Nailing Down A Co-Branding Agreement

Co-branding is a great way to crank up the revenues via another party’s website. The key is to make sure you understand the factors involved and how to go about dealing with them from the outset.

What is co-branding? It is the process of incorporating a product or service of one site into another site. A fairly classic situation was the Toys R’ Us and Amazon situation a few years ago. Amazon had and has a huge presence on the web. Toys R’ Us was hurting because margins on the web where not great with all the competition. Given this, the two came together and incorporated the toys in question into the Amazon site. It didn’t work out well, but it was classic co-branding.

The key with co-branding is making sure you know how to get into the agreements and, more importantly, how to get out. The issues that can arise can be maddening. There are topics such as who controls the client data, how will the designed content for the project be owned and disseminated if the deal falls through. Then there are issues related to money in how much marketing each party will be required to do and so on.

Then there is the issue of brand control. In our example above, Toys R’ Us and Amazon both spent years building up their brand. Allowing the brand to be used on another site necessarily involved some risk that it might be used in a manner that one company might not like. Defining how this will be dealt with in the agreement between the parties is critical.

The real beauty of a co-branding agreement is it is extremely negotiable. Each situation is completely different, so all the terms are on the table. This usually leads to positive relationships because the parties often each want something that is unique from the desires of the other. This results in harmonious agreements in which both parties are exceedingly happy from the outset.

The companies mentioned in this article are obviously rather well known. Make no mistake. Co-branding agreements are just as viable for small companies as they are for big. Make sure you consider the possibility of going in this direction when considering the revenue sources for your business.

Richard A. Chapo is an internet attorney providing strategic alliance, website development agreements and co-branding agreement negotiation and preparation legal services.