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Co-op Advertising: Money on the Table

By | 06.13.16

National brands may pay 50% to 100% of your local, online ad campaigns, and may also cover social media, email and web hosting costs. In fact, they set aside a whopping $36 billion a year to shower on local businesses through “co-operative advertising,” according to report in 2015 by Borrell Associates, a well respected local-market research firm.

So, of course, small businesses are just lined up with buckets, waiting for the cash to fall in. Uh, actually, no. The Borrell survey found that only 15% of eligible businesses joined co-op advertising programs. And brands handed out only $22 billion of their $36 billion pot.

We’re talking free money. What’s the problem?

In the Borrell survey, small businesses said they were daunted by big company rules governing ads and reimbursement. Borrell also faulted the co-op programs for not keeping up with how local businesses want to market today. For instance, 82% of the brands in the survey covered newspaper ads but only 37% covered social media marketing.

Still…$14 billion in unspent funds seems like it would be worth putting up with some red tape. So we’re going explain how this whole co-op thing works.

But first, here’s a little secret that will move you to the front of the line for co-op advertising bucks.

The folks who want to sell you the advertising will do the legwork for you. Yes, they can (most of the time) find out the requirements of your eligible co-op programs, create the ads to the right specifications and help you verify your ad campaigns so you can collect reimbursement. Our company, Dex Media, does this service for our clients (go here) and so do many other publishers and agencies.

Now, here they are: Co-Op Advertising Frequently Asked Questions

Who is eligible?

If you re-sell national brand products or services, your manufacturer or distributor will likely have co-op funds to distribute. So step one is to ask if you qualify. The range of industries is wide: HVAC or plumbing equipment, insurance policies, moving van lines, garage doors, eyeglasses, cabinets and more.

How do you get the money?

Here’s how it often works:

  • The manufacturer sets aside an amount based on your purchase history, often 1%, during the course of a year. You can usually check the amount of this co-op fund online. The manufacturer may add more to the fund, or maintain another fund, for other promotional expenses.
  • You submit your ad or campaign for pre-approval by the brand or its agency. Some promise to respond within a day or two.
  • You pay an advertising or marketing vendor in full for the ads or services that the brand pre-approved.
  • You submit proof that you made the buy.
  • Several weeks later, the brand credits your parts or services purchase account in an amount typically 25% to 100% of what you spent on your ads, up to the amount in your co-op fund.

What does it take to get approval?

Brands may supply you with ads but if you run your own, they want pre-approval, Co-op advertising guidelines can get very particular though recently some companies have been loosening up. Guidelines might cover:

  • Logos (look and size) and trademarks
  • Yes or no to competitive brands in one ad. (If yes, payment might be at a lower rate for a non-exclusive ad)
  • Prices advertised
  • Product illustrations
  • Language, including disclaimers
  • Web pages to link to

For final approval, you submit some proof of purchase, such as a tear sheet of a print ad or a screen shot from Google AdWords showing a search engine ad buy. Generally, you can do it all online.

What ad media buys will co-op advertising programs cover?

In-store promotions, fliers, billboards, direct mail, TV, radio, newspapers, yellow pages and a range of online promotion: email, website pages, search ads.

But check with your manufacturer or distributor to see just how digital they will go. Surprise: Only about a third of co-op programs cover search engine advertising, a staple of local online marketing, says the Borrell report, while “incentives geared toward up-and-coming forms of digital advertising – mobile and video – are nearly absent from the co-op realm.”

Bottom line

Co-op ad programs can save you advertising dollars or subsidize bigger ad campaigns on the same budget. Your sell-through determines how much of a subsidy you’re eligible for. You will have to front the ad expense and wait several weeks for the manufacturer to pay off, in the form of a credit on your account. And you’ll have to meet the brand’s requirements for ad content and proof of purchase – but publishers are eager to help you through the process.

Learn more 

Find out about Dex Media’s co-op advertising services

Read the Borrell report on co-op

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