CO-OP Ad arbitration is important to healthy channel relationships
Co-op ad arbitration is an interesting topic that generally no one wants to talk about. Most companies work hard on their co-op guidelines to avoid disputes. Some companies have a strict no arbitration policy. After managing many different co-op ad programs, we see the value of arbitration and believe it is a healthy part of any coop ad program.
Let’s face it, you can have the best guidelines in the world and you’ll still have a partner at your door that either has found some grey area or something important you didn’t consider. A good arbitration process is a healthy way to deal with these issues and new opportunities as they arise.
It’s important to keep in mind that market development funds are meant to be a collaboration between brand and partner. We’ve found blanket “NOs” or “give us a call” methods of dealing with disputes or exceptions are not great options when it comes to managing partner relationships. If a partner feels passionately enough to put effort towards pleading a case, there should be a process to hear them out.
We recommend arbitration be a standard part of your co-op program guidelines. Here an outline of some best practices for co-op arbitration to get you started:
- Have a clear co-op ad arbitration process
- Put scope around arbitration (what can be arbitrated and how often)
- Use a 3rd Party to manage the arbitration process and empower the 3rd party
- Make exceptions consistently across your partner network
- Document everything and review it the next time you update your co-op ad guidelines
CO-OP Ad Arbitration Process
Just like your process for pre-approvals and claims you’ll need a process for arbitration. This starts with how a partner should initiate an arbitration and should include guidelines on the information necessary from all parties. You should ask the partner to identify the language in the co-op guidelines in question This will be useful to have when the guidelines are reviewed.
Your co-op arbitration process should include clear rules around who does the review based on subject matter and dollar amount. It is also important to identify who has final say and what the escalation process is in different situations.
CO-OP Ad Arbitration Scope
It’s important to put some scope around the process. You don’t want to encourage partners to plead every case. Arbitrating a partner request should be the exception and not the norm. To this end we’ve seen customers offer partners the opportunity to plead a case once a year. In most cases partners hold on to this option and frequently don’t use it.
It is a good idea to put parameters around what can be considered for arbitration and what can’t. This is also true of the program guidelines overall. The clearer you are with what is covered by the program and what isn’t the less you’ll have to arbitrate. Here’s an example of these parameters:
Case Study Development
Demo Products and Services
Direct Mail, E-mail, Telemarketing
Product Showcase Events
Entertainment events (such as sporting events, concerts, and events held in non-business venues)
Normal business operating expenses
Shipping and labor costs
Paid search marketing
Value of a 3rd Party Arbitrator
When two parties don’t agree on something it is often wise to bring in a third party to arbitrate. This is just as true in co-op and MDF disputes, as it is in legal disputes. A third party is in a much better position to be unbiased when it comes to hearing a dispute from both sides.
360insights provides co-op and MDF claims processing and auditing services along with general program management. This often casts us in the role of third party arbitrator. The brands that hire us value our experience with many different programs and listen to our position when it comes to partner disputes. Many brands leave the final decision in our hands because of this depth of experience.
For the most part, partners also see us as unbiased. They recognize we’re paid by the brand but know we’ll leverage our experience, listen, and add credibility to their case if we see their point of view. We’re also very consistent in how we apply rules on a daily basis, so partners know what to expect from us.
All disputes should be measured within the spirit of the program. The size or influence of the partner should not be factor. A good rule of thumb should be: what you are willing to do for one partner you should be willing to do for all eligible partners.
Just like a legal ruling in the judicial system sets a precedent, so does an arbitration ruling within your co-op ad program. If you don’t treat it this way, you’ll lose the trust of your partners and sow the seed of discontent. This is how channel loyalty is lost, so be careful.
Documentation of all disputes allows you to track how often different topics in question. This is very useful when it comes to refining co-op ad guidelines. It is also helpful in quantifying the importance and cost of a program change. Keeping good documentation and using it when/where appropriate is just good practice with any co-op ad program.
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