The Sad Truth of Unused Co-op Advertising Dollars
March 9, 2017 | Contributed by: Tim Brennan
Regardless of how much these programs are touted by the manufacturer or the media, large amounts of any brand co-op program budget go unspent. And despite the misguided conception of many, manufacturers do indeed want their channel partners to take advantage of these programs since it gives them localized brand advertising at attractive media rates. Some manufacturers will have programs to move this money through different dealer programs to boost sales volume but many brands will still have large pools of unspent allocations on the books come year’s end.
So why do local dealers just watch these budgets dry up and blow away each and every year? Well, lots of reasons…
Complexities: Because the earnings involved in these programs intersect with purchase volume, sales is involved to ensure communication and product availability. And because the advertising intersects with brand presentation in many media options, marketing is involved to make sure ads meet any compliance rules. And because the program involves dealer reimbursement for the advertising, finance is involved to verify auditing rules and validate payments. The more cooks, the more ingredients in the soup…
Small Earnings and Reimbursement Percentages: Because co-op funding is based on small percentages of wholesale purchases over different time frames, a dealer can easily lose track of what kind of budgets are available. Beyond that, only a percentage of the total ad costs are paid back to dealers and usually as a credit on their account. The details involved can be tricky for one or two brands, let alone those stores that might have multiple vendors with co-op programs. Basic math skills are needed to work through the process, but even a little money back on advertising helps the bottom line.
Dealer Trust: Because the program appears complicated, the dealer perception can be that it’s not worth the headache. Advertising itself can be complicated enough without adding all of these other factors into the mix. The advertising content may be difficult to work into what the dealer usually tries to accomplish and there may have been instances that it was tried in the past and not covered under the program guidelines. If you can show how the creative can fit together simply and effectively while showcasing their local brand, it can certainly help take away the misgivings the dealer may have.
Paper Shuffle: Because marketing needs to approve the ad before publication and finance needs to see documentation after the fact, there are added steps in the process for someone to handle. Left to their own devices, the local dealers have no one beyond themselves to handle these steps, which are simple necessities in the co-op process. If your solution can gather all of the relevant material as part of the plan, at the very least it helps take care of details they won’t need to cover.
Co-op won’t sell your media solutions, but there is a reason that certain media types are approved for these programs. Most local players need to see what your solution can provide and how you can help their business by taking care of the details. Otherwise, dealers will continue to use what they can easily and the rest will simply go away again next year.
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.