4 Essentials for Co-Branding Success

In the crowded, competitive world of digital marketing, brands are required to think creatively to earn the attention and loyalty of consumers. 

Many turn to brand partnership opportunities to stand out, working together with other companies to achieve greater brand awareness and a more positive reputation. Co-Branding is a type of brand partnership that can be effective so long as the partnership is established wisely.  

What is Co-Branding?

Co-Branding is a tactical partnership strategy involving two brands coming together to market a new product or service under both brand names. 

Ideally, by sharing risk between the two brands, both companies widen their audiences, solidify consumer trust, and generate more sales after entering into a co-branding partnership.

Most consumers (71%) enjoy it when companies offer co-branded products, which encourages businesses to give partnerships a try.

Consumers who enjoy co-branding efforts cite that there are benefits to the presence of new product options. Some surveyed consumers also support co-branding because new products can serve unique purposes. 

Visual Objects surveyed 501 consumers to determine which components of co-branding partnerships best appeal to audiences and yield successful products. 

Our Findings 

• 71% of consumers feel positive about co-branding partnerships, making partnership opportunities appeal to prospective brands.
• 61% of consumers avoid purchasing products with a negative brand reputation at least sometimes, emphasizing the importance of wisely selecting a co-branding partner. 
• 50% of consumers recognize Doritos and Taco Bell co-branded products, showcasing the benefits of aligning on target audiences before a product launch. 
• Only 5% of consumers knew the CoverGirl and LucasFilm co-branded products, displaying the disadvantages of targeting separate, distant audience groups.
• 43% of consumers would likely try a co-branded product from a company they already liked, making co-branding a solid opportunity to reengage returning consumers.
• 41% of consumers think a brand’s values are essential for purchasing decisions, indicating that co-branding partners should spend time discussing values alignment.

Positive Brand Reputations 

When considering the success of a potential co-branding relationship, companies must evaluate the brand reputations of themselves and possible partners. 

Entering into a co-branding partnership requires sharing reputations and any risk associated with marketing products in unison. 

In coming together to market themselves, companies that co-brand rely on the positive reputations of both companies to succeed. If one company in the brand partnership has a negative reputation, that will hurt performance for both companies.

Almost two-thirds of consumers (61%) avoid purchasing products associated with a negative brand reputation at least some time. 

Brands must be selective and thorough in the vetting process when selecting a company to co-brand with. Even if a potential partner company seems to have a positive reputation, it may not be the best fit for your business. 

For instance, Forever 21 and Atkins entered into a brand partnership as two companies with good reputations. However, when Forever 21 started sending Atkins weight-loss snack bars in online orders, consumers thought Forever 21 was “fatphobic” and encouraging customers to lose weight. 

Source: Megaphone

This was damaging to Forever 21’s reputation. The company issued an apology, stating that it didn’t intend to offend anyone with the campaign. However, the partnership could not continue in a meaningful way because of the differences in reputation between the two companies. 

Jerry Han, CMO of market research and reward company PrizeRebel, emphasizes the importance of evaluating how a brand partnership will affect audiences. 
  
“Before we partner up with a company and offer rewards or discounts on their behalf, we make sure that the impact on the customers will be a positive one and would make them feel excited [to receive our services],” Han said. 

Han prioritizes connecting with companies with positive reputations that align well with business goals. Businesses should consider the entirety of a potential partner’s reputation before engaging in a co-branding partnership. 

Audience Alignment Between Brands

When brands partner for co-branding efforts, it is important that they each align on target audiences before engaging. 

In coming together as two brands, audiences must come together as well. Audiences must buy into the partnership to purchase co-branded products and make the relationship a success.

The operations manager of Astor Chocolate, Samuel Klein, finds that establishing shared audience segments aids companies in sharing risk while co-branding.  

“A co-branding partnership should have shared goals for the type of people they want to reach,” Klein said. “There needs to be an overlap in target audience size such that neither party is risking too much by choosing this particular business arrangement.”

Proper audience alignment sets the stage for success when marketing co-branded products. Companies that align on target audience groups can develop a strong partnership and maintain audience awareness.

Audience Alignment Success: Taco Bell and Doritos

Taco Bell and Doritos partnered in 2012 to create, market, and sell the Doritos Locos Taco. This co-branding effort quickly rose to popularity, and the product is still a mainstay on Taco Bell’s menu. 

Source: Taco Bell

Half of consumers know the partnership between Doritos and Taco Bell, making this co-branding effort the most widely known of those surveyed.    

Doritos and Taco Bell proved to be a long-lasting successful partnership because their audiences of late-night snack food lovers could easily come together through the co-branded product.

There is a substantial overlap in both the companies’ audiences and missions, so their co-branding effort came together seamlessly.

