply no two-way relationship between CD-NOW and MTV that creates synergy in creating a unique brand name.
Distribution Partnerships are not Co-Branding
In the online world, targeted traffic generates ad revenues, sales, and builds brand awareness. Distribution deals are the keys to driving this traffic. As an example, WebMD has established a relationship with Web portal Lycos that has lead to the development of the Lycos Health Channel at www.webmd.lycos.com. The channel exclusively features WebMD content and generates a good deal of traffic for the WebMD site.
And the Lycos/WebMD deal is extremely close to an Internet Co-brand; they have gone so far s to share a sub-domain name, after all. Still, such a deal doesn't qualify as co-branding. Lycos merely repackages WebMD's content; it never features them as a co-brand on the home referral site; and it doesn't promote the Lycos Health Channel with WebMD independently.
In addition, WebMD's site delivers everything offered on Lycos's Health Channel and much more. If the Lycos brand implies "search expert" and WebMD conveys "online health resource," shouldn't the combination of the two imply something more robust than what one partner offers on its own? The Lycos Health Channel is a good example of why. Sure they repackage WebMD content, but co-branding implies that there's more to a relationship than just content.
If the site were co-branded, the name, the content, and the overall site promotion would communicate greater saliency and relevance to a consumer. In this case - and in almost all other Distribution deals - partners fail to deliver on this criterion. Once again, that's OK, good strategic partnership can still deliver results, just be aware of what you're buying.
Sponsorship/Advertising
Ad reps love to call this co-branding. But it's not. It's advertising. In fact, it's almost always less integrated and lucrative than even the weakest Distribution deals.
For instance, Excite's Money and Investing Channel is dominated by a Distribution deal with Quicken. The "second string" relationship is a long-term Sponsorship/Advertising deal featuring Morgan Stanley Dean Witter Online. Every page features some limited information about Morgan Stanley and even encourages online trading with the online brokerage. Frequently, however, web banners of other indirect and direct competitors also appear on the site. Companies like Fidelity and Scudder. Not very good protection for a "Co-branded" partner.
Remember, Internet Co-branding conveys more than just a pay-to-play relationship. It must create a new online product. It must convey increased value and differentiation to a consumer. Advertising sells a current product - and on a single, cluttered web page, it has a very difficult time "breaking through the clutter" to differentiate itself.
Basically, limited placement and visibility do not a co-brand make.
Endorser Brand Offerings
Perhaps this is my favorite co-branding misperception.
An interview with a brand manager at HP Shopping recently indicated that they are involved in a new "Co-branding" project. It involves selling complementary non-Hewlett-Packard products (including computer mice, zip drives, disks, etc.) through their commerce site. This is a dramatic shift for HP, which has exclusively sold its own products since inception.
HP Shopping's motivation is to be able to offer customers a complete package of products - much like Dell Computer does on its web site. From HP's perspective companies like Iomega and Microsoft become "Co-brands" of the HP Shopping experience and product line.
That's like saying that since Macy's sells clothing by Polo and DKNY they are somehow doing co-branding. Or since my local supermarket sells Grey Poupon that I should think of them more positively.
It's true, an e-store can only be as good as the products they sell - and branded products do convey value to consumers. But to call this co-branding is simply too much of a stretch. At best, this is a strategic partnership - not that strategic partnerships are bad...of course not.
But the critical question to ask is this: Will these types of arrangements really help my brand name? This is what a co-branding strategy does, so make sure the arrangement profoundly helps your brand name!
