Cross-promotion is an extremely innovative marketing strategy, where the consumers of one product or services are targeted by the promoters of a different product. Let me give you a couple of examples to explain this better:

  • All major airlines have frequent flyer cards, which is a type of a rewards program. When you specify the card number at the time of booking, or at the time of checking-in, you earn miles, which are added to the account associated with this card. These miles can be redeemed at a later date to get free tickets or to get premium services like preferential boarding, etc. However, you may have noticed that traveling on that particular airline is not the only way to earn miles. You can earn miles by staying at a particular hotel or by renting a vehicle from a particular rental agency, or by using a particular credit card!
  • Every time you visit McDonalds, you may have noticed that the “Happy Meal” usually comes with a character toy from the latest Disney movie. The ad campaigns that run on TV feature both, the movie, as well as McDonalds.

Now I believe you have a basic idea about how the cross promotion works. This is a preferred marketing strategy among many modern day companies of various sizes because:

  • It is cost effective: The total marketing cost for a particular campaign does not change by much, if at all, but it is far more cost-effective because the costs are now being shared between all the companies that are participating in the campaign.
  • It is a win-win situation for all parties: Companies get to piggy-back off each other’s reputation and can establish each other’s credibility.

Although cross-promotion strategies sound simple on paper, they need to be carefully thought out. Before getting into cross promotion agreements, a couple of checks need to be made:

  • Check and see if the participating companies are a natural fit or not: Both the companies need to have a similar image and a similar type of clientele for cross-promotion strategies to work for both parties. For example, let’s say one company has a chain of specialty coffee stores, and there is another company that makes artisan chocolates. Both are known for their friendly service and providing products of high quality. Right off the bat we can tell by gut instinct that these two companies would get partners in a cross-promotion marketing campaign. They do not compete with each other, yet they provide products that would appeal to the same demographic! On the other hand, if a company making gym equipment tying up with a chain of retirement homes would not be the best idea!
  • Check and see whether the participating companies enhance each other’s credibility: Unless there are some ulterior motives, companies participating in cross-promotion campaigns need to have a similar standing in each other’s respective verticals for the promotion to be equitable. For example, American Airlines is a leading airline in the United States, and Marriott are a leading hotel chain. So earning AAdvantage miles while staying at a Marriott makes sense for the customer as well as enhances the credibility of both brands. It will be extremely rare to see a smaller company riding the credibility of a larger company in a cross-promotion campaign unless the bigger company has some stake in the smaller company.