How Does Co-Branding Strategy Work (And What Can it Do For Your Business?)

What the Hell is Co-branding? Find out how Co-branding can elevate your brand to new heights and what it can do for your business in this post.

Co-Branding Strategy

Image Source: Vecteezy


Branding is everything. 


No matter the size of your company, growing your brand is your number one goal.


Markets have never been more saturated, and customers have never been more informed or discerning. New brands and startups appear every day, trying to gain a foothold. Dying companies are trying to rebrand and pull off dramatic turnarounds. Well-established brands are always trying to grow their audience even further. 


There are plenty of marketing strategies brands can implement. A unique opportunity arises when two or more brands come together to combine the best of what they have to offer, like teams working together on a project over Dialpad’s cloud collaboration software.


That strategy is called co-branding.

What is co-branding?

Co-branding is when two or more brands partner over a product, service, or event.


It’s important to remember that co-branding is different from co-marketing. Co-marketing is when brands come together for a marketing campaign; co-branding is when brands partner over every aspect of a new product.


From the research and development stage through to the marketing campaign, brands work together to create something new and bring it to market. You’ve probably already seen co-branding in action, in the way Lego has collaborated with movie studios since the 1990s to create sets designed around iconic movie franchises. 


Co-branding pros

  • It allows brands to pool their finances and spread the cost of a new product.
  • Different teams can come together to share knowledge and energize each other.
  • Companies can share the risk of failure should a product fail.
  • Brands can tap into each other’s audiences, expanding their reach. 
  • Brands can also expand their reach to whole new customer bases, capturing new markets.
  • It can bring new sales or distribution opportunities. 
  • Co-branded products offer new ways to build customer loyalty.
  • Brands can increase profits.


Co-branding cons

  • Both companies lose out if something goes wrong.
  • Brands risk diluting their image by partnering with others.
  • Brands can run into controversy, and co-branded companies can suffer image problems as a result.
  • Co-branded products might end up more popular than individual ones, leading customers to jump ship once the partnership ends.
  • Customers might lose sight of the individual brand, focusing too much on the partnership.

The two types of co-branding

Ingredient co-branding

This is the most common type of co-branding. It involves a new brand partnering with a more established one. 


The new brand might not have the same resources as the well-established one, and it certainly won’t have the name recognition. Up-and-coming brands are entering a saturated marketplace, and getting noticed can be difficult. A small start-up can use a larger company’s brand awareness to reach an audience. It can also use a well-established business’ infrastructure to develop, market, and deliver its product. 


The well-established brand benefits from this, too. They might want to branch out into a new line of products, capture a different audience, or just refresh their image. Many up-and-coming companies appeal to online natives; they’re popular with younger demographics, and well-established brands can increase their awareness amongst those demographics. 

Composite co-branding

This is when brands of equal size collaborate. This goes for small start-ups to international corporations. 


When smaller companies collaborate, it allows them to pool their resources. They might have smaller teams with less experience, and combining those teams can lead to great ideas. They might have less money, so spreading the cost of a new product can be advantageous. Once the product is developed, they also share the risk of launch, mitigating the damage if something goes wrong. 


Overall, smaller brands can achieve growth together using co-branding. A small startup could benefit from partnering with a small business phone service, for example. 


Collaborations between larger brands work the same way. They can pool resources, spread costs, and share risks to achieve growth. But larger companies already have brand recognition. Their goal is generally to find a new audience amongst a different demographic, spreading their brands even further. 


Big companies can benefit from co-branding and achieve global brand recognition. 

Let’s talk about good co-branding

Good co-branding requires a few things: the brands synergizing well, their product being a success for all the companies involved, and each party being elevated together. It combines all the best branding strategies to create a great product and an exciting campaign. 

Red Bull and GoPro

Red Bull gives you wings, right? And GoPro gives you the means to capture your soaring new heights. 

Image Source: WikimediaImages Pixabaystä


Red Bull and GoPro’s partnership began in 2012 for a skydiving project named Red Bull Stratos. Skydiver Felix Baumgartner ascended 24 miles above the Earth in a stratospheric balloon–and then jumped out! On his descent back home, he broke 3 world records, smashed the sound barrier, and live-streamed the whole thing. 


Using 7 HD HERO2 GoPro cameras. 


It was the perfect partnership, watched by 9.5 million users on YouTube and countless more on TVs around the world. Red Bull proved that their drink did indeed give you wings (of a sort), and GoPro got to show off the capabilities of their devices. 


This co-branding campaign was so successful that in 2016, the brands announced a permanent partnership. 

Uber and Spotify

The campaign is: Soundtrack for your Ride. 


Whilst Uber and Spotify operate in different industries, their partnership makes perfect sense. Many people like to listen to music as they travel, and Spotify provides them with that entertainment. The campaign focuses on turning traveling into an experience–one that can be shared online via user-created content. The very name “Soundtrack for your Ride” allows the customer to feel like they’re in a movie. 


This co-branding partnership gives Uber an edge over other ride sharing apps, and shows people what Spotify has to offer. 


Another added benefit is avoiding awkward conversations with your Uber driver as you both sit there in silence.  

