Question

Topic: Advertising/PR

How Much For Co-marketing?

Posted by Anonymous on 2/28/2008 at 8:55 PM ET 250 Points
I am a marketing manager at a major component manufacturer in the technology arena. We sell heavily in multi-tier distribution.

I am working on a nascent market application with a partner and want to help his business grow because I know in the long term it will be a win-win proposition. The partner has the entreprenurial mojo and I have marketing budget.

Rather than create a precedent of giving away sample product to get his biz rolling, I am looking to establish a co-marketing fund where I help the partner with their advertising. We have discussed an ingredient branding strategy whereby in his advertising he includes positive ad copy about how the solution is enabled in part by inclusion of my company's component.

The question I have is - how do evaluate the right level of funding? His cost of marketing is essentially zero as he is tapping his existing customer base to start, but I do want to show good faith towards the partnership.

I want to have some rationale as to how I come up with a recommendation as I will be working with some partners who are much bigger than this first case, and some that are smaller.

His total spend on my component for the initial rollout is about $3000. Total spend is about $5000. I was thinking about providing 500 to $1000 in co-marketing $. Am I in the range or not?
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RESPONSES

  • Posted by Frank Hurtte on 2/28/2008 at 10:01 PM Member
    Based on my experience your thoughts of 500 is very generous. Ten percent is the norm in a lot of industries.
  • Posted by adammjw on 2/29/2008 at 5:17 AM Accepted
    I think Frank has a very good feel for the amount.
    I would consider sequencing marketing contribution as per milestones i.e. $250-300 at some point, then if you are happy with the way it goes adding extra $200.
    If the results you see exceed your expectations then you could think of further marketing investments.

    Adam
  • Posted on 2/29/2008 at 11:21 AM Author
    Question goes to Frank. When you say "ten percent is the norm" - what is the base? Ten percent of the parnter's investment? Not revenue, I am guessing, but I want to make sure.
  • Posted on 2/29/2008 at 6:33 PM Member
    Just to chime in on this. I think there are a lot of variables in play here, and there is a lot fluctuation between one industry and the next.

    I know an appliance retailer that gets their entire ad paid for by their manufacturer suppliers. Not one manufacturer pays the full bill, but he gets about 25% from each supplier just for slapping their logo and company name in the ad.

    If your goal is to help this guy out, then it really doesn’t matter what everyone else is doing.

    Perhaps your most generous offer can be put towards new outside advertising, and less for marketing to his internal list of customers.
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