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In an era of declining ad spending, companies are seeking more cost-effective ways to drive sales. Co-op marketing is a recession-proof advertising option that is mutually beneficial to retailers and manufacturers; it's also attractive to consumers.

Co-op advertising presents a win-win solution both for retailers and brands. By employing co-op advertising programs, retailers can significantly reduce advertising costs. When brands come together to focus on one plan and strategy, their collective power to drive sales only grows stronger.

Co-op advertising is a win-win

Co-op advertising involves manufacturers/brands providing advertising dollars to their channel partners, such as retailers and dealers, that sell their products.

Through those programs, retailers receive funds to alleviate advertising costs, engage customers and promote in-demand brands to drive sales. For retailers, it's like getting free money.

This form of advertising is particularly effective for durable, consumer-oriented product categories, especially when brands want to establish a local presence.

Whatever the industry or vertical—electronics, apparel, building materials, appliances, or automobiles—co-op initiatives strengthen the marketing partnership between manufacturers and retailers. By distributing advertising expenses, these programs foster lasting and strong relationships between local stores and the brands they carry.

Retailers, in collaboration with their brands, can use co-op advertising for special promotions, events, customized ad templates, and targeted marketing to consumers who have made previous purchases.

That shared marketing support benefits both the brand and the retailer by reducing the cost of traditional or digital advertising and effectively reaching customers.

Mutual benefits and flexibility are focal points for success

Although retailers save costs by participating in co-op advertising programs, it doesn't mean they don't concern themselves with the strategy behind the ad spend. In fact, strategy is the focal point for success and essential for mutual success for all manufacturers and channel partners.

It is crucial that retailers coordinate with their manufacturers or brands to align goals, such as reaching the target consumer, driving sales, and maintaining brand loyalty.

Co-op programs often have guidelines with built-in disciplines and audit controls to safeguard brand identity, especially when multiple players are involved.

In addition, continuous and comprehensive reviews of ads and activities provide greater control and influence over channel partner advertising behavior.

Although co-op programs often have guidelines set by the manufacturer providing the funding, it is important to still maintain flexibility to anticipate and accommodate additional products, features, or services within the program.

Collective innovation and power drive sales

The power of co-op advertising lies in collectively innovating strategy.

For example, in the electric vehicle (EV) space, original equipment manufacturers (OEMs) can showcase collaborative leadership by offering fine-tuned co-op advertising programs that educate consumers about EVs. Informative content can cover various topics, such as charging the vehicle, range per charge, and the financial viability of purchasing an EV.

Recently, Ford, Tesla, and other EV automakers have announced lower prices to lure buyers as the supply of battery-powered models begins to exceed demand.

When manufacturers unite to create a unified strategy, they can leverage local dealer co-op advertising tactics to guide consumers towards the final sale.

Local brands can also come together to create co-op campaigns for specific chain stores or independent retailers, enabling targeted advertising that resonates with multiple demographics in a specific region.

Here's how brands can best employ co-op programs

By reaching loyal consumers in new ways, retailers can tap into entirely new audiences of potential purchasers.

That's how co-op advertising becomes both multilocation and hyper-localized. Brands can allocate advertising dollars to stores across various demographics, creating a melting pot of localities and benefiting the brand and retailers collectively.

Here are some tips for brands looking to better understand co-op programs:

  1. Look to partner with a marketing channel expert who can develop online digital processes for your brand. A partner can help submit your brand's digital ad content for approval prior to campaign run and help keep you on track for deadlines. That can benefit the brand when approvals need to change rapidly.

    In the OEM space, for example, when the content needs changes to meet OEM requirements, a marketing expert can provide quick suggestions for compliance. Some marketing experts even offer an additional layer of support with an 800-phone number for concierge-style customer service.

  2. After you've partnered with a marketing expert, familiarize yourself with the co-op programs' offerings. Retailers maintain separate co-op websites or they have the integration of key co-op programs within their marketing portals. If your retailer offers field marketing support, contact them to let them know you're interested in learning about every new program available to you.

    Stay connected with your sales representative or field marketing support representative, since many retailers often hold regional webinars about upcoming special programs.

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Although retailers may reduce ad spend in other areas, they should take full advantage of co-op advertising. The financial benefits, from using manufacturer-provided money to reaping the rewards that result from a well-orchestrated marketing campaign, are too good to pass up.

More Resources on Co-Op and Channel Marketing

How to Build a Solid Channel-Partner Marketing Plan

Good Money After Bad? Your Channel Partners and Your Co-Op Dollars

Reinvigorating Channel Marketing

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image of David McShane

David McShane is VP, head of sales and marketing, at the Advertising and Checking Bureau, where he is responsible for leading all new sales, account management, and marketing initiatives.

LinkedIn: David McShane