What are co-marketing and co-branding?
The terms 'co-marketing' and 'co-branding' are often used interchangeably, but they can have slightly different meanings.
Co-marketing is a strategy that involves brands or organisations partnering together to maximise their customer reach. These companies may have some similarities, such as operating in the same industry or attracting the same type of consumer. For example, the international football federation FIFA has partnered with US drinks firm Coca-Cola during their World Cup competitions since 1978, offering giveaways and prize competitions to boost their respective brands.
Co-branding, however, uses multiple brand names as part of a strategic partnership to develop a good or service. Co-branding generally incorporates several types of branding collaborations in order to create a new product or offering. For example, US tech giant Apple partners with payments-processing firms Mastercard, Visa, and American Express to deliver Apple Pay.
What’s the purpose of co-marketing and co-branding?
The overall concept is that two (or more) businesses or brands work together (either for a one-off campaign or as part of a longer-term plan) and combine their marketing efforts to achieve greater exposure and more effective results. It's generally a case of identifying symbiotic dynamics and complementing each other’s products in some way in order to gain a larger overall market share than they otherwise would be able to achieve on their own.
So products being marketed as part of a co-marketing campaign may remain unique to each brand, but when two companies create a new product together, essentially fusing their brands, this will be sold as a co-branded product.
What are the main pros and cons of co-marketing?
Shared resources can vastly reduce overall marketing expenditure, often almost halving costs by creating one joint advertising campaign instead of two separate ones. Alternatively, a greater combined marketing budget can provide additional exposure (eg enabling the purchase of TV advertising space). Furthermore, the two or more brands will each bring their own existing shares of their market, introducing their partners to new potential customers.
On the downside, dilution of a brand is a possibility, especially if one brand is much stronger than the other. Another potential problem is that if a co-branded product develops a fault or receives negative publicity, this will affect both brands, even if the fault lies with only one of the brands.
It will also be necessary to ensure a sufficient legal framework is in place to protect each company involved in a co-marketing campaign, so there will generally be additional legal costs.
What are the potential legal considerations (and common pitfalls)?
It is vital that the companies involved in a co-marketing campaign ensure they have proper legal agreements in place to clarify their rights and responsibilities as part of their joint efforts and to avoid any potential disputes. This is even more important if they are developing a co-branded product.
In legal terms, co-marketing is considered a Trade mark licence agreement, rather than a Partnership agreement or joint venture. It utilises a trade mark cross-licence, whereby each party must licence its trade mark(s) to the other(s).
The cross-licence must be able to adhere to and rely on the existing intellectual property (IP) rights of all other parties launching a co-branded product, in order to manage risks and enforce the parties' trade mark rights against possible infringements from third parties.
It is also crucial that co-marketing campaigns do not breach any antitrust (ie competition law) rules.
If you need help legally protecting your business during a co-marketing or co-branding campaign, Ask a lawyer how to get started.
