Co-branding is nothing new to the offline world. The strategy has brought terrific success to many companies by creating new products that leverage the existing and complementary strengths of the partners.
So why not do it on the Web?
The reality is, they're trying. And in a handful of cases, they're actually succeeding. CNN/SI, MSNBC, ToysR'Us/Amazon, and even the newly configured Disney/eBay auction site are good working examples of successful Internet co-brands. Through their work, we have learned of five powerful benefits generated by online co-branding.
1) An improved focus on customer needs and wants - All marketing strategies should have a customer-oriented focus. But because co-branding involves the launching of a new product, it adds extra incentive for a true evaluation of a customer's current and latent needs and wants.
An example of a successful co-brand that captured customers' desires is NBCOlympics.com. By co-branding with the Olympics, NBC delivered a blow to its competitors by delivering on a strong proposition of timely news and rich media coverage. The official event name - Olympics - focused the content and provided immediate topical salience to the target customer.
The result was a site that captured 75% of the total page views for Olympics oriented content, despite competition from the likes of AOL, Sports Illustrated and ESPN. NBCOlympics.com also beat the competition by as much as 200% in site traffic on individual days during the event.
2) Improves the ability to communicate a product or service to a target customer - The point of developing a brand is to communicate a core value to the target customer. Through co-branding these values can be extended and reinforced to communicate a new product to the consumer. One solid example of such a relationship is the Toys 'R' Us/Amazon co-branded commerce site.
In its first online attempt, Toys'R'Us failed miserably. In 1999, they were trounced 3-to-1 in sales by eToys, got fined by the FTC for poor business practices, and had to issue hundreds of thousands of dollars in "make good" gift certificates to angry customers.
Amazon.com also made a failed attempt to sell toys. Their poor planning left them with $39 million in overstock (the amount of overstock was actually higher than total sales) and far fewer online toy sales than eToys or Toys'R'Us.
But in August 2000, Toysrus.com and Amazon.com created a 10-year partnership splitting both revenues and advertising expenses. The new co-branded site joins Toys 'R' Us' specialization and mass selection with Amazon's competent fulfillment and customer service.
3) Better differentiates your products and services - Because co-branding involves the development of a wholly new product, it allows for differentiation from one's competition as well as from the parent products involved in the partnership. CNNSI.com is a dramatic example of this effect.
On their own, CNN and Sports Illustrated do not deliver what web-based sport-knowledge seekers want. CNN is known as a worldwide, up-to-the-minute, news network. Sports Illustrated's brand represents leadership in delivering in-depth sports knowledge and content. Together, however, CNNSI.com is a major site that provides current, deep, worldwide sports news content to its customers.
In this way, CNNSI.com immediately delivers product clarity to its current and potential customers while also differentiating itself from the competition.
4) Leverages assets and core competencies -Internet co-brands that leverage their core competencies dramatically increase their chances for success in the Internet realm. In the case of Microsoft and NBC, two companies from genuinely different backgrounds came together to create a powerful Internet co-brand.
In 1996, MSNBC hit the television airwaves. After two years, it was clear that in the cable world, MSNBC would never be CNN. Even the Fox news Channel surpasses MSNBC's ratings.
In the online space, however, MSNBC became an instantaneous and potent force. It dominates the competition. It outpaces all other news sources including CNN.com, ABCNews.com, USAToday.com, and NYTimes.com reaching almost 13% of all Web users.
This success comes in large part thanks to the co-brand's ability to leverage each partner's core competency to its fullest extent. Microsoft's involvement with NBC is fairly meaningless to a cable viewer - but it is a dramatic endorsement to an MSNBC.com site visitor.
Microsoft's prowess and ability to understand online customer needs is fully leveraged with NBC's deep news content and broadcast marketing synergies.
5) Improves revenues and image - An Internet co-brand can generate revenues or build each of the partners' brand images. One such example is eBay's Disney Auction site.
In 1999, Disney's Go Network tried to launch its own online auction site that failed miserably in just four months. Its problems were immense. It didn't have the site traffic. It didn't deliver on the Go Network's core competencies. And it didn't offer a differentiated user-experience.
eBay is the world's leading online auction community. It is the seventh most visited site on the World Wide Web with a unique monthly audience of over 7 million users. Its only true desire is to continue growing a strong traffic base, generate additional revenues, and build its brand as the leading online trading community.
Together, Disney Auctions' partnership with eBay lists over 90,000 items.
While not "named" in a traditional co-branding format, Disney Auctions is promoted as such. Radio, television, Internet, amusement park and print ads are promoting site visits to www.eBay.Disney.com. The visual layout is clearly co-branded with eBay and traffic can flow bi-directionally from both eBay and from anywhere on Disney's Go Network.
While still too early to tell how well the companies will do with this new relationship, it has promise. eBay will acquire new customers and community members; Disney will deepen its relationship with Mickey Mouse evangelists across the world, thus building commitment and consumption levels within its core audiences.
BOTTOM LINE
By effectively harnessing the power of two brands, a company can simultaneously focus on the customer, deliver new revenues and create potent new products in areas as diverse as news, sports and entertainment events, e-tailing, vertical portals, and the melding of "brick-and-mortar" relationships.
Co-branding doesn't guarantee product category leadership. And it doesn't mean immediate success. But what is important to realize is that co-branding can be as powerful a force on the Web as it is in the offline world - if it's done right.