We can’t talk about the good without the bad

Bad co-branding can be disastrous. It’s tempting to jump on the co-branding bandwagon, but it’s obvious when a partnership isn’t well thought out. 

Kendall Jenner and Pepsi

Influencer partnerships are popular in today’s digital world, and they can be incredibly lucrative.


One example that could’ve worked, but didn’t, is Pepsi and Kendall Jenner. They partnered up for the “Live for Now” ad campaign, which seemed to promote fighting for equality and… Kendall Jenner doing a modeling photoshoot.


Two rather disparate causes, really. 


The campaign was launched during a tumultuous political period where passionate conversations about civil rights were on everyone’s lips. And while corporations co-opting social issues can feel tacky, Pepsi’s ad starts out reasonably well-intentioned–with people from diverse backgrounds coming together to protest.


Until Kendall Jenner appears, posing for a sexy photoshoot. She sees the march, grabs some Pepsi, and heads out to laugh and toast with the crowd. 


Neither Pepsi nor Kendall Jenner appeared to put much thought into this campaign, and the optics were terrible. It seemed as though both brands were trivializing a very serious issue whilst trying to profit off it, and many people were upset by that. And the memes… the memes were brutal. 


Bad timing, bad planning, and bad press. 

Balenciaga and Epic Games

This one was a head-scratcher. The partnership between the high-end fashion house, Balenciaga, and the video game primarily marketed at children, Fortnite, left a lot of people baffled.


Fortnite is a global phenomenon, and many brands would kill to partner with Epic Games on its most popular IP. So it’s no surprise Balenciaga wanted in on that action, developing skins and clothing options to purchase from Fortnite’s item shop. No doubt, Balenciaga wanted to capture a new demographic and advertise to Fortnite’s enormous player base. 


But a fashion brand trying to market expensive luxury styles to children seems downright ridiculous. And it was. The partnership lasted only a year and was a total failure. All traces of Balenciaga skins and clothes have been wiped from Fortnite’s store.


It seems that Epic Games has tried to distance itself from the debacle by pretending it never happened. It’s no surprise, really, that these two brands were not compatible at all. 

So how can you get co-branding right?

Here are some things to consider before jumping into a co-branding partnership.

Are your brands compatible?

If your company works on business VoIP services, you probably aren’t looking to partner with a children’s video game–take note Balenciaga.


Compatibility is key to creating a successful co-branding strategy, but that doesn’t mean all co-branding partnerships need to be insular. You can partner with companies inside or outside of your industry, so long as both brands can offer each other a complementary service. 


Co-branding with companies within your industry has many benefits, as you’re coming from a place of mutual understanding. You might already have similar products, audiences, and experts within your business, so partnering up allows both companies to work together on their strengths. Technology powerhouses Dell and Intel regularly collaborate on new systems because they share a common expertise and can market to similar audiences. 


For co-branding opportunities outside of your industry, you can look at the examples we discussed above–like Red Bull and GoPro. Two entirely different products but one synergizing marketing campaign. Both brands found a way to complement each other, and it helped them to expand their name recognition and capture a global audience. 

Do you risk diluting your brand?

Your brand needs to be strong in its identity before you consider co-branding, or you risk diluting it. 


Have solid brand guidelines for your company. Know your strengths, your brand personality, your selling points, and why customers choose you, and make sure you bring those things to the table.


Your brand image should remain strong throughout the partnership. 

Do your customers mesh? 

Figure out who your existing audience is–then figure out what kind of audience you’re trying to capture. 


If those two audiences are at major odds, you’re going to be spreading your co-branding strategy too thin. You don’t want to alienate your existing customer base by partnering with a brand they have zero interest in; you don’t want your loyal customers to feel overlooked or devalued for the sake of a shiny new partnership. 


A huge benefit of co-branding is capturing a new audience for your product, so consider companies that have a demographic you can appeal to. 

Do you share common values?

Today’s world is increasingly socially aware, so it’s important to consider what kind of image your brand projects. Are you politically or socially active? Are you carefully neutral? Are you purposefully controversial, pushing buttons wherever possible?


It’s important to partner with brands that share your values, whatever they are. A recent example of this is the Adidas and Kanye collaboration on the Yeezy line. The iconic partnership fell apart due to opposing values (that’s putting it very lightly), and now both brands are dealing with the fallout. 


Try not to set yourself up for an equally messy breakup. 


Will both brands benefit?

Co-branding is no good if one brand is using up all the resources and earning all the profit, and the other is losing out. Co-branding should elevate both brands in recognition and ROI. 


If you run a smaller company with less name recognition, make sure you’re not getting steamrolled by a larger or more well-established brand. On the flip side, if your company is already well-established, make sure any smaller brands you partner with have something to offer. You don’t want to end up carrying a bunch of dead weight. 

In conclusion

Co-branding can be a great strategy for brands looking to grow their audience, expand their reach, and increase brand recognition. But like any marketing strategy, it’s important to examine the risks. 


Before jumping into a co-branding partnership, consider what co-branding can do for your business. A well-thought-out co-branding strategy could elevate your brand to new heights.