For those who may be unfamiliar with the concept of co-op advertising, it is partnership between a retailer and a manufacturer or distributor to share the cost of advertising at the local level to increase product sales.
Retailers accrue advertising dollars from a particular brand based on the purchases they make. Most commonly, 2%-3% of total purchases made become available for the retailer to use for advertising purposes. The manufacturer and retailer share the cost of the advertising insertion 50/50, in most instances, up to the amount of the co-op funds accrued.
Many manufacturers have a formal co-op program established that sets specific guidelines as to how and where this money can be spent. Others are more flexible in their approach, so all retailers should check with each of their manufacturer’s reps to see if they are eligible for any co-op advertising funds.
Manufacturers that offer co-op advertising dollars have a list of approved media options that are eligible for co-op advertising reimbursement. Newspapers are the most common media approved for co-op purposes.
Best of all, co-op advertising is an effective way for retailers to maintain a high profile without spending a lot of their own money. Other benefits of using co-op advertising include:
• Co-op advertising increases the reach and frequency not only of the advertised brands, but also of the store’s name.
• Using co-op advertising with national brand merchandise associates the retailer with the manufacturer’s national advertising campaigns and identifies them as the local source for the national brand.
• Co-op advertised brands help sell other products once the consumer is in the store.
• Unused co-op accruals cost retailers money in purchases from manufacturers and in potential sales to consumers.
For many years, co-op advertising was a significant part of the advertising budgets of retailers. Knowing that a whopping 40% of available co-op dollars go unused each year, it’s a lost opportunity for retailers to grow their brand, and move merchandise, at a fraction of the regular cost to advertise. Be sure to utilize and maximize the co-op advertising dollars that you have earned through the purchases that you have made.