Co-branding—also referred to as brand alliances—is the short- or long-term partnership of at least two brands. As sponsorship is already an association between two brands, it accelerates two types of co-branding phenomena: 1) several brands joining forces to create a unique activation or 2) a sponsor leveraging several of its brands in its partnership with a single property.
Why should two different brands join forces? Managers opt for this approach to improve their brand positioning, a tactic that the science of consumer behaviour tends to support, specifically when it comes to the sale of co-branded products. In fact, consumers generally perceive such alliances as positive, making it a winning strategy even if one of the two brands has weaker brand equity than the other.
Concretely speaking, each brand inspires a series of associations (or nodes) in the consumer’s mind. When a new brand association arises or a new co-branded initiative hits the market, the consumer trusts his or her current opinion of the respective brands. Usually, the sum is greater than its parts, but such associations can also bring about certain risks—like the danger of associating with a partner that will damage a product’s brand equity.
The bicycle brand Specialized leveraged its partnership with the Tour de France to launch an exclusive edition of its S-Works Tarmac bike that it jointly developed with car and F1 manufacturer McLaren. This partnership has proven to be interesting for both brands: on one hand, it gives McLaren the chance to target a segment of high-end cyclists—a potential market for its luxury sports cars. And for Specialized, it reinforces its innovative image. Beyond product sales, which were limited to 250 bikes, this partnership created buzz and reinforced the positioning of both brands.
In the sponsorship context, a lot of brands use co-branding as an ingenious way of showing their support for certain causes. Bank of America successfully communicated its support for veterans by leveraging its high-level sports sponsorships with NASCAR, Major League Baseball and the NFL. The bank rallied sports fans—who proved to be receptive to the cause—to express their thanks to the troops, and the bank, in turn, made a donation for every message of support.
In Canada, there are other examples of companies using their sponsorships to show support for a cause, like Sun Life and its fight against diabetes and TELUS with its support for Opération Enfant Soleil in Quebec.
Co-branding can also take on another form, where big companies with a wide-ranging brand portfolio use the same sponsorship property to activate multiple brands. Pepsi is a good example of this: it leverages its partnership with the NFL and MSL to do marketing initiatives for Gatorade, Quaker and Frito-Lay.
The same criteria used when selecting a property must also be respected when considering a partnership with another brand. It has to feel like a relevant fit, be it in terms of brand values, brand image, the consumer base or a functional attribute (complementary competencies). The fact that companies sponsor the same organization already serves as a good foundation to explain its association to fans. Always remember: confusion is a brand’s biggest enemy.
The association between brands or with a sponsorship property serves to create a competitive advantage that other companies have difficulty replicating. In itself, the amalgamation of multiple brands is interesting, but to have a real impact, the association must be deployed over the long term, which can be tricky when several brands—and therefore several managers—have to collaborate and get on the same page.