A Brief Introduction About the Co Marketing Agreement
What is co marketing?
Co marketing is a joint marketing effort by two companies who want to promote a product or service which will be co-branded by both companies. The companies will combine their resources for this promotion, and the profits will be divided according to the co-marketing contract.
Some co marketing examples include Uber joining hands with London Dairy to offer ice cream or Paytm offering Uber free rides and coupons. This provides an incentive to the customer to avail of these services as they get something extra for using them. You will find similar collaborations through e-books, blog posts, webinars, videos or twitter chats.
There will be more awareness created about the brands among new customers with less effort and more effective use of their resources. There will be substantial cost savings in advertising and other promotional activities.
When you have such agreements, there is no misunderstanding and smoother collaboration between the two companies. The resources to be provided by each company, the cross-training, tools, or materials will be mentioned in the agreement. These agreements are drafted for joint sales and marketing campaigns with one business using the store of another business. Both businesses gain from this arrangement as it provides customers with more excellent choice under one roof.
Who Takes the Co Marketing Agreement – People Involved
A joint marketing agreement is entered into by two or more companies who want to combine their resources and reduce their overall marketing costs. The parties involved in such agreements are companies who want to collaborate for higher profits.
Purpose of the Co Marketing Agreement – Why Do You Need It
When it comes to joint marketing, the companies involved should have complete clarity about how they will mutually benefit from this arrangement. For co marketing to be successful, the companies should decide how their resources are going to be used and the sharing of the costs of the promotion.
The agreement will specify the rights and responsibilities of all the parties to the agreement. Each company should know what resources they need to provide and the deadlines, the advertising strategy to be used, the offers to be provided to the customer and how the profits are to be shared between them.
Contents of the Co Marketing Agreement – Inclusions
The agreement should include the terms and conditions between the parties involved. It should also follow the laws of the state.
Here are the contents of a co marketing agreement:
- The effective date of the agreement
- Parties to the agreement
- Offer: The combined offer being made by the companies
- Records to be maintained of customers availing of this offer during the promotion
- The information collected from the customer will be confidential and not shared with any third party
- The date on which the agreement will commence and be terminated
- Limitation of liability due to losses
- Indemnification against acts of employees
How to Draft the Co Marketing Agreement – Points to Consider While Preparing the Agreement
While preparing an agreement, you could refer to a cooperative marketing agreement template. Additions or modifications to the agreement can be made to suit your requirements.
The points to consider while drafting an agreement are:
- Identifying the parties to the agreement: The companies involved in the co marketing arrangement. Full legal name and contact information for all parties
- Defining the roles of each party: The contribution to be made by each party
- Describing the purpose of the agreement: Collaborating to reduce costs and increase profits
- The dates between which the agreement is in effect
- Additional expenses or clauses: The distribution of costs and sharing of profits or losses
- Any other consideration: If any intellectual property is involved
- Defining what is a breach of contract
- Exceptions to the contract: A clause where violations will be accepted
- Remedies in case of violation of the agreement
Before the co marketing agreement is drafted, there are certain aspects that should be addressed.
They include how the parties can exit the agreement, what are the exceptions to the agreement, what restrictions apply when it comes to promoting the products of the other party and governing the contract.
Benefits & Drawbacks of the Co Marketing Agreement
Here are the benefits of the co marketing agreement:
- Protection of interest of both parties: The parties are assured of the benefits mentioned in the agreement
- Clarity of responsibilities: Each party has defined responsibilities, and there is an optimization of resources
- Termination: If any of the parties to the agreement want to exit the arrangement, they can terminate it
The drawbacks of a co marketing agreement are:
- Disputes: If there is no agreement, there will be a dispute among the partners regarding profit sharing and other aspects
- Duplication of effort: Without clearly divided responsibilities, there will be a repetition of tasks leading to lower productivity
- No legal action possible: In case of breach of any clause of the contract, the offending party cannot be penalized.
What Happens If Case of Violation
There are five different types of remedies in case a co marketing agreement is violated. They are:
- Money damages: These are monetary payments that the offending party has to pay for the violation
- Restitution: Under this remedy, the offending party has to restore the position of the affected party as it was before the contract
- Rescission: When the court terminates the contractual responsibilities in the agreement
- Reformation: If the court feels that the contract is unfair, the entire agreement will be redrafted
- Specific performance: The party which has breached the contract will have to fulfill the contractual obligations
When preparing a co marketing agreement, clauses like the limitation of liability, exceptions to the agreement, indemnification in case of offenses committed by the employees should be incorporated for protection of the rights of all parties. Parties to the agreement should read the terms and conditions carefully before signing it.