Branding expert Martin Lindstrom, author of the book BRAND sense, says over 90 percent of brand alliances fail, half of them for three reasons: there isn't equal value for the brands in the relationship, the brands' values don't match each other, and the strategy isn't easily understood by consumers.

So why do brands join hands? Very simply, they believe the payoff is real. It is getting much, much harder for a brand to stand out in its respective category today. As a brand scrambles for consumer attention, aligning with another brand could be an attractive end-run around its competition. It might even propel a brand into a new category.

Co-branding has become so common we may not even be aware that it is all around us. Yum! Brands, owner of such fast-food icons as KFC, Pizza Hut, and Taco Bell, has combined its brands into about 3,400 multi-brand locations. Yet this is more a matter of business efficiency than strategic brand alliances.

Credit card companies now routinely offer "affinity cards" that take advantage of a consumer's personal affiliation. Chase, for example, offers over 40 university alumni credit cards, as well as cards that support non-profit organizations and promote sports teams. While this serves to co-promote the organization along with Chase, it is a financially driven business arrangement rather than a brand marriage made in heaven.

Similarly, brands standing together may not always represent deep alliances. Serving Starbucks-brand coffee on United Airlines flights is no more than making "the friendly skies" a little friendlier.

Then there are paid sponsorships—a whole category of relationships that bring brands together in what may not always seem like logical pairings. What does Nextel have to do with NASCAR? Nothing, except that it paid for the right to have its name on the "NASCAR Nextel Cup Series." And do we really need a "Tostitos Fiesta Bowl"—or any other college football bowl game with a branded name?

Volkswagen was the first car manufacturer to align itself with Apple, offering a free iPod with every New Beetle sold. Since that foray, other automobile manufacturers have aligned with the iPod, most notably BMW, which integrates the iPod directly into a car's stereo system via a glove compartment cable. Other brand alliances in the auto industry include the "Eddie Bauer Edition" of the Ford Explorer, the PUMA Mini Cooper S, and the 2007 Cadillac CTS Bose Edition.

McDonald's recently joined with Newman's Own coffee—a win-win, according to Michael Carey, senior vice president and director of brand promotions at Arnold, a leading US ad agency. Carey says the extensive McDonald's network introduces the Newman's Own brand to a large retail audience, while Newman's Own "elevates the McDonald's coffee experience to a whole new level. Now McDonald's is a real competitor in the coffee category."

A new charitable spin on the brand alliance is the Product Red, or (RED) campaign. (RED) is a brand that was created by the socially conscious performer Bono to help people with AIDS in Africa. (RED), via licensing, aligns itself with global brand names in a philanthropic win-win: The licensee creates and promotes a (RED) product in a category-exclusive arrangement and the money goes to the Global Fund, which funds programs to fight AIDS. American Express, Apple, and Motorola are three of the notable brands participating in (RED). (Brandchannel readers recently debated the merits of "Red" and other cause-related marketing.)

But some brand alliances may leave you scratching your head. Take the recently announced Coca-Cola/L'Oreal partnership. According to Brandweek, the two brands will introduce a "nutraceutical drink" called Lumaé in 2008. Supposedly, the drink will include ingredients "that will help women care for their skin." The brand reportedly will be marketed like a beauty brand, not a soft drink, and it will be sold in such upscale stores as Saks Fifth Avenue. Will consumers believe in the credibility of this brand pairing?

Ultimately, it seems, the most successful brand alliances are the ones that skillfully craft something bigger, better, and more meaningful than each brand could create alone. While achieving success with alliances is not guaranteed, brand marketers facing intense competition still pursue the elusive perfect match. Brand alliances will continue to grow, says Evers, because "consumers know which brands have a competency in what area, and they are relentlessly looking for the best of the best."     

[28-May-2007]