E-commerce Link: Mutual Benefit
The advantages of online cooperative marketing partnerships
June 2006 By Peter Figueredo
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A cooperative marketing partnership exists when two companies work together to promote their products or services. These partnerships can take many forms. Some companies simply promote a partner to their customer base, while other examples are more complex and involve co-branded messaging and consumer offers. For example, in a simple reciprocal promotion, Marketer A may place a link on its online confirmation page promoting Marketer B; Marketer B does the same for Marketer A. This type of exchange usually is viewed as equitable if the delivered impressions are comparable.
A more complex arrangement might involve Marketer A including an insert in its customer mailing and Marketer B including a promotional link to Marketer A in its customer e-mails. In this example, the exchange is not the same for both marketers, but they have worked out a deal where the end result is viewed as fair.
Somewhere in Between
In the online realm of performance-based marketing, these relationships fall somewhere between affiliate programs and business development alliances. Cooperative marketing partnerships typically require more work to set up and manage than an affiliate relationship, but they are not as complex as large business development deals. The differences between these types of deals are illustrated in the Online Relationships chart shown below.
Reap the Benefits
Our experience has shown that just one cooperative marketing partnership can account for an estimated 3 percent to 5 percent of a marketer’s online revenue. In many cases, this revenue is from new customers, which only increases the value of this channel. However, these types of deals can yield many benefits beyond the acquisition of new customers. The three biggest benefits to direct marketers are:
1. Efficiency. Most of these co-op deals are set up as barter relationships, so they can be extremely efficient. Typically, the only costs involved are staff time for program set-up or performance marketing agency fees.
2. Third-party Endorsement. By partnering with a strong company, you reap the rewards of a positive brand association.
3. Growth Potential. In some cases, these relationships can be so successful that companies grow them into larger business development deals. This is relatively easy to do since relationships already have been formed and a level of trust exists between the two partners. Additional arrangements can be made for brick and mortar cross-promotion, event sponsorship, co-branded advertising initiatives and more.
Key Steps
Cooperative partnerships require a good deal of communication between all parties involved to make sure everyone benefits. Here are a few key action points you’ll need to undertake when participating in this type of deal:
• Get necessary internal resources on board. Depending on the deal structure, this might include securing Web development time; legal resources; staff responsible for tracking and measuring marketing activity; marketing personnel required to get the deal done; and creative resources to build ad units or design marketing materials.
• Establish available inventory for exchange. Do you have print ad space available with which to barter a homepage banner ad? Is your insert program maxed out, or can you accept an insert in exchange for a confirmation page link?
• Coordinate multiproduct departments. If your company markets multiple product or service lines, check with the department managers to find out if they want to be involved in the deal or if they have inventory to barter.
• Get everyone on the same page. Create a mutual project plan that states each partner’s responsibilities, and specifies when each task needs to be completed and by whom.
• Manage the relationship launch. Once your project gets the green light, what needs to be done to get the project up and running? A relationship launch questionnaire distributed to all parties involved in the partnership can be a helpful tool in seeking this type of input.
• Strive to hit deadlines. If you hope to roll out a co-op partnership into a business development deal, it behooves both partners to hit their deadlines. If a partner falls behind on its set-up, however, you may want to delay the launch of your side of the program in case the delay becomes permanent.
• Create a win-win situation for both parties. This involves monitoring performance from your partner’s perspective, as well as your own. Ask for reports on how its side of the program is performing and how much revenue you are generating for the partner, so you can be aware of how well the program, as a whole, is measuring up to the goals you agreed to at the start. If halfway through the program you determine one partner is benefiting more than the other, you have the opportunity to make changes necessary to improve performance. The biggest problem with many co-op deals is that one party comes out on top because, even though it did an equitable exchange, it put more effort into optimizing the program. So, the more you strive to make it a win-win situation for both parties, the better the chance you’ll have to continue the relationship.
Cooperative marketing partnerships can be a powerful tool for any marketer willing to think outside the box. The key is to be flexible. As in the early days of the Internet, there are no hard and fast rules to these deals. So stay tuned. In my September column, I will discuss the specific steps involved in putting together a cooperative marketing partnership deal.
Peter Figueredo is co-founder and CEO of NYC-based NETexponent, an online direct response agency. He can be reached by e-mail at peter@netexponent.com.
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