Co-op Marketing Programs – Everything You Need To Know
Co-op marketing programs are when a brand offers to pay a portion or all of the cost for an advertising placement done by a sales channel partner.
Cooperative marketing programs can be a simple set of rules whereby the partner must ensure the brand is properly displayed and positioned. In more sophisticated environments brands may create ads that are easily customized by channel partners to facilitate co-op ad placement.
Why does co-op marketing make sense?
Cooperative marketing programs foster teamwork between a brand and its channel partners. Channel partners often don’t have large marketing departments. Brands are more equipped to create professional advertisements and deal with media placement.
Channel partners need to create local demand. Co-op marketing programs take advantage of the sale channel’s local presence. This benefits both the partner and the brand.
Most importantly the cost is shared between brand and channel partner increasing the capacity of both parties.
What holds Co-op Marketing Programs Back?
There is really no good reason for a co-op marketing program to fail, but many often do. When co-op programs fail it is usually for one of three reasons:
- The channel partner cannot afford the upfront capital to place the advertisements.
- The brand places too much of the creative burden on the channel partner.
- The reimbursement process is too administratively cumbersome.
Industry analysts estimate that approximately 50% of coop funds go unused each year. The root of this issue goes back to the three
A sales channel partner is usually a small business with limited cash flow. Their cash flow is derived from selling the brand’s products. Often they have to purchase these products prior to recovering the money from the customer. When brands ask channel partners to extend themselves further through advertising it is often more than the channel partner can bear.
Channel partners also don’t tend to have extensive marketing resources. A brand may offer to pay a significant part of the advertising expense, but if the partner has no ability to create ads the program will fail.
Brands typically belong to large companies with compliance considerations. This creates a need to have an auditable process around how the funds are approved and reimbursed. Many co-op programs are living in the stone ages when it comes to how the programs are administered. This delays the reimbursement to the channel partner and increases the cash flow burden.
Best practices for co-op marketing programs
To get the benefit and avoid the pitfalls of cooperative marketing programs we suggest the following best practices.
- Coordinate co-op advertising with your broader marketing campaigns.
- Make sure the rules around the use of coop funds are simple and clear.
- Create ad templates that are easily customizable by your channel partners. Assist partners in media buying.
- Get in place an automated system for claiming available funds and requesting reimbursement.
- Streamline the reimbursement process with pre-approved ads.
- Automate, automate, automate
Learn more about channel incentives, our Channel Success Platform™, SPIFFs, Rebates, Co-Op/MDF, volume incentives, sell-through allowances, and reward points programs.