Brand collaborations and why collaborations between brands are a win-win

Forging alliances is nothing new. When mankind discovered the division of labor, people began to focus on their own strengths in economic cooperation. And if someone else was better at something, then it made sense to cooperate: I’ll make you the comfortable leather shoe and you build me the cupboard. That’s how business works. A basic principle. However, the use of money as a means of payment has made us lose our sense of cooperation somewhat.

In the current times, in which we have to fight together for a better world and work together on the best solutions, brands should also rethink and cooperate with other market participants: For great products that make our lives better. But also to strengthen their own position in the market. This article shows how brands can gain new target groups, generate attention and optimize costs and pricing through cooperation.

1. Definition of brand cooperations

Why should brands join forces? That’s a contradiction in our competitive market economy! Brands are precisely there to differentiate themselves from other products and companies. To be unique, to offer a special consumer benefit. All other companies are competitors that need to be eliminated! Aren’t they?

Well, cooperation has always existed in the economic cycle. Cooperation between a supplier (e.g. an automotive supplier) and a producer (e.g. an automotive brand) or between a producer and a trading partner makes sense as part of the division of labor. Such a relationship is absolutely efficient. Nobody questions this anymore. In our digital world, the platform approach has given this economic principle a further boost for practically everyone: Mydays.de, for example, arranges experiences from various providers. Otto.de has become a marketplace for many brands that do not want to rely on their own distribution infrastructure. And it’s not just private sellers who appreciate Ebay.

But when brands form alliances at the same economic level – i.e. retailers with retailers, or manufacturers with manufacturers and suppliers with suppliers – we are surprised. And if the two partners are also active in the same industry, then our traditional view of economic paradigms is broken. Because supposed competitors now become friends …

Basically, we can distinguish between two types of brand cooperation: Co-branding and co-marketing.

When two brands engage in co-marketing, they decide to market their brands together, whereby the respective brand or product remains independent. This type of cooperation is most common with brands in different sectors or at different economic levels. Co-sponsoring is the simplest form of co-marketing. Affiliate marketing and sales partnerships are further examples of co-marketing. But license agreements for joint marketing are also common forms. A glorious example of this is the Barbie film and its massive marketing: Summer was pink. Numerous licensing agreements between Mattel and more than 100 brands contributed significantly to an incredible cinema event and a massive 20% increase in sales of Barbie dolls. The utopia in pink and the doll was suddenly present in all consumers’ minds.

With co-branding, the partnership goes one step further in terms of consumer perception. For example, the two cooperating brands have developed a joint product and market it on an equal footing under the brand partnership. Or a product of one brand is a decisive component of the other brand product and this strengthens the quality and/or performance of this product.

To illustrate the possibilities for cooperation, let’s take a look at the following examples of co-marketing and co-branding depending on the economic level:

Cooperation between supplier and manufacturer

The classic business relationship between supplier and supplier is the loosest form of cooperation. In this form, however, such a supplier relationship has practically no brand effect. If the supplier and manufacturer work together on the product development of the supplied goods, which can be perfectly integrated into the branded product, then we speak of co-marketing. Later in the marketing process, the individual components can be advertised as special features. The integration of Apple CarPlay in various car models can be described as such a marketing partnership, but if the supplier plays a decisive role in the branding of the manufacturer’s brand, then we speak of co-branding. This is usually referred to as ingredient branding. One of the best-known examples is certainly the Intel Inside campaign. At the same time, it is also a very special example. Because Intel initially achieved its success on its own. Through a good product, of course. But above all through the marketing of microprocessors. Before 1991, when the campaign began, normal computer users were not familiar with the Intel brand. However, the CPU is the key indicator of a computer’s performance. Intel used this as an opportunity. The Intel Inside logo quickly became a seal of quality for outstanding computer performance and Intel became the most important advertising partner for numerous PC manufacturers.Gore-Tex is another well-known example. The breathable membrane is a component of numerous functional brand products in the fashion industry. W. L. Gore is now also a successful manufacturer of its own branded products, and when the partnership between the refining ingredient brand and the manufacturer becomes increasingly exclusive, it develops into composite branding. One example is the supplier Alpina, which is regarded as an automobile refiner and is increasingly working exclusively for BMW. There are now Alpina BMW models with their own brand representation. BMW will fully integrate Alpina as a brand into the BMW Group in 2025.

