As we established in Part 1 of this four-part series, strategic alliances are a force to be reckoned with.  These partnerships can boost results for businesses looking for creative ways to stoke leads, grow awareness, and ultimately generate sales.

Alliances come in all shapes and sizes.  Five of the most common arrangements include:

1. Licensing
2. Sponsorships
3. Ingredient Branding
4. Joint Promotions
5. Co-Marketing

We’ll dive into the first three here.  Hold your breath for the final two until Part 3.

Licensing

In licensing agreements, one business (licensee) obtains the rights to use intellectual property owned by another business (licensor).  The licensor’s brand equity helps the licensee enhance its appeal to a very specific audience.  Financial terms often involve up-front fees and ongoing royalties based on sales of licensed materials.

That Nike sweatshirt you bought with your favorite NFL team on the front?  Swoosh licensed the mark.  Flintstones Vitamins?  Bayer’s paying Hanna-Barbera for Fred and Barney.  And then there’s the Disney empire.  Let’s take a look.

Electronic Arts (EA) and Disney

• Few pop-culture franchises have as large of a worldwide following as Star Wars. The series’ popularity has led to numerous spin-offs across film, TV, books, and gaming.
• A leading publisher of console, PC, and mobile games, EA looked to capitalize on the cinematic resurgence of Star Wars to reach new generations of gamers.
• EA signed a 10-year deal in 2013 to be the exclusive video game publisher for the franchise. It soon after released the first installment of its new Star Wars Battlefront series.
• Disney’s gaming strategy has mostly veered away from one-off titles tied to individual movies. But in this case, EA’s license helps Disney recuperate its $4 billion 2012 acquisition of Lucasfilm.

Sponsorship

Sponsorship is a cash and/or in-kind fee paid by a brand to a property to access that property’s commercial potential.  Sports sponsorship is by far the most common form with a 70% share of spend.  However this platform also exists within music, film, the arts, and other entertainment verticals.

Effective sponsorships build strong connections with audiences through highly-targeted passion points.  Allstate has done this particularly well in college football.

Allstate and College Football

• Allstate has worked hard to embed itself into the sport as a non-endemic brand. Higher-profile ways of doing this include entitlement of the Allstate Sugar Bowl and sponsorship of the College Football Playoff.
• Additionally, the Allstate AFCA Good Works Team recognizes players committed to service. Allstate also partners with ESPN analyst Kirk Herbstreit for new CFB campaigns each season.
• Then there are the “Good Hands” field goal nets. These have literally integrated Allstate into the fabric of the game across more than 80 stadiums and events.
• The nets provide Allstate an estimated $25M in media exposure each season. Allstate also makes a donation to each school for every field goal kicked.  This has led to the insurance giant funding millions of dollars’ worth of scholarships since 2005.

Ingredient Branding

In an ingredient-branding scenario, one brand deliberately promotes another that makes up its product.  This creates differentiation by adding the partner’s equity to its own value proposition.

Gore is a great example.  Companies like The North Face promote the use of Gore-Tex in their jackets because of its name recognition and built-in trust factor.  Consumer PCs have done the same thing with Intel for decades.

Intel and PC Makers

• Intel’s now-famous “Intel Inside” campaign launched in 1991. It was unheard of at the time for a semiconductor developer to market directly to consumers.  Microprocessors were barely an afterthought for buyers.
• To persuade manufacturers to adopt its branding, Intel negotiated volume discounts with media companies for those that participated. This brought new clients to the media publishers, better advertising rates to the manufacturers, and more exposure for less cost to Intel.
• Over time, people began to associate quality processing assurance with Intel-branded PCs. This forced other makers to adopt Intel when it became clear consumers sought this feature and would pay a premium for it.
• Within the first 10 years of the campaign, Intel became a top 10 global company with a 90% market share. Not bad.

Part 3 will continue our look at alliance categories before tying everything together in Part 4.

Go to Part 3.