Nike and Michael Jordan. Ford and Eddie Bauer. Coach and Lexus. These are just a few of the many examples of successful co-branding in the marketing world. Also called brand partnership, co-branding involves two companies forming an alliance in order to create a new product, campaign or identity. Though co-branding is hardly a new concept in the marketing world, these days many companies are also exploring the possibility of co-marketing.

What Is Co-Marketing?

A form of relationship marketing, co-marketing involves two companies creating a partnership between their brands for the purpose of helping to market each other’s products. A thoughtful and well-executed co-marketing campaign can help both companies reach new audiences while saving valuable marketing dollars. Whether you’re sharing commercial space on national TV or just guest-posting on each other’s blogs, co-marketing can help you generate new leads, build trust and even enhance your company’s perceived value, as you’re providing your existing customer base with information about useful new products and services.

What Is a Co-Marketing Agreement?

To make sure both companies’ values and goals align from the start, it’s important to draft a co-marketing agreement. A co-marketing agreement is crucial to protecting the interests of both companies in a co-marketing arrangement. Additionally, a carefully written co-marketing agreement can prevent misunderstanding and disappointment down the line by spelling out expectations early on in the relationship.

In a co-marketing agreement, both marketing partners receive a share of the total sales from their joint marketing efforts. To ensure a successful, conflict-free relationship, it’s crucial to outline payment provisions and other guidelines from the start. Many co-marketing agreements specify the territories in which the marketing will take place. In most cases, both parties must review all marketing materials before they’re released. A co-marketing agreement may also specify how potential disputes between the companies will be resolved.

What Are the Benefits of Co-Marketing?

A shrewd co-marketing partnership can offer profound benefits for the companies involved. One of the advantages of co-marketing is that it presents your product or service to a new potential client base with demonstrated similar interests. For example, when a hair salon co-markets with a nail salon, both companies gain access to each other’s clients.

Another benefit of co-marketing and co-branding is the ability to save on costs. Once two companies have agreed on marketing content, they can save money by promoting that content together. Some companies take co-branding to another level, sharing facilities and even staff to reduce expenses. For example, Pizza Hut and Taco Bell stores often operate out of the same building to share costs. Additionally, each brand in this arrangement benefits from connecting with the customer base of the other.

No matter how strong your product is—and how large your existing client base— your continued growth relies on your ability to attract new business. A strong co-marketing arrangement involves the expansion of existing content. By exploring new products and services, you can ensure that your company fulfills all of your existing clients’ needs and desires while encouraging new customers to try your business.

When Should You Enter into a Co-Marketing Agreement?

The success of a co-marketing venture depends in large part on your choice of a partner. Naturally, you want to select a brand that is related to yours but not a direct competitor. Additionally, it’s essential that the two companies share a similar customer base. For example, an airline might co-market with a hotel company, as both are members of the travel industry. Similarly, a clothing retailer that targets teenagers could reap rewards by partnering with a popular hip-hop musician.

Before you enter into a co-marketing agreement, it’s important to do your homework. Check up on the company’s numbers to make sure their claims match up with the reality of their customer base. Co-marketing is only beneficial if you have access to a new market share.

Additionally, co-marketing partners should share similar business values. If the two companies in a partnership have drastically different values in the way they do business, then it may be hard for them to agree on marketing endeavors. You should also take the time to research the company’s online reputation and read reviews. Partnering with a company that has a poor reputation could actually harm your business in the long run.

Securing Your Co-Marketing Agreement

Once you’ve chosen the ideal partner for your co-marketing arrangement, you need to encourage the other company to get onboard. Share your data to show all the ways in which the partnership will benefit the other company. A great way to encourage participation during the early stages of a new partnership is to do some of the heavy lifting. Consider generating a promotion kit with sample marketing content. The goal is to make it as easy as possible for the other company to participate in the co-marketing arrangement.

It’s clear that co-marketing offers businesses many valuable benefits, provided they choose their partners wisely. Find a great match, and start reaping the rewards of co-marketing today.