Report: Local Marketers Frustrated with Complex Co-op Ad Programs

To some co-op is viewed as a huge, multi-billion dollar marketing fund available to local retailers (advertisers). But many local marketers that seek helping local clients take advantage of these dollars either ignore or abandon co-op as a strategy due to the excessive paperwork, bureaucracy, outdated rules and unreasonable requirements.

Poor co-op experiences have resulted in an estimated half of co-op funds going unused each year. And for the majority of co-op programs, if you don’t use co-op funds, you lose them. If brands are seeking to improve awareness of product availability in local markets, why make it so hard for local retailers to participate in these programs?

The reality is that co-op advertising is complicated, but it doesn’t need to be. The complexity is mostly driven by desires to protect the brand at the local level, leading to extremely rigid program rules. The result is less use of these funds with roughly half (45%) of local retailers not using their accrued co-op last year according to a recent white paper from Brandmuscle.

The problem with co-op is multi-pronged. Over half (52%) of local retailers from the Brandmuscle study said they did not receive adequate training on co-op processes or platforms. Another 12% didn’t use funds because the approval process was too complicated, 15% said they don’t have enough time and 16% didn’t utilize co-op because the tactics they use most weren’t eligible.

Additionally, 40% of these local retailers want to increase spend on digital, yet 66% don’t plan on stopping spending on traditional tactics. From a consumer journey perspective, as many traditional media channels see declines in usage and digital channels grow, spending should follow. However, this isn’t an either-or discussion.

The challenge local retailers face is developing the right mix (online and offline) of marketing and advertising efforts for their particular industry and market. As we saw in the 2018 Digital Consumer Report from LSA, there are overall national media usage trends, but variation exists between markets and based on industry. For instance, a customer seeks a place to eat dinner in a very different way than finding a local landscaper.

In the end, the responsibility for improving co-op participation rests on the shoulders of program creators at the brand/manufacturer level. Complexity, paper work and not offering key media channels are all areas of programs that can be shaped to fit better with the interests of local retailers.

Brandmuscle identifies three important ways co-op program creators and managers at the brand level can improve usage of co-op programs:

  1. Offer Program Clarity: Simplify reimbursement and other program requirements and adoption will follow.
  2. Focus on Channels that Work: Get to know the customer journey for your brand’s products and develop programs that invest in channels driving results.
  3. Tier Programs: Reward top sellers by offering a larger percentage of co-op reimbursement or earnings.

While we are seeing co-op programs with more emphasis on digital channels, the underlying complexity remains a challenge for many. This is why many local media and marketing sellers work with co-op advertising enablement tools and partners to overcome this complexity.

To see how LSA removes friction and complexity from the co-op advertising process, click here.

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