Co-op Advertising Programs
Suppliers Offer Retailers about $50 Billion for Shared Ads
Co-operative advertising programs provide a multi-billion dollar win-win-win situation for retailers, their suppliers and the media, but much of the money goes unclaimed. That's because many small retailers do not take advantage of the opportunities that the system offers to:
- Reduce the cost of retail advertising;
- Increase retail advertising;
- Enhance retail advertising by adding color, graphics or new media.
Co-op Advertising Designed to Help Retailers Sell More Product
Co-operative advertising is a simple and logical concept: Product manufacturers or wholesale suppliers provide dollars and materials to help retailers advertise their products for their mutual benefit. The complexity, which can be considerable, and challenge is in the details of each individual supplier plan.
The basic requirement is that the retailer refer to the specific product name and/or graphic in the ad. Instead of simply advertising a generic soft drink, the retailer advertises a specific brand of soft drink.
About $50 Billion Available in Ad Assistance
Industry sources say several thousand firms offer co-op ad programs in 52 different product categories. The National Federation of Independent Business (NFIB) estimates that manufacturers and wholesalers offer about $50 billion worth of co-op ad reimbursement per year, but only about $30 billion is actually used by retailers.
One reason much of the money is never claimed is that many manufacturers do not promote their co-op programs very loudly. In many cases, the retailer has to inquire, sometimes aggressively, to learn about the funds.
Depending upon the individual product, co-op advertising funds can be used for newspaper and magazine ads, flyers, brochures, Internet advertising, radio and television commercials, billboards, Yellow Pages listings and even special product displays.
The manufacturer usually provides photos, logos, tape or product graphics to be used in the ad or commercial.
Seven Steps to Co-op Advertising
To obtain the assistance, a retailer needs to:
- Determine which product suppliers offer co-op advertising
- Determine the rules for that particular program
- Contact the manufacturer or wholesaler to confirm procedures for participating in the program
- Have a reasonable inventory of the product in stock to back up the advertising
- Have the advertising designed and produced in accordance with the rules for that co-op program
- Pay for production and running of the ad, keeping good records of the transactions
- File a claim, with proper documentation, for reimbursement from the co-op ad program. Follow up if necessary
Though most co-op ad programs reimburse retailers in cash, some manufacturers and suppliers prefer to reward retailers with additional products or discounts on future purchases of the product.
Media Usually Anxious to Provide Co-op Ad Assistance
Publishers, radio and television stations, and billboard companies are usually anxious to help retailers find co-op advertising programs because the programs can increase their ad volume. Many will also assist the retailer to design the advertising in accordance with the manufacturer’s co-op specifications.
Retailers that employ advertising agencies need to check with those agencies because some of the co-op advertising may involve fee or commission issues for the agency. On the other hand, some agencies may provide co-op ad assistance as part of its customer service for clients.
Check All Aspects Before Committing to New Advertising
As with all aspects of co-op advertising, the best rule is to check first before committing to any new advertising.
published by National Register Publishing, is considered the industry "bible" on co-op advertising. The directory contains detailed information on thousands of individual co-op programs offered to retailers. In 2007 it was priced at $637. Many publishers and stations maintain copies of the directory to help retailers use co-op advertising.
