Local Co-Op Advertising Programs: Why are Billions Left Unspent Every Year?

According to industry reports, billions of dollars in co-op advertising funds are left unspent every single year. That’s a huge pot of shared advertising funds that are being left untapped by OEMs, distributors, marketers and retailers alike. And this pool of money represents a significant miss for many major brands worldwide. Read on to learn why this is such a big deal, the reason these funds often sit unspent, and what your brand can do about it.

Co-op Advertising: Digital’s “Lost Opportunity”

Co-op advertising has long been referred to as “digital’s lost opportunity” by organizations like the Interactive Advertising Bureau (IAB) and the Local Search Association (LSA). When done well, these programs have proven time and time again to be effective tools for scaling localized advertising campaigns.

In fact AdWeek recently published a piece outlining how shifting funds into co-opted local paid search and Google shopping / product listing ad (PLA) campaigns, in particular, should be a top strategic advertising priority for brands and retailers:

“At present, companies are investing about $70 billion in co-op marketing, but only 20 percent of that is digital. Moving more co-op dollars into digital channels—and specifically paid search and PLA—makes strategic sense for brands and retailers. For one, about 75 percent of all ad-induced sales today come from paid search and PLA, and an infusion of co-op dollars into this space represents a huge opportunity.”

So given the upside, why are so many co-op advertising budgets being left unspent?

Why Billions are Being Left on the Table

The logistics involved with running a local co-op advertising campaign are inherently tricky. According to Forbes, these logistical barriers have proven to be universal for any brand or manufacturer that has attempted this advertising model:

“Inevitably, a manufacturer co-op fund becomes difficult to manage over time. A few large dealers request additional funds, an ad runs with unapproved creative or the brand realizes that small, individual advertising buys are not the most effective use of advertising dollars and decides to pull back on funding. A significant portion of co-op money goes unused every year due to red tape created by the manufacturer or because the dealers don’t have the time or expertise to properly manage and submit co-op claims.”

Getting buy-in at the local level and showing value to local stakeholders can be challenging. But handling basic brand compliance is possibly the largest hurdle — individual local marketers and advertisers often get tripped up on rules around creative, messaging, promotions, and what can and cannot be submitted for remittance within a co-op advertising program. Submitting those campaigns to the OEM or distributor for remittance also can be a major obstacle for local dealers and retailers.

These already-daunting barricades are compounded by the complexity of native advertising channels themselves; creative requirements and tactical best practices are constantly shifting and changing. All of these factors make it difficult to execute a coherent co-op advertising program, even under the best of circumstances.

What Can Be Done to Ensure a Successful Co-op Campaign?

Irrespective of those aforementioned issues, a co-op advertising program can be organized and managed in such a way that these barriers to entry become a non-factor. At Mediagistic, for instance, our team is experienced with designing turn-key, brand-compliant advertising programs and organizing full-court-press outreach efforts to ensure maximum buy-in. Our accounts payable team has deep specialization in submitting 100% compliant co-op claims on behalf of local dealers and retails, and we closely coordinate with OEMs and brands to ensure a frictionless remittance process.

Does your brand need to get a co-op advertising campaign off the launchpad? Check out the infographic below, which outlines our 8-point process for onboarding and implementing an effective co-op advertising campaign. Then see what options might be available for your group or co-op advertising campaign.

View the infographic:

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Eddie Childs is the Director of Corporate Marketing for Mediagistic. His writing has been published by a range of websites and publications including Copypress.com, Jambase.com, NFLSoup.com, FootballNation.com, and Boating World, KnowAtlanta, Men’s Book, Cobb in Focus, TCL, Blush, Charged Electric Vehicles, Business to Business, and Catalyst magazines. Follow him on Twitter and connect with him on Linkedin.

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