Cash In On Co-op Advertising

Co-op advertising has been a staple for years in the retail world; some businesses rely on it to help offset the cost of promoting their store. Some ignore it and wonder how their competition can afford to advertise as much as they do while they cannot do the same for their store.

If you have never used co-op ad dollars to help promote your business, maybe now is the time to change that trend. At this year’s ICAST there was a seminar on co-op advertising – if you missed out on it, here is our take on this often overlooked program.

Co-op dollars are available for your store if you know where to look, how to play the game and when to apply for them. Many retailers shy away from using them because they feel there are too many steps in the process and they don’t have the time to invest in receiving the co-op dollars they have earned. If this is the case, identify someone in your store or even your spouse if they are willing, to be in charge of your co-op advertising and ensure you get the most out of the program.

Here are a few tips to get you started on your co-op advertising journey. If you currently are taking part in co-op advertising, maybe you will pick up a new wrinkle you never knew about before.

Know the Rules
Before you investigate each company’s individual rules for their co-op advertising programs, you need to know the overall rules of co-op advertising. Co-op advertising is a way to offset a percentage of your advertising costs by the manufacturer, dealer group or wholesaler. It is not intended to pay for the entire advertising campaign, but rather to stretch your ad dollars and many times double them. If your competition is selling the same products as your store, and is using co-op dollars to help fund their advertising, you legally must be offered the same advantage. The amount of dollars offered to you though will be contingent on the amount of products you buy and sell. If you sell less volume of a certain product line than your competitor, expect to receive less co-op dollars from that company than they do.

Target the Best
You know your store better than anyone else and should be able to tell anyone who asks what your top-selling brands are year in and out. These are the first companies that you should target for co-op funds. Call your representative from each of these companies. If you deal with manufactures directly, a wholesaler, or even a distribution group, they should all have co-op funds available for most of the products you are selling. The time to accrue these dollars may already be past for this year, so be prepared for that fact.

Once you contact them and identify what dollars are available, discuss what their rules are for accruing co-op funds and how you can use them to promote your store and their products. Ask that they email these rules to you so you can keep them on hand for future reference. Also ask when their new co-op accrual cycle begins and let them know that your plan is to take advantage of the program. If rule changes take place yearly, ask that you be notified as well so you do not plan your advertising on outdated information.

Find Alternatives
Not every company offers co-op funds, so have a secondary list created in case your initial list comes up short of what you were expecting to receive or have available to you. Some smaller companies cannot afford to offer co-op advertising; like your store, they find this economic climate difficult to navigate.

If a company does not offer actual funds to assist in your advertising campaigns, inquire about alternative methods that may be open to you in order to help you sell their products. One alternative may be that instead of money exchanging hands, they offer a percentage off of products once you buy a certain dollar amount of their goods. While this will not offset the cost of advertising directly, it will allow you to shift money from your purchasing account to your advertising account.

Many retailers are finding online advertising to be the most difficult to submit to co-op programs. This is one area many manufacturers are also finding difficulties in, but are adjusting their programs to include online advertising. If you are having difficulties obtaining co-op funds for online advertising, ask your representative on the availability of giveaway items to use for social media promotions for in-store giveaways.

With alternatives come hurdles, for you and the companies you are working with on co-op advertising. Be prepared to not receive an instant yes if what you are proposing is something new to their company. Due to laws, the same co-op opportunities need to be available to all stores they work with. Many times this means they will need to discuss these new options with a senior member of their company and their legal department. Do not be surprised though if your idea is incorporated into next year’s co-op program.

Build Your Ads
Now that you have identified who you will be working with and know the rules from each company, you need to start instituting these newfound dollars into your advertising budget and plan. Each company will have their different rules so create each ad to maximize your co-op dollars and be sure to follow their rules. Do not wait until the last minute to submit your ads back to them for co-op approval; many companies request to approve the ad before it runs. Adjust your ad planning to incorporate lag time between submission and approval. Do not become discouraged if your first few ads take multiple submission attempts before they are approved, this is part of the co-op process. Once your ads are approved, keep a copy of it for future reference and possibly to re-run next month if it is applicable.

Track Everything
Not only will you need to keep copies of your ads for your records, but you may need to resubmit a copy of what ran to the company who helped pay for it. You should also keep track of the costs of each ad and what monies you received for each one. Once an ad has run, look back and see if you also noticed an increase in sales of that product line or in general. Many times an ad may run promoting one product and a customer comes in and buys something else. The ad may have reminded them of your store and brought your store’s name back to the top of their list of places to shop, or maybe the ad was the first time they heard of your store and came in to see what other product lines you carry. No matter why they came in, the ad worked for you and you should be happy.

If you receive free products to give away through social media or in your store, track the response rate from that as well. Track how many more followers you gained while you ran your giveaway on the social media site. How many more people came in to enter the giveaway you held in your store – did you notice an increase in sales during the time the giveaway ran? Track this and use it to help motivate yourself, if for no other reason than to continue to use co-op advertising.

Co-op advertising may add more work to your already overburdened shoulders, but if you can find assistance from someone you trust, the extra time it takes can pay off. Nothing in life is free, but many of you are throwing away the co-op funds you are earning. If you are currently taking advantage of co-op advertising programs, how do you like them? What would you like to see changed or modified to stay up-to-date on the current advertising and buying trends you are seeing in your store? Share your thoughts with us on our Facebook page or in our LinkedIn group. Other retailers may be thinking the same thing, or have suggestions they can share with you to overcome your problems.