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Study: 30% of Franchisees Get Over Half of Ad Budget from Co-op

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Brands offer co-op advertising funds to franchisees because it helps them reach local audiences and boost the brand’s local appeal. Most national advertising by brands focuses on the “what and why” of the product messaging, but local marketing and advertising by franchisees helps consumers understand the “where.”

A new BIA/Kelsey survey of 102 franchisees provides insights into franchisee advertising activities and trends, finding that 30% of franchisees get over half of their advertising spend from co-op funds. Overall, 65% of franchisees surveyed use co-op programs to varying degrees for advertising and promotion.

Of those that take advantage of co-op programs, about 40% said co-op contributes 25-49% of their total ad spend. Another third said co-op only contributes to 25% of their budget or less. Clearly co-op is a mixed bag as it relates to actual usage, but based on LSA estimates, billions in co-op advertising dollars are left on the table each year.

“Co-op dollars present a significant opportunity for franchisees to increase their spending over the next 12 months,” said Celine Matthiessen, VP, analytics and insights, BIA/Kelsey.

The report goes on to say that half of all franchisees are planning to increase their ad spend in the next year and spend across a variety of 20 different ad channels to reach their local customers. Many use their co-op advertising budgets on both traditional and digital channels.

For the most part, co-op advertising programs focus on targeted digital such as search and display advertising and traditional channels like direct mail, radio, and community sponsorships. Each media has its own unique creative, fulfillment and proof of delivery and performance challenges that have to be understood and navigated.

Today, there’s more advertising options, more complex reimbursement rules, and the need to provide proof of performance with co-op programs. In addition, digital tools are requiring direct management of online claims submission. Co-op has becoming increasingly more complex and local marketing providers require more support with co-op.

For more from the study, download BIA/Kelsey’s “Franchise Advertising and Marketing Research Report.” To access the graphic above, click here.

Click here to see how the Local Search Association can make co-op advertising a simple, revenue-driving strategy for your local media and marketing company.

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