Co-op advertising programs are when a brand offers to cover a portion or all of the cost for an advertising placement done by a sales channel partner.
Cooperative marketing programs can be a very simple set of rules whereby the spouse needs to ensure the brand is properly displayed and positioned. In more complex environments brands may create advertisements that can easily be customized by channel partners to facilitate co-op ad positioning.
Channel partners frequently don’t have big marketing and advertising departments. Brands are more equipped to create professional advertisements and cope with media positioning.
Channel partners need to create local need. Co-op advertising programs take advantage of the selling channel’s local presence. This benefits both the partner and the brand.
Above all the cost is shared between brand and channel partner raising the capacity of both parties.
When co-op programs fail it is usually for one of three reasons:
- The station partner cannot afford the upfront funds to set the advertisements.
- The brand puts a lot of the creative burden on the station partner.
- The payoff process is too administratively cumbersome.
- Industry analysts estimate that roughly 50% of coop funds go unused every year. The origin of this issue goes back into the three
A sales channel partner is generally a small company with limited cash flow. Often they need to buy these products prior to recovering the cash from the consumer. When brands ask station partners to extend themselves further through advertisements it is frequently more than the station partner can tolerate.
Channel partners also don’t tend to have extensive advertising resources. A new may offer to cover a significant portion of the advertising expense, but when the spouse has no capability to create ads the program will fail.
Brands normally belong to big companies with compliance considerations. This creates a requirement to have an auditable procedure around the way the funds are approved and reimbursed. Many co-op programs are residing in the stone ages when it comes to how the programs are administered. This delays the reimbursement to the station partner and increases the cash flow burden.
To find the advantage and avoid the pitfalls of cooperative advertising programs we propose the next best practices.
- Coordinate co-op advertising together with your broader marketing campaigns.
- Make certain the rules around the use of coop funds are simple and clear.
- Create ad templates which are easily customizable by means of your station partners. Assist partners in media purchasing.
- Get in place an automated system for maintaining accessible funds and requesting reimbursement.
- Streamline the reimbursement process with pre-approved advertisements.
- Automate, automate, automate