There's A Ford In My Frosted Flakes!

Co-marketing campaigns have been around for a long time, but in the past they’ve typically involved entertainment and sports properties aimed at children, such as the Star Wars figures given away with McDonald’s Happy Meals. However, now companies with far more basic products aimed at a broader range of consumers are entering into joint agreements to expand their markets.

In the widely followed PricewaterhouseCoopers Trendsetter Barometer survey of 339 privately held companies, almost one in three (31%) of the respondents reported that they now have co-marketing or licensing agreements. In another survey conducted in January 2006 by Reveries.com, 83.7% of the executives polled said their companies will be increasing their co-marketing activities over the next three years.

Companies Of All Sizes Co-Market

Not all co-marketers are big name companies either. The principles of co-marketing also apply to small and mid-sized businesses in a range of industries, including carwashing. "Co-Marketing is not just for mega brands and mega retailers," observed marketing consultant Chris Hoyt, a recognized authority on the subject. "There are many permutations of co-marketing that offer smaller companies the opportunity to participate on a variety of different levels."

Businesses of all sizes are turning to co-marketing in large measure because traditional media advertising has become less effective. Television ratings and newspaper circulations are at an all-time low. Direct mail pieces are more likely to be discarded as "junk" than ever before. Local radio stations have lost ground to iPODs, SIRIUS and XM.

No longer loyal to traditional mass media outlets, consumers have dispersed like so many leaves in the wind, each seemingly settling on a different website, blog, or specialized cable TV station. This has made the job of communicating with them through a single advertising message far more difficult. Aside from being spread out among so many narrow market niches, today's consumers also have unprecedented power to skip commercial messages thanks to technologies like digital video recorders.

Reaching Consumers Where They Shop

Now that it has become much more difficult to reach consumers at home through traditional media outlets, marketers are focusing on reaching them when they're out of the house shopping. This has led to the growth of such marketing tools as dynamic point-of-sale signage and in-store videos.

Co-marketing fits neatly into this advertising strategy, since it allows a company to reach out beyond its own stores and communicate with a very targeted group of potential customers while they're shopping at another retailer's sites. This is why McDonald's has cut its TV ad spending roughly in half this decade and has redirected some of these funds to commercials on the closed circuit videos run by retailers, including the In-Store Sports Network aired in 1,500 Foot Locker locations in the US.

The young men in the 12-20 age group that make up the core of Foot Locker's market are also critical to the success of McDonald's. These consumers don't all watch the same network TV programs or listen to the same kind of music on the radio as their counterparts did a decade ago, but most of them buy sneakers. When they are at a Foot Locker store, they're a captive audience for McDonald's.

There's A Ford In My Frosted Flakes

Ford followed a similar strategy in its co-marketing effort with Target and Kellogg's. The automaker has put toy Fusion cars in 600,000 boxes of Frosted Flakes, Cocoa Krispies, Apple Jacks and Fruit Loops sold at Target stores. One of the Fusions has the Target logo on it. The lucky consumer who buys the box of cereal with this vehicle in it will receive a free Ford Fusion.

According to Ford, the Fusion's target customer is someone in the 25-39 age group, who is just starting to enjoy career success. This description also applies to the upwardly mobile Target customer. Kellogg fits in the equation because people in this age bracket are likely to have young children who eat the pre-sweetened cereals.

The same principles applied to the union of Haagen-Dazs and Showtime. New subscribers to the movie channel receive a book of coupons entitling them to a pint of ice cream a month for one year. The deluxe ice cream and the cable network both appeal to a market dominated by upscale, home-oriented females.

Ford, Haagen-Dazs, McDonald’s and many other marketing savvy companies have discovered that in today's "micro culture" environment it's often easier to get your message out by piggybacking on an outside business that serves the same consumers you do, than it is to purchase ads in mass media outlets.

Multi-Dimensional Programs

Since co-marketing partners are almost always targeting the same group of customers, their joint efforts will often go beyond advertising and promotional activities to include co-selling. The recent joint effort between Home Depot and Six Flags provides a good example.

As part of this deal, Home Depot is selling Six Flags tickets in all stores located within a 100-mile radius of a theme park. For Home Depot, the arrangement builds store traffic and generates added revenue, while Six Flags is able to expand the number of "touchpoints" it has with customers. (Home Depot is also hosting its popular "Kids Workshop" clinics at selected Six Flags parks and is sponsoring appearances by its NASCAR show car.)

For its part, Six Flags is placing Home Depot signage throughout its sites and is allowing the chain to supply building and maintenance materials to its theme parks. So, while Home Depot is selling Six Flags' "product," the theme park is reciprocating by buying products from the retail chain.

Co-Marketing Partners For Carwashes

In many respects, a carwash and automobile dealer are in an ideal position to replicate the Home Depot-Six Flags promotion. For example, a carwash can offer the auto dealer a discount on fleet washing, and in return the dealer can purchase prepaid wash cards to give to customers who buy a vehicle.

Click here to learn more about SiteWatch Prepaid Cards.

A carwash also offers an ideal advertising platform to automobile dealers, upscale restaurants and other business that appeal to affluent consumers. Tens of thousands of customers may visit a carwash in a year. Placing a commercial message by this carwash's menu board or on its receipts should be invaluable for any business wanting to reach car-oriented consumers with a high-level of disposable income.

Service stations and automotive repair centers are other natural co-marketing partners for carwashes. Customers are focused on taking care of their vehicles when they visit one of these businesses, so they're more likely to be receptive to a carwash's selling message.

At New Buffalo, Minnesota's Buff-N-Glo Carwash, owner Randy Ernesti has increased gross sales by $3,000 a month through a co-marketing campaign with a nearby Super America service station. Ernesti uses the WashCAPs feature in SiteWatch to sell carwashes through the service station's gas pumps, paying Super America $1 for every wash sold at its gas islands.

Click here to read a case history of Buff-N-Glo's co-marketing with Super America.

An added benefit of co-marketing is that it makes a company's marketing message stand out more in the minds of consumers. If Buff-N-Glo had gas pumps (it doesn't), and sold carwashes from them, its customers would undoubtedly appreciate the convenience, but it wouldn't make them stop and take notice. After all, we expect a business to be cross-marketing its own services.

However, when consumers go to a gas station that has no connection to Buff-N-Glo and are offered the chance to buy washes from the pumps, it captures their attention, because it is out of the ordinary. The fact that an outside company is selling the wash creates the impression of an endorsement and enhances the image of Buff-N-Glo.

This shared image-building principle was also at work in the Ford-Kellogg-Target co-promotion. Target currently enjoys a sterling reputation with consumers. Ford is hoping that some of this glow rubs off on the Fusion, so it can overcome the perception that the car is not up to the standards of its main rivals, the Toyota Camry and the Honda Accord. Target, which is eager to expand beyond its traditional soft goods base and develop its grocery business, welcomes the co-promotion because it focuses consumer attention on its selection of breakfast cereals. For its part, Kellogg views the co-promotion as a way to increase its presence at Target stores, which represent a newer retail channel than the ultra-competive supermarkets and warehouse clubs where most of its cereal is sold.

The morale here: the best co-marketing programs are not just about increasing sales, but also advancing the strategic goals of all companies involved.