Latest / The CMO Podcast with Fexingo: Marketing Leadership, Budgets, and Executive Strategy / CMOs Are Shifting Budgets Into Brand Partnerships
Transcript
- Lucas: There's a number that's been sticking with me all week. According to a recent survey from the Association of National Advertisers, brand partnerships now account for 22 percent of marketing budgets at top consumer brands. That's up from 12 percent just two years ago. Luna: Wow — that's almost a doubling in two years. What's driving that? Lucas: A few things. One is that CMOs are feeling pressure to show measurable ROI, and partnerships offer a way to share costs while splitting the upside. Another is that consumers are getting harder to reach through traditional channels — so a co-branded product or campaign can cut through the noise in a way a solo ad can't. Luna: I've noticed that a lot of my friends are actually buying these co-branded drops. Like, they're not just ads — they're products you can buy. Lucas: Right. And that's exactly the point. Today I want to look at one specific case that I think illustrates why this shift is happening and what it means for how CMOs are thinking about their budgets. Luna: If these marketing conversations have sparked something you've actually used at work or just found interesting, we'd love for you to consider supporting the show. It's listener-supported, ad-free, and every contribution goes right back into making episodes like this one. You can do that at buy me a coffee dot com slash fexingo. Lucas: Yeah, and it genuinely helps us keep the conversation going without any sponsor pressure. So, let's get into the case. The partnership I want to look at is between On Running and Paravel. Luna: On Running — the Swiss athletic brand that's been growing like crazy. And Paravel is the sustainable luggage company, right? Lucas: Exactly. So last year they launched a co-branded travel collection — think running shoes designed to pack flat, a lightweight duffel, and some accessories. The angle was 'travel for runners' — a niche but passionate audience. Luna: And what were the results? I remember seeing some buzz on social media. Lucas: On reported that the campaign drove three times the engagement of their typical solo product launch. And Paravel saw a 40 percent bump in new customers who had never bought from them before. That's the kind of win-win CMOs are looking for. Luna: So it's not just about splitting ad costs. It's about tapping into each other's audiences in a way that feels authentic. Lucas: Right. And this is different from the old model of influencer marketing, where you pay someone to post about your product. In a brand partnership, both sides are invested in the outcome. Sometimes they even share revenue or equity. That changes the incentive structure. Luna: I've heard some CMOs talk about 'partnership equity' as a new line item in their budget. Is that becoming standard? Lucas: It's still early, but I'm seeing it more. At the recent CMO Summit in New York, about a third of the attendees said they now have a dedicated 'partnerships' budget line. That's up from maybe 10 percent a few years ago. Luna: What about the risks? I feel like a bad partnership can do more damage than a bad ad. Lucas: Absolutely. The biggest risk is brand misalignment. If one brand has a sustainability scandal and the other is built on eco-credentials, the partnership can blow up. That's why CMOs are spending more time on due diligence — looking at the other brand's supply chain, their customer service reputation, even their political stance. Luna: So it's almost like a mini-merger in terms of the vetting process. Lucas: Exactly. And then there's the attribution problem. If a customer buys a co-branded product, how do you know which brand gets the credit? Some are using unique promo codes or tracking links, but it's not foolproof. Luna: What about the creative side? Do both brands have to agree on the design and messaging? Lucas: That can be the hardest part. In the On-Paravel case, they had to merge two very different design languages — On's minimalist athletic look with Paravel's vintage travel aesthetic. It took months of back and forth. But when it works, the result is something neither could have created alone. Luna: I can see why CMOs are allocating more budget here. It's high-risk, but the payoff can be huge. Lucas: And it's not just consumer goods. We're seeing B2B companies do it too. For example, Salesforce recently partnered with Slack on a co-branded integration toolkit. They both sell to the same buyer — the enterprise customer — but from different angles. Luna: So the trend is really across the board. What do you think the next evolution will be? Lucas: I think we'll see more long-term, equity-based partnerships where brands essentially co-invest in a new product line or even a joint venture. That's a step beyond a one-off campaign. And it means CMOs will need to think like venture capitalists — evaluating the strategic fit, the potential return, and the exit options. Luna: That's a big shift from the traditional marketing role. Lucas: It is. But it also raises the profile of the CMO within the organization. If you're responsible for a partnership that generates real revenue and new customers, you're not just a cost center anymore. You're a growth driver. Luna: And that's probably why we're seeing more CMOs with P&L responsibility. Lucas: Exactly. So the partnership trend is part of a larger shift toward marketing being held accountable for business outcomes, not just brand awareness. Luna: Well, and on that note — if you're a CMO listening, what's the first step to getting into partnerships? Lucas: I'd say start small. Find a brand that shares your values but targets a slightly different audience. Propose a limited-edition product or a co-branded event. Measure everything — not just sales, but also social sentiment and new customer acquisition. And be prepared to walk away if the fit isn't right. Luna: Sound advice. Thanks, Lucas. That was a great look at a shifting strategy. Lucas: My pleasure. And to our listeners — if you've tried a brand partnership, we'd love to hear how it went. Reach out to us.