co-op marketing

Effective co-op marketing can drive brand alignment in the channel

  • October 31, 2016

A co-op marketing plan has the potential to get manufacturers and channel partners aligned around advertising strategies, creating greater connection between brands and stronger sales. However, this type of alignment isn’t always easy to achieve, especially when there are communication barriers between project stakeholders. Modern software platforms help manufacturers and channel partners share data with greater ease and precision, creating new opportunities to maximize the potential of marketing programs.

Building stronger partnerships and improving revenues is possible through co-op marketing, but only if organizations are able to partner with one another effectively.

“The co-op and MDF marketing segments are facing a significant divide.”

Co-op marketing sector at a glance

The promise of co-op marketing is substantial: reduce costs for the retailer by giving it access to big-brand advertising assets and expertise and improve channel engagement for the manufacturer by showing strong support for partners. In reality, businesses find this success, but they often struggle to do so. A recent study from Gleanster Research found the co-op and market development funds marketing segments  face a significant divide. Consider the following points:

  • Estimates vary wildly across the sector as to how much is spent on co-op and MDF marketing, but there is a general consensus that heavy resources go into programs. However, approximately 48 percent of funds devoted to marketing are left unused, adding up to at least hundreds of millions of dollars going to waste each year.
  • While companies spend less than half of their co-op and MDF marketing allocations, approximately 80 percent of those polled said such programs add value to the business.
  • Just 46 percent of respondents said they participate in co-op or MDF marketing programs available to them, but 75 percent of those that do engage in the strategy work with at two or more programs annually.

There is a major divide here – a significant percentage of businesses are either not using or underutilizing co-op, but those that do take advantage of the strategy tend to find it incredibly valuable. Manufacturers that can bridge this gap and get more of their channel partners engaged in co-op marketing can strengthen relationships and drive revenue gains for all parties involved.

The first step in connecting with channel partners may be to simplify expectations, as a recent report from marketing consultancy Dex Media pointed to a wide range of common questions that still plague organizations as they work to take advantage of co-op funds.

Making co-op simple

According to Dex Media, many retailers don’t take advantage of co-op media in part because they aren’t sure how to. The report pointed to basic questions, ranging from how to qualify for a co-marketing plan to the basics of the ad approval process, as frequent key issues still facing businesses.

If retailers struggle with such simple matters, then how can manufacturers expect to engage them in co-op marketing to improve revenues for all parties involved? This is where simplification comes into play. Overly complex, restrictive co-op marketing programs can:

  • Intimidate retailers.
  • Leave sales workers feeling like their hands are tied.
  • Limit collaboration.
  • Set up barriers to efficient ad approvals.
  • Reduce the value of co-op campaigns.

Conversely, setting clear guidelines for what retailers must accomplish within a co-op campaign, gaining visibility into ad performance and opening up channels of communication can strengthen the relationship between manufacturer and retailer.

Effective collaboration can go a long way in driving marketing success.

Using co-op to strengthen channel engagement

Imagine, for a moment, that you are a salesperson who showed up to work one morning to find a new kiosk ad for a product. You look at the kiosk, which is nice and attention-grabbing, but you also see a few details that will be off-putting to your local shoppers. You talk with your marketing team and get the response, “That’s a manufacturer’s ad; we can’t touch it. Just try to keep moving the product anyway and keep customers distracted.”

This is precisely the scenario manufacturers can avoid when they have better transparency and communication within a co-op program. Engaging local retailers in the planning process to fine-tune ads as necessary is just one possibility. Getting sales data through a channel incentive and analytics platform can give you immediate visibility into how ads perform. If you notice something out of the ordinary, you can check in with the retailer for feedback or insights.

The collaborative environment created when everybody involved in the project has access to the same data and clear lines of communication within a platform can be invaluable. Retailers in the channel can provide feedback quickly, and manufacturers have the information they need to act on that feedback in the most effective way possible. With everybody having a voice within the campaign, the connection between manufacturers and retailers is stronger, keeping products top of mind for salespeople on the floor and maximizing revenue potential.

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