Audiences Alignment Failure: CoverGirl and LucasFilm

A makeup partnership between CoverGirl and LucasFilm failed to align with audiences as much as Taco Bell and Doritos. 

The two companies started their co-branding partnership in 2015, launching a 19-piece makeup collection all themed around the popular movie franchise. 

Source: Forbes

While their Star Wars-themed makeup line excited makeup-loving sci-fi fans, only 5% of consumers recognized the partnership when asked.    

This lack of awareness could be due to the products being limited edition. However, a relative lack of audience agreement likely contributed to its smaller, niche following. 

CoverGirl primarily markets its products to women who are interested in beauty and makeup. While there are plenty of women Star Wars fans, that isn’t the film franchise’s main fan base. Women are about twice as likely to have never seen a Star Wars movie as men. 

This allowed for the co-branding partnership to appeal to niche audiences strongly. However, the partnership didn’t acquire the same broad acclaim and popularity as other partnerships due to differing target audiences. 

Appeal To Loyal Customers 

While co-branding presents opportunities to attract new customers to branded products, partnerships should also aim to engage returning customers.

Co-Branding is likely to drive in new customers. However, you should remember your brand’s existing customers when establishing a co-branding relationship. 

You already have your loyal customers’ attention and are more likely to excite them with the prospect of new and helpful co-branded products. 

In fact, 43% of consumers would try a co-branded product from a company they already supported.

Companies should appeal to loyal customers just as much, if not more, than they aim to impress new customers with co-branded products. Research shows that increasing customer retention rates by 5% can increase profits by up to 95%. 

John Li, co-founder and CTO of loan provider Fig Loans, believes that co-branding is the perfect opportunity to reengage loyal customers through new products. 

“Co-branding can help loyal customers venture out and try new products,” Li said. “If they already have trust and loyalty with you, they’re more likely to trust your recommendations.”

Keeping your loyal customers in mind when planning your co-branding partnership will set you up for success.

Brand Values Agreement

Co-Branding doesn’t demand that companies have the same values. However, individual values need to agree to avoid contradictory marketing messaging.

Customers care about what you stand for as a brand. Over forty percent (41%) of consumers think that brand values and mission statements help inform purchasing decisions. 

Terri Rockovich, co-founder and CEO of nutritious kibble brand Jinx, emphasizes the importance of complementary brand values in co-branding partnerships.  

“Value alignment should be at the core of a co-branding project since both brands will be inextricably linked,” Rockovich said. “If you focus on just connecting a growing audience with a co-brand initiative, the partnership can feel inauthentic and strained for both a brand’s current audience and their partner brand’s audience.” 

Value alignment should be at the core of a co-branding project since both brands will be inextricably linked.

Business partners with contradictory values risk sending mixed messages to their audiences and appearing ingenuine. The consequences of this could be severe enough to make a strong co-branding partnership fail. 

For instance, Lego and Shell established a decades-long partnership that terminated in 2014 following pressure from environmental organizations. 

During the partnership, Shell logos and icons were printed onto childrens’ toy sets. Shell provided Lego with authentic toy design opportunities, while the partnership made the Shell brand appear more wide-reaching and friendly.  

However, the partnership came under fire from environmental activist group Greenspace. The organization pointed out Shell’s plans to drill in the Arctic and showcased the brand’s history of dubious drilling practices.   

Source: Better World Solutions

Following this controversy, Lego pulled out of the partnership. While the co-branding partnership was mutually beneficial for a long time, the companies had different stances on drilling and energy. In the end, their values had to take precedence over continuing the partnership. 

Rockovich advocates for partnerships that truly complement and highlight the values of each party. 

“The best collaborations are those that truly bring value to both sides, elevating the values of the other and complementing each others’ offerings with something unique that is created through the partnership,” Rockovich said.

Agreeing on brand values at the start of an engagement will keep your co-branding partnership from a strained, inauthentic collaboration. 

Co-Branding is Effective for Brands That Work Together

A successful co-branding partnership is no simple feat. Linking company reputations, audiences, and values together can lead to unexpected challenges. For this reason, it’s crucial to understand your co-branding partner before entering into a relationship. 

Ensure that you are fully aware of how your brands align on desired target audiences, values, and reputation in the marketplace to ensure a successful partnership. 

About the Survey

Visual Objects surveyed 501 US consumers in May 2021.

Thirty-one percent (31%) of respondents are female; 28% are male; 42% did not provide their gender.

Eleven percent (11%) are 18 to 34; 21% are 35 to 54; 27% are 55 or over; 42% did not provide their age.

Respondents are from the South (36%), Midwest (30%), West (20%), and Northeast (14%).