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This article was published on July 1, 2018

Co-marketing: What is it, and what can it do for your business?

Co-marketing: What is it, and what can it do for your business?
Mattias Liivak
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Mattias Liivak

Mattias Liivak is the head of marketing at Fortumo where he creates understanding about telco collaboration and growth opportunities in emer Mattias Liivak is the head of marketing at Fortumo where he creates understanding about telco collaboration and growth opportunities in emerging markets for digital merchants. Fortumo develops a digital enablement platform for app stores and digital service providers for user acquisition, monetization and retention. Its platform is used by thousands of leading digital merchants including Google, Spotify and Electronic Arts.

How can we make our company grow faster than the day before? That thought crosses my head on a daily basis. I’m the Head of Marketing at company whose business model is B2B2C, so our success comes down to how well our partner companies are doing.

It’s not an easy thing to grow a company, but I want to share an approach with you that has helped some our partners grow, in hopes that you are able to replicate it.

First of all, let’s identify the obstacles. Most of the companies I work with have the same growth-related challenges: Acquiring more users, converting them into paying customers, and keeping them loyal.

This set of challenges is universal but solving them depends on the target audience. A growing problem for our partner companies is that the audience is changing.

The digital audience used to come out of North America and Western Europe as most of the world’s population with access to the internet was located in these regions. Today, the US has fallen behind China and India in smartphone ownership, and there are 2x more smartphone users in Indonesia than people living in the UK.

This means our customers need to solve the user acquisition growth in countries that are unfamiliar to them. Should we run a campaign targeting Indonesia on WeChat, Line, or Kakao? How many people in the country speak English and do we need to localize our ads? What sort of platform distribution will be expected between iOS and Android? How many of the users have a credit card or a PayPal account? How much are local consumers willing to pay for content, considering their income is substantially lower than those of our existing customers?

Finding answers to these questions is a prerequisite for running a successful user acquisition campaign. The solution is to either do thorough market research or hire local experts. Both of these approaches require an upfront investment in time and money. But there is an alternative.

Introducing co-marketing

Co-marketing means partnering up with another company and promoting both services together through a mixed pool of resources. In the telco industry, this approach has been used for years and is referred to as bundling.

In case of telcos, their main co-marketing partners are streaming services whose products align well with the telco’s goals of selling more of their own products (mobile data). Co-marketing in this case works as follows:

  • Streaming service provides discount to telco subscribers
  • Telco packages the discounted product with one of their own products
  • Telco promotes the offering to their users through their marketing channels
  • Subscribers purchase the bundled product and get access to the streaming service

There are various models used in case of telco-streaming co-marketing, ranging from simple reselling of the service by the telco, to more complex deals where discounted offers are given to users either in the telco’s channels or promoted inside the merchant’s service to customers of that telco.

Co-marketing works successfully between telcos and streaming services because one side has the capability to reach local consumers, and the other side has an attractive service which can be used to incentivize those consumers. Taking a step back, could this approach not be leveraged by other segments in the digital industry?

If your goal as a digital merchant is entry into a new country, there is a multitude of verticals to partner with for co-marketing. Local newspapers, video websites, communication platforms, ecommerce and classifieds sites all have existing marketing capability to reach local users. They all operate in highly competitive environments, so getting an extra incentive (your service, discounted) to provide to their customers is something they’ll likely be interested in.

Co-marketing partnerships can also be effectively leveraged with partners beyond the digital industry. Your service could be linked up with the loyalty card of a local convenience store chain or bundled into employee loyalty program schemes of the target country’s biggest employers.

The key to success is finding an organic match with another product that doesn’t directly compete with yours; if you’re developing a task management tool, it makes sense to team up with the local business newspaper; if you’re developing a fitness app, employers promoting wellness to their employees will want to consume that app.

There are of course costs involved in setting up co-marketing deals as users need to be incentivized by discounts or free trials for the partner company to have the motivation for bundling your product. At the same time, the need to do local market research is significantly reduced and local presence is not required, as the partner company should already know their audience, and have promotional capabilities in place to reach that audience — and bring you new users.

Planning on expansion and launching your service in a new country? Perhaps it’s worth checking out local companies with the biggest web traffic, getting in touch with them and seeing if they are interested in teaming up with you.