Definition:

Co-branding is a collaboration strategy in which two or more brands jointly present a product, service or experience while keeping each brand’s identity recognisable.

The offering combines contributions from the participating brands, such as design, technology, expertise or reputation. It does not mean that the companies merge or that every commercial agreement between them becomes co-branding.

Table of contents

1 How co-branding works
2 Common forms of collaboration
3 Differences from sponsorship, cross-promotion and licensing
4 What the agreement should define
5 Opportunities, risks and evaluation

How co-branding works

Co-branding is part of branding strategies. Brands link their identities to a shared offering so that the audience recognises the involvement of both.

Each party may take on different roles. One may contribute the product and another a component, design or specialised experience. Their contributions do not have to be equal, but the association must make sense for the offering being presented.

The collaboration between adidas and the LEGO Group announced in 2020 included co-created products, among them footwear and apparel. It illustrates how two brands from different categories can bring elements of their identities together in a single offering, rather than simply recommending each other.

The relationship may be limited to a launch or last for several years. Its duration depends on the agreement, not on a mandatory feature of this strategy.

Common forms of collaboration

Co-branding can take different forms depending on what the brands contribute. Some of the most common include the following:

Joint product: brands participate in an offering that combines recognisable attributes of both, such as a collection or special edition.
Ingredient or component branding: one brand is identified within another brand’s product because it contributes a relevant material, technology or component.
Shared service or experience: the brands’ capabilities are integrated into a service or experience presented jointly to the public.

These forms can be combined. A campaign can communicate any of them, but sharing an advertising asset is not enough to demonstrate that a co-branded offering exists.

Not every distribution agreement belongs to this category either. Selling another brand’s products in a store does not, by itself, amount to creating an offering with a joint identity.

Differences from sponsorship, cross-promotion and licensing

Collaborations between brands may look similar even when their purposes and structures differ:

Sponsorship: a brand contributes money, products or resources to an activity, organisation or person in exchange for certain association and visibility rights. It does not require developing a joint offering.
Cross-promotion: the parties promote their respective offerings to their audiences, but may keep their products and communications independent.
Trademark licensing: an owner authorises another party to use its trademark under specified conditions. This may form part of a co-branding agreement, although not every licence does.
Co-branding: the brands appear together as part of the identity of the same offering.

These relationships are not mutually exclusive. A project may combine a licence, promotional activities and a co-branded product. The distinction should be assessed by what the parties do, not simply by the name given to the agreement.

What the agreement should define

The collaboration needs to establish what will be offered and how responsibilities will be allocated. Before launch, the following aspects should be resolved:

Objective and audience: which need the offering addresses and why the combination of brands is relevant.
Contributions: who develops, produces, distributes or delivers each part of the offering.
Use of identities: how names, logos and messages appear, and who approves their use.
Rights and financial terms: ownership of developments, permissions for use, costs and revenue sharing where applicable.
Scope: products, channels, territories, duration and any exclusivity arrangements.
Customer service and termination: who handles problems and what happens to stock, warranties and materials when the collaboration ends.

Coordination should also cover quality and availability. A joint presentation may lead the audience to attribute a problem to both brands, even if it originates with only one.

Opportunities, risks and evaluation

Co-branding may provide access to capabilities a brand lacks, bring it closer to other audiences or help develop a differentiated offering. These possibilities depend on the fit between the parties and the usefulness of the result.

The association may also create confusion, dilute a brand’s identity or expose it to its partner’s reputational problems. An alliance between familiar names does not guarantee that their audiences share interests or will accept the product.

Evaluation should address the agreed objective. For a commercial launch, sales, margins and collaboration costs can be reviewed; if the aim is to change brand perception, indicators are needed that can capture that change.

A campaign’s reach or the mentions it receives do not automatically equate to profitability. Assessing the alliance’s contribution requires distinguishing initial attention from commercial results and its effects on the participating brands.