I find this statistic shocking: “Roughly half of the nearly $70 billion allocated to fund co-op advertising programs goes unused every year.” However, according to estimates from LSA, Borrell Associates and others that is exactly what is happening. So it is not that co-op money is less available as some might believe, it is more that the uses of co-op dollars are growing behind traditional media channels, with an growing amount being set aside specifically for digital.
If we want to look at that overall number from another angle, it means that close to $35 billion in co-op money goes unused or unclaimed. Is