Cooperation between manufacturers and dealers

The classic retail relationship is not yet co-marketing. But every manufacturer wants its products to be well placed on the shelves and promoted by dealers. Occasionally, manufacturers also run retail promotions at the PoS. This requires co-marketing. Advertising subsidies from manufacturers to retailers are commonplace. For the important Christmas season, the European Toys’R’Us successor Smyth has an advertising cooperation with Lego Duplo in moving images and advertisements. When certain manufacturer brands, such as Alnatura, are sold exclusively in Edeka and DM, we have already made the transition to co-branding. Alnatura’s products on the shelves are thus significantly linked to the retail brands Edeka and DM without being private labels. Amazon has expanded a long-term sales and advertising partnership with Philips Hue, the smart home lamp system. Echo devices are sold with a Philips Hue lamp in a bundle and the smart home applications of the Echo devices are often advertised by Amazon with the Philips lighting system. The two components cannot do without each other. So this partnership is absolutely relevant. It has helped to clearly demonstrate the benefits of Amazon smart speakers as smart home assistants. And it has helped to raise awareness of the Philips Hue system via the retail partner Amazon.

Cooperation between protagonists at the same economic level

We are now entering an area of creative partnerships at eye level. First of all, collaborations between supposed competitors are not necessarily obvious. But this is precisely why they can be particularly effective: there are research partnerships between numerous automotive brands. BMW and Toyota, for example, developed a joint platform for the Z4 and Supra, while Daimler and Renault developed a platform for the Smart and Twingo. These product cooperations only have an indirect brand impact. However, they help the partners to ideally achieve quality leadership with efficient means. The FreeNow app now not only bundles the company’s own cab service, but also various car sharing and e-scooter providers. Ticket sales for local public transport are also integrated. Mobility competitors are supposedly combined in one app. That may be the case. But there are different needs for different routes. This sales partnership creates awareness of the diversity of mobility services. The other offer is just a fingertip away. FreeNow thus becomes a bundle app for urban mobility. This co-marketing therefore contributes to the credibility of its own cab service.The co-marketing between GoPro and Red Bull is more subtle – and yet one of the most emotional brand partnerships there can be. Content from Red Bull sporting events is filmed from the subjective perspective of the athletes with the GoPro and thus becomes a global event. RedBull Stratos would not have become a global event without the GoPro. No one would have seen it. And a stroke of luck for GoPro. The images showed the quality with which GoPro turns events into a subjective experience. This partnership is brilliant. It has emotionally charged both brands. The co-branding of BMW and James Bond served BMW to introduce the Z3 in “GoldenEye” in 1995. Advertising measures for the Z3 were entirely in the spirit of the Bond film. The partnership between DHL and the “No Time To Die” James Bond was involuntarily extended. Because the film release was postponed several times during the coronavirus pandemic, the James Bond logo was emblazoned on the yellow parcel delivery vehicles for many months. The city runabouts gave the film massive mobile out-of-home awareness and when products are developed jointly between two brands, this co-innovation becomes close co-branding. H&M has been leading the way for many years. Most recently with the Capsule Collection in partnership with Rabanne. The joint collection between Gucci and Adidas has made Gucci’s image sportier and given Adidas even more of a fashion cult following. Furthermore, this alliance will lead to a further rejuvenation of Gucci, giving the brand street credibility and thus making the luxury brand more desirable for the next generation – without being “cheap”.

For a summary and overview of the most important cooperation opportunities, see the following diagram.

2. Objectives of brand cooperations

The overarching goal of brand cooperations should of course be to strengthen the cooperating brands and ultimately increase sales. The basis for this are marketing and innovation synergies.

On average, the number of buyers increases by 5.2% if the cooperation is rated positively (Basic study on brand cooperations, Splendid Research, 2017). According to the study, these four factors significantly increase the likelihood of purchase:

• Like (11%)
• Benefit (8%)
• Innovativeness (9%)
• Brand fit (10%)

Whether a cooperation between brands is appealing is certainly a very subjective assessment. Nevertheless, this factor is particularly important when it comes to achieving a positive image transfer between the brand partners or expanding or rejuvenating the target group with a joint product, for example.

The most important goals for brand cooperations can be summarized as follows:

A. Image improvement

The cooperation of brands has the potential to enable a transfer of positive image facets from one brand to the other. If the cooperation partners cross-fertilize each other, we have a perfect win-win situation. A rejuvenation of the image with simultaneous premiumization (strengthening the perception of quality) is a frequent goal.

Crocs and Birkenstock have now become fashion brands:

• The former “health slipper” manufacturer Birkenstock has achieved cult status through numerous collaborations with fashion brands (including Dior and Jil Sander) and with celebrities. At the same time, the former “granny” shoe has become a brand for the GenZ.
• The same goes for Crocs: an innovative, functional shoe made of plastic foam for water sports enthusiasts is now very popular with fashionistas. The Lil Nas x Crocs edition is currently available. The collection no longer looks like the original rubber shoe, but has a cozy lambskin look. And the American rapper Lil Nas appears cuddly and lascivious in the advertising material.

B. Volume and price optimization

Premiumization through cooperation often goes hand in hand with a price increase. The jointly produced goods enable cost efficiency and volume effects if the joint edition is advertised with concentrated advertising power.

C. Awareness and media sharing

When two brands (or more) join forces, there is the potential for double the attention and/or more efficiency in media planning. Because if two brands in an “advertising community” can generate just as much attention on one advertising medium as with separate advertising media, then media budget sharing is an efficient approach.

D. Know-how transfer

A product cooperation is often a technical cooperation in the context of upstream research or also as an interplay of different production competencies. Product cooperations are often planned as temporary line extensions, so-called capsule collections. This reduces the risk if the cooperation is not so well received by consumers. Furthermore, the short-term availability of the collection increases desirability. If the product cooperation gives the participating brands a relevant design and technology boost, the brands have done everything right.

E. Expanding the target group

Expanding the buyer base is a very present goal of a brand cooperation. The above-mentioned rejuvenation of the Gucci, Birkenstock or Crocs target group is certainly the greatest achievement of these brands’ collaborations. At the same time, a cooperation with a traditional brand can give a young brand awareness, relevance and thus establishment. In return, the traditional brand may receive a rejuvenating treatment. Furthermore, a collaboration can give a product a technological, digital or sustainability edge. The collaboration between the sustainable shoe brand allbirds and the sporting goods manufacturer adidas has given adidas a green touch, but has also given allbirds the opportunity to use adidas’ technological expertise to develop an ultra-light running shoe. The collaboration of long-established insurance or financial companies with FinTech start-ups gives traditional brands a fresh perspective on user experience and digital know-how. The start-up, on the other hand, may find it easier to enter the market.

3. When brands should not forge alliances: Risks of brand alliances

Problems and risks of brand alliances arise when the two brands are too far apart or hardly complement each other at all:

A. Brands are not on an equal footing

As soon as cooperations are imbalanced, i.e. one brand benefits less than the other from a collaboration, things become difficult. If both negotiating partners want to take advantage of each other and are not pulling in the same direction, the collaboration is doomed to failure. Rights and obligations should be divided fairly between the partners. This also means that profits and losses are also shared within the scope of the assignment.

B. Loss of technological leadership

There is a risk that one brand will “steal” know-how from the other brand within the collaboration. The confidentiality of internal information and the rights to innovations should therefore be clearly defined contractually in advance of the collaboration.

C. Overextension of the brand

When collaborating with other brands, it is absolutely essential to know your own brand. You should ask yourself these questions: Do the target groups match? Are there needs of our buyers that can be addressed in a relevant way with the product collaboration? Can we expand the image of our brand by an intended facet through the collaboration? Or do people not understand how the new product of our brand collaboration fits into the existing brand world?

