Q: I was wondering if you could tell me how co-op advertising works?
A: If you have never heard of co-op advertising, pull up a chair – you are about to learn of an amazing – and highly affordable – way to get the word out about your business.
Let me illustrate it with a little story: I once knew the owner of a small pet store who was having a very rough go of it. Sales were down, the economy was in the doldrums, budgets were tight. (Sound familiar?)
One day, a representative for a major dog food company came in the store, looking to create a new customer. But aside from offering a good product, the rep also came armed with a bucket of co-op advertising funds. The rep explained that if the shopkeeper would begin to carry the dog food in his store, the manufacturer would support the effort with this deal: If the store mentioned the dog food in its ads, the dog food company would help pay for the ads.
The rest, as they say, is history. The store owner knew a good deal when he saw one. He took the rep up on the offer and began an ad blitz. The manufacturer paid for 60% of the ads and business boomed. A relationship was born. The owner ended up opening three more stores, and credits much of the turnaround to that first co-op ad campaign.
Co-operative advertising is an arrangement between a manufacturer, wholesaler, or distributor and a small business whereby the wholesaler helps to pay for some or all of an ad run by that business (typically, the amount paid for by the wholesaler is 50% and up, and 100% is not unheard of.) The catch is that the wholesaler’s product must get a clear mention in the ad, i.e. “Now Featuring Organics® All Natural Dog Food!”
Literally billions of dollars are available every year in co-op ad funds, and they can be used in just about any medium:
- Television and radio
- Newspapers and magazines
- Yellow page and outdoor ads
- Internet and e-media
Aside from money, the wholesaler may assist with graphics and point-of-purchase displays, as well as ad creation and even media-buying.
It is no surprise why retailers love co-op advertising – it allows them to advertise at the fraction of their normal cost. But that’s not all. Not insignificantly, the opportunity to co-brand with leading manufacturers is a big part of the attraction. Customers like brands. Brands lend credibility. As such, co-op advertising allows small businesses to build their brand via co-branding.
What’s in it for the manufacturer? Plenty. Co-op advertising sells product. It helps foster relationships with their distribution channel, the small business retailer. And it also helps build their brand in a local way: By teaming with local small businesses, the national brand gets a homier feel.
If co-op advertising intrigues you, understand that there are strings attached. The ad may need to be made in a certain way to meet the wholesaler’s criteria, or their product may need to take up a certain percentage of the ad for the ad to be eligible for the co-op reimbursement. (That is correct – co-op funds work as a reimbursement rather than an up-front payment.) And don’t worry if you think that your wholesaler does not engage in co-op advertising – they may, and even if they don’t, they may nevertheless be interested if you explain it to them.
In any economic climate, but especially in tough economic times, co-op advertising is a smart way to get a big bang for your advertising buck.
© 2010 Steven D. Strauss, “America’s small business expert.” www.MrAllBiz.com