Study: 70% of Co-op Ad Dollars Still in Traditional Media
March 13, 2018 | Contributed by: Joe Morsello
Increasingly, brands are updating co-op programs to encourage use of digital media among their local retailers. LSA’s co-op database shows hundreds of programs with digital funds. Some brands are being more aggressive in this than others, but it appears the majority aren’t shifting dollars to digital fast enough.
A new report from Brandmuscle found that 70% of all available co-op advertising dollars were tied up in traditional media, while only 19% was in digital/social and 11% was dedicated to local events. The report featured data from a survey of over 2,700 “dealers, agents, franchisees, and distributors of national and global brands.”
According to a recent LSA survey of local marketers, five of the top six most commonly used channels for co-op campaigns represent legacy media: newspapers (1), yellow pages (3), out-of-home/billboards (4), radio (5) and direct mail (6). Based on the “inventory” being primarily traditional media, this appears to simply reflect usage of what’s available rather than any media bias among media and marketing sellers.
As you can see above, traditional media has the biggest gap between available co-op dollars and the percentage that is actually used. If we consider this a simple supply and demand discussion, brands are supplying co-op dollars for media channels that aren’t in as much demand as others. Because of this, retailers said that the top reason they aren’t using co-op is because, “the marketing tactics I use aren’t covered.”
Co-op programs for many brands appear to be out of touch with actual consumer behavior and which media local retailers are looking to utilize for their marketing. It is possible that co-op is being neglected as brands focus efforts on understanding the digital landscape at the brand level and co-op strategies will follow. On the other hand, the challenges with co-op are many.
A cynical view of co-op is that brands make programs so complex because they only want retailers to use some or none of the funds. The thought is that these programs are simply a mechanism to foster good will between the brand and retailer. At that same time, 86% of local retailers said co-op is critical to their ability to execute local marketing.
Whatever the reason for co-op’s complexity, it remains a major missed opportunity for the entire local space. Whether you’re a brand, you work with brands, or you work with local retailers (SMBs), all levels of the value chain need to understand co-op in order to drive local consumer awareness and local retail activity.
LSA offers a full suite of co-op advertising products and services to help your organization take advantage of the billions in available co-op funding. Click here to learn more.