Co-branding is hot - but does it work on the Internet?
As it turns out, not always.
Waging a successful co-branding campaign - that is, marrying two or more brand names to create a new product - can be a tough task on the web. Indeed, while off-line successes such as the AT&T Universal Master Card and the Ford Explorer Eddie Bauer edition have helped make co-branding the strategic flavor of the month, the Internet's unique dynamics and paradigms have frustrated similar online efforts.
Still set on launching an online co-branding campaign? We've come up with three essential questions to ask before you do. It could mean the difference between success and disaster for your product.
QUESTION 1: DO YOU HAVE THE MATURITY?
The Internet is still an extremely new marketplace. While some market leaders have clearly emerged, it takes little more than a committed group of core developers and an infusion of capital to become a competitor. While this is great news for those eager to enter a new market, it makes co-branding an even more difficult task.
Why? Because co-branding only works when the two brands have brand equity behind them. Brand equity is only achieved through time, experience and credibility -- three things impossible to gain in a hurried entry into the Internet. The Internet is also a very volatile marketplace. When brand leaders such as Pets.com go out of business because they cannot generate a profit, consumer confidence in the entire online marketplace erodes. This also makes co-branding on the Internet very difficult, for an online brand not only speaks of the product -- it also represents the the Internet as a whole.
So, the first question for you is this: Do you (or your partner) have the brand equity it takes to pull off a co-branded product?
QUESTION 2? ARE YOU DIFFERENT?
Many online brands define their principle benefit as low price. Marketing researchers have shown that when consumers are low-price focused rather than fixated on performance and other features, brands start resembling commodities. This undermines brand equity, which in turn frustrates co-branding efforts.
So, the second question to think about is this: Even if you're an online brand leader, do you have strong enough points of differentiation? Can you sustain these distinguishing points? Without them, it will indeed be hard to establish a long-term, trusted co-brand identity.
QUESTION 3: CAN YOU CREATE ADVERTISING SYNERGY?
In the off-line world, CO-branding has been an effective way to launch new products - such as packaged goods - because it reduces the need to advertise heavily to communicate product utility to customers. As an example, Healthy Choice Cereal by Kellogg's is an effective co-branded product because people predominantly shop for cereal in a supermarket. While walking down the cereal aisle, a potential customer may now see two brands calling out to them: Kellogg's - quality cereal; and Healthy Choice - healthy food products. Without explicitly advertising what the new product is, it is clearly communicated to the customer.
This effect is called synergy, when the benefits of two brands working together outweigh the benefits generated by either one alone. Advertising synergy can be much more difficult to achieve online. On the Internet, consumer traffic is a convoluted trail that is a challenge for even the most sophisticated websites to master. Your co-branded product may or may not attract customers who would recognize both brands and inherently interpret their CO-branded message. In this way, in can be difficult to leverage advertising synergy.
The third question, then, is this: Can you create strong enough strategic partnerships to drive the right traffic to your co-branded products? Will this traffic enable advertising synergy?
THE PUNCH LINE
You need to have brand equity, points of differentiation, and synergy if you are going to pull off a co-brand strategy on the Internet. If you don't have these things, you might think about going it alone. Even in a world where relationships and alliances are key, that doesn't mean you'll need to risk your brand name in a lousy co-branded alliance.