Crocs is in danger of overstepping the mark: Crocs has launched a design collaboration with McDonald’s. McDonald’s may be a strong brand, but how does it fit in with Crocs? Sure, Crocs’ plastic kicks are just as colorful as the McDonald’s brand world, but isn’t it getting a bit random now? Why should advertising motifs and cartoon characters from the McDonald’s line decorate the shoes? Mind you, the collection is not intended for children, but for adults. The rejuvenation and premiumization of the Crocs brand has been successful so far. But now Crocs is exposing itself to ridicule. At the very least, the cooperation is not conducive to an it-piece of the fashion world.

The Supreme brand was a pioneer of fashion collaborations. However, the former indie skater brand has overshot the mark. Through numerous collaborations with established fashion brands, Supreme has lost credibility in the skater community. The brand is now managed by the holding company VF. The cult character that characterized the brand has been lost. The share price performance reflects the loss of value.

D. Loss of control

Collaboration always means trust. Suddenly you are no longer solely responsible for managing your brand, but share responsibility. And you lose sole control. This harbors dangers. Because if one brand has a problem, this also has a negative impact on the other brand. If a cooperation partner already has a crumbling positive public image, the risk of negative perceptions in the future is difficult to control.

Lego and Shell expanded their partnership in 2011. Lego puts the Shell logo on toy racing cars, petrol stations and tankers. In return, the multinational oil giant also markets these Lego products via its petrol stations. This gave Lego access to a new global distribution network.

A campaign by Greenpeace in 2014 ultimately led to the termination of this cooperation. With the extraction of fossil fuels, the oil multinational did not exactly stand for the future of a world in which a carefree childhood is possible. For Lego, the risk of the negative image of dirty oil sticking to the brand was too great.

4. Brand cooperation as a new paradigm and strategic success factors

Our economic principle is based on economic cooperation through the division of labor: the knowledge that there are others who are better at what you are not so good at. Division of labour means exchanging skills, i.e. specialization. For a long time, this principle was only understood as a supplier relationship.

Recently, however, companies have increasingly turned their attention to cooperation on an equal footing. In a multi-optional, omni-channel world, companies began more than a decade ago to generate attention and reach by breaking taboos in cooperation in different sectors. These unusual collaborations have what it takes to spread exciting content. Today, it is hardly surprising to see True Fruits and Em-Eukal create a menthol shot or Tiffany & Co. team up with Nike to design a shoe in the iconic green box. And yet such collaborations continue to renew brands and keep them exciting.

A new era of collaborations is about to begin. Our world has come apart at the seams economically, politically and ecologically. We have realized that we can only make a lasting change to the world by pulling together. Customers therefore expect brands to work together to make not only their lives better, but also the surrounding circumstances such as climate change, the energy transition and the economic cycle. People expect brands to take a stance on current problems. As a result, production-oriented image facets will become more prominent in the future. The actual product benefits will be seen in relation to the ecological product costs. In order to achieve this, consumers see brands as having an obligation to join forces with their expertise. Traditional brands benefit from working with sustainable brands – in their mindset and through better products.

A second factor for a new age of cooperation is digitalization. Traditional brands need (digital) added value in order to remain relevant. This is why some analog brands are creating innovation synergies by collaborating with digital brands. Montblanc digitizes writing with augmented paper or produces high-quality headphones in the Maison Kitsuné design and in collaboration with the high-end manufacturer Audeze. In this way, the analog fountain pen manufacturer is becoming digital and relevant for the up-and-coming Generation Z target group.

Banks and insurance companies cooperate with FinTecs. This is the necessary attempt to digitize services, to design contracts online and to be accessible without bureaucracy.

Cooperation is therefore the paradigm of a continuous improvement process for companies, products – and yes, the world we live in.

Kai Bösterling

Kai Bösterling ist seit 20 Jahren Berater in verschiedenen Werbe- und Kommunikationsagenturen. In den letzten Jahren verantwortete er in der Geschäftsleitung von Digitalagenturen die Markenberatung. In Agenturen wie Zum goldenen Hirschen und GREY klassisch ausgebildet, ist er heute überzeugt, dass Marke, Idee und Kundenerlebnis Leitfunktionen in Unternehmen übernehmen müssen – als geistige Haltung, als service-orientiertes Handeln für den Kunden und als Brücke zwischen digital und analog.