Collaborating with other brands can often lead to more significant profits and benefits than going solo. In this article, we'll uncover the essence of cross marketing, examine various cooperative strategies and shed light on why nearly every business should seek out a strategic partner.
What is Cross Marketing?
Cross marketing is a savvy strategy where different brands, typically not in competition with each other, join forces for a unified marketing campaign. The primary objective of such collaborations is often to boost sales and reach a broader audience. However, it's worth noting that larger companies frequently employ cross marketing not only to solidify their market position but also to enhance their reputation and increase brand awareness.
A classic cross-marketing move is when a customer gets discount coupons at one store and can use them in another.
Let’s take Amazon and Whole Foods as an example. These two brands collaborated to offer discounts and benefits for Amazon Prime members who shopped at Whole Foods: they could get 10% off select items, free two-hour delivery and exclusive deals.
Cross marketing is valuable for all types of brands, regardless of their niche. The real magic happens when both brands are on equal footing.
For example, back in 2013, Android rolled out a new operating system, naming it Android 4.4 KitKat. To grab attention, they even gave a fresh look to 50 million Nestle chocolate bars.
But the cross-marketing story didn't stop there. KitKat buyers got the chance to win Google Play gift cards and tablets. In this collaboration, three companies of comparable scale — Android, Nestle and Google — teamed up to boost their brands' visibility and increase sales.
Types of Cross-Marketing Strategies
Cross marketing promotion can take many forms, depending on the nature and duration of the partnership, such as:
Tactical — this is a short-term cooperation that aims to boost sales quickly. It usually involves joint promotions, such as when a beauty salon offers coupons for purchasing skin care products from a partner store.
Strategic — this is a long-term alliance that has multiple objectives, such as increasing demand, reaching new customers, enhancing the brand image and reputation. For example, a construction company may form a strategic partnership with landscape and interior designers to offer a complete package of services.
Cross-cultural — this is cross marketing with a foreign brand. It can be either tactical or strategic. It often leverages the cultural differences and similarities between the partners to create a unique value proposition. For example, the collaboration of the Spanish brand Nouman with the Armenian LaGalleria was a case of tactical cross-cultural marketing. The companies produced a limited line of clothes with a national print and hired actor Aron Piper as the ambassador.
Different Methods of Cross Marketing
Depending on their characteristics and objectives, some of the main methods are:
Joint event. This is when two brands organise an event together that is relevant to both of their audiences. For example, a fitness centre and a gluten-free, low-protein food shop can rent a public space and hold an open lecture on how to lose weight without harming your health. The benefit of holding joint events is that brands can access each other’s customers, who are already interested in their services. A good case is GoPro and RedBull: they partnered to create extreme sports events and content, such as the Stratos space jump, that showcase their products and appeal to their adventurous audiences.
Co-branding. This is when two brands create a new product or service that combines their features and benefits. They often merge their corporate styles and logos to create a unique identity for the co-branded product. The brands do not have to be in the same industry, as long as they share some common values or goals — as in the previously mentioned example, when KitKat and Android co-branded a special edition of the chocolate bar with the Android logo and slogan.
Cross-competitions. These are contests or lotteries that are co-sponsored by two or more brands. They usually take place online, through social media platforms or websites. The prizes are often products or services from the sponsoring brands. For instance, Doritos and Sony Pictures teamed up with Marvel Studios to launch a promotion for the movie Spider-Man: Far From Home. By purchasing Doritos products with special codes, the participants could access exclusive content and enter a draw for various prizes, such as movie tickets, Spider-Man merchandise and a trip to Europe.
Cross-promo. This is when two or more brands promote each other’s products or services within one advertisement, billboard, campaign, etc. This method is more suitable for businesses that operate in related or complementary industries. For example, McDonald’s and Coca-Cola cross-promoted their products in a TV commercial that showed people enjoying both at the same time.
McDonald’s and Coca-Cola “Better Together” promotional campaign
Co-packing. This is when two or more products that complement each other are packaged and sold together. For example, toothpaste + toothbrush, shaving foam + razor, etc. This method can increase the value and convenience for the customers, as well as the sales for the brands.
Cross-posting (cross-streaming). This is when two or more brands share each other’s posts on their own platforms. This can be blogs, social media pages, podcasts, etc. The purpose of cross-posting is to increase the exposure and reach of the partner’s content through their own channels.
Cross-promotion. This is when customers get discounts or bonuses from one brand when they purchase from another brand (partner). Sometimes partners also give gifts, such as when you buy products from store N, you get a free product from store X. This method can encourage customer loyalty and retention for both brands.
Cross promotions are a common and effective cross-marketing strategy. If you want to run your own cross-promotion campaign, you need to follow these steps:
Find a suitable partner company that offers complementary products or services to yours.
Research your partner’s offerings and see how they align with your own. For example, if you own a beauty salon, you can reward your customers who spend above a certain threshold with gift cards to buy professional hair care products from your partner store.
Measure the impact of your cross-promotion campaign. You can do this by comparing the profit difference between normal days and the campaign period.
However, keep in mind that you and your partner should target the same market segment. For example, giving away a frying pan as a gift for buying a hairdryer is a bad cross-promotion idea. The products may appeal to the same demographic — mostly women — but they have no logical connection with each other.
Cross Marketing: Pros and Cons
Cross marketing is a powerful promotional strategy, especially for brands that target similar or complementary niches. It can bring many benefits, but also some challenges. Here are some of them:
The benefits of cross marketing:
Lower advertising costs. By sharing the expenses of renting space, organising events, producing ads and other promotional activities, each partner can save money and optimise their budget.
Faster results. A well-designed cross-marketing campaign can attract new customers as soon as it is launched, increasing sales and conversions.
Higher brand trust. Customers tend to be sceptical of direct advertising that praises a product or service. But when another brand endorses or recommends it, they are more likely to trust it. For instance, if Apple partners with another brand, the latter will gain credibility and reputation.
Wider product range. Cross marketing allows partners to sell each other’s products in their own stores, expanding their offerings and satisfying more customer needs. For example, mobile operators often sell phones, accessories, cameras, drones and other gadgets in their outlets.
Easier work. By combining marketing teams, partners can generate more creative and effective ideas for their campaigns. If they work directly with each other instead of hiring external agencies, they can also simplify the communication and coordination process.
Valuable collaboration. Partners can access each other’s customer bases, increasing their reach and exposure. They can also benefit from joint purchasing, reducing their logistics costs.
The drawbacks of cross marketing:
Difficulty in control. Cross-marketing campaigns are harder to monitor and manage, as they involve multiple teams working on different aspects of the project, and not all the information and progress are available to each partner.
Disclosure of commercial information. Partners may have to reveal some sensitive or confidential data about their business to each other, which could compromise their competitive advantage or security.
Lack of autonomy. Partners have to agree on every decision and action, and if one of them disagrees or vetoes an idea, it may not be implemented.
Negative feedback. As with any marketing campaign, there is a risk of receiving criticism or complaints from customers. If they are unhappy with one partner’s products or services, they may also blame or boycott the other partner.
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The Basics of Cross Marketing
As we already know, this strategy involves two or more brands promoting each other’s products or services to their respective audiences. Thus, they can attract new customers without spending extra money on advertising.
A common example of cross marketing is when electronics stores offer a free SIM card with the purchase of a smartphone. The gadget buyers enjoy the bonus and the mobile operators gain new users who might not have bought a new SIM card otherwise.
Another case is the collaboration between Uber and Spotify, the taxi aggregator and the streaming service. While waiting for a taxi, Uber allows the customer to create their own playlist for the ride. When the customer gets into the taxi, the music selection they created in Spotify is already playing in the car. Both services enhance the user experience through cooperation and strengthen their positions in their niches.
The Essential Rules of Cross Marketing
If you want to launch a successful cross-marketing campaign, you need to follow these steps:
Define your objective. Analyse your business, identify your strengths and weaknesses and decide what you want to achieve with cross marketing. Your objective can be anything, such as increasing sales, expanding your customer base or entering a new market.
Find compatible partners. Research potential partners, check their reputation, products/services and common goals that can align with yours. The main rule here is to choose partners whose products / services complement yours, not compete with them.
Negotiate the partnership terms. Agree on the budget, goals, timeline and format of the marketing campaign with your partners. Make sure everything is clear and fair for both parties.
Execute, monitor and evaluate the campaign. After launching the cross-marketing campaign, track the results and KPIs. If needed, make changes, adjust the appearance of the campaign (for example, the design of gift vouchers) and measure the outcomes again.
When Cross Marketing is a Bad Idea
Cross marketing can help you grow your business, but it can also hurt you if you pick the wrong partner or the wrong product. Here are some scenarios where cross marketing can be counterproductive or damaging:
You and your partner are rivals. There is no point in advertising two products that compete with each other, such as two cars of different brands. The customer will only choose one of them and you will miss out on a sale.
Your products have no connection. You should avoid offering products that are unrelated to each other, such as a book voucher and a gym membership. They will not appeal to the same customer and they will not create any synergy or added value.
Your customers have different preferences. You should not target customers who are not interested in your product or your partner’s product, such as offering fishing gear coupons in a cosmetics store. You will not attract any new customers and only waste your resources.
Your customers have different income levels. You should not pair products that have a big price difference or cater to different segments of the market, such as a luxury watch and a fast food coupon. You will not create any demand, and you will damage your brand image.
Sometimes, cross marketing can work even when the target audiences of the two brands have different income levels. For example, Alexander Wang (a high-end fashion label with tops costing around $300) teamed up with H&M (a mass-market retailer with tops costing around $12). They co-designed and produced a limited edition of products that sold out in a month.
The Alexander Wang and H&M case is a rare example of successful cross marketing between two brands with very different price points. Such experiments are only possible for big market players, who have enough budget to cover their marketing risks. And even if one campaign fails, it does not mean the end of their business, which is not the case for smaller or local brands.
The lesson from Alexander Wang and H&M is that you can bend the rules in marketing, but you have to weigh the risks. Large companies can afford to try new things, while for medium and small businesses such decisions can be too costly or risky.
How to Pick a Partner for Joint Marketing Campaigns
Choosing a partner is a crucial step in cross marketing. If you partner with the wrong brand, you can waste your entire advertising budget and damage your company’s reputation. To avoid this, follow these rules:
Define your marketing objective. Do you need a long-term partnership or a one-time campaign? Do you want to boost your sales quickly, or do you want to increase a steady flow of customers? Then choose the brands that can help you achieve your goal.
Identify your target audience. Study the audience that you want to reach with your campaign. It does not have to be the same as your existing customers. For example, you can target new customers who belong to a different age group or demographic. Look for potential partners who have the audience that you want.
Narrow down your list of potential partners. Research the selected brands, find out their pain points that you can help solve. After doing your homework, make a shortlist of suitable brands.
Agree and formalise the partnership legally. Once you have agreed on a cross marketing strategy with your partner, sorted out financial and other issues, proceed to the paperwork. It is important to specify in the contract who is responsible for what. If there are any problems in the future, it is always easier to solve them in the legal field.
Here are some possible partners you can consider:
Businesses in a related niche. This is the most profitable partnership because you share the same audience. Plus, the products and services you and your partner offer do not compete with each other. Therefore, the return on this partnership will be higher than in other cases.
Bloggers or influencers. Co-marketing with influencers works especially well when you run promotions and contests. They tell their audience about you, and you promote their social media and blogs through your channels. Keep in mind that popular bloggers rarely work on the principle of cross marketing, as they already make good money on advertising. Therefore, look for partners with 10,000-500,000 followers.
Charitable foundations. From working with such organisations, you will not receive material benefits, but your company’s reputation will improve significantly. You tell your customers that you donate a certain part of your profits to the foundation and the organisation itself can list your company among its active sponsors.
Partners from other fields. This is risky, as the target audiences of such partners are almost never the same. But if you manage to find points of connection, such cooperation can be a hit. A good example is KitKat and Android.
Suppliers. These can be wholesale companies or small workshops that produce handmade items. Joining forces with partners you already know can often be more beneficial than finding new ones.
How to Measure Effectiveness of Cross-Marketing Campaigns
There are several ways to determine how well a cross-marketing campaign or advertisement works:
Calculate the ratio of receipts from the campaign to the total number of receipts.
Calculate the return on marketing investment (ROMI).
Formula:
(Co-marketing revenue - Co-marketing expenses) ÷ Co-marketing expenses × 100%.
Compare the profit during the campaign and at other times.
Successful Examples of Cross-Marketing Collaborations
Let’s take a look at some examples of how big brands have increased their profits through cross marketing.
Beyoncé and Adidas
Beyoncé and Adidas announced their collaboration in 2019, which involved Beyoncé becoming a creative partner for Adidas, developing new footwear and apparel and relaunching her Ivy Park brand with Adidas.
The collaboration was based on a shared vision of creativity, empowerment and social responsibility, as well as the belief that sport can change lives. It featured stylish and functional performance gear that included gender-neutral clothing and accessories. The collection was a huge hit, selling out in minutes online and in stores.
Starbucks and Spotify
In 2015, Starbucks and Spotify launched a joint project that gave Starbucks employees a premium subscription to the streaming service. Starbucks employees could create their own playlists, which were then played in the coffee shops. Customers could access those playlists through the Spotify mobile app.
This cross-marketing campaign was a win-win for both brands. Starbucks enhanced its customer experience by offering personalised and diverse music choices. Spotify gained exposure and new subscribers from Starbucks’ loyal and large customer base.
LEGO and Volvo, LEGO and McDonald’s
LEGO is a brand that uses its building sets to collaborate with other companies. For example, LEGO released a model of a truck from the Swedish car company Volvo. The cross-marketing campaign was successful for both brands. Since LEGO sets are popular among adult males, Volvo reached a new audience for its products. And LEGO increased the interest in its sets among Volvo fans.
LEGO also partnered with McDonald’s and released a large series of collaborative sets. They also created a joint advertisement that featured LEGO characters enjoying McDonald’s food.
BuzzFeed and Best Friends Animal Society
BuzzFeed is a media company that produces viral content. Best Friends Animal Society is an American non-profit animal welfare organisation. Both brands joined forces to help find new homes for animals from BFAS shelters.
The following campaign involved BuzzFeed publishing a video of Emma Watson playing with kittens and answering fan questions. Any kitten that the viewers liked from the video could be adopted from BFAS shelters. BuzzFeed was able to create viral content and expand its audience with this cross-marketing campaign, while Best Friends Animal Society increased the number of people who chose to adopt animals from America’s shelters.
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Conclusion
Cross marketing is an effective and versatile technique that can bring many advantages to businesses of all sizes. Whether they are large corporations or small enterprises, they can benefit from collaborating with other companies that share their target market.
By doing so, they can reduce their marketing costs significantly and generate more customer traffic in a snap. Cross marketing is a win-win situation for both parties, as they can leverage each other’s strengths and resources to reach a wider audience.
We hope that this article has given you some good ideas of how to use cross marketing for your business. It is a smart way to boost your sales and expand your customer base by partnering with other businesses that have similar goals and values. Good luck with your campaigns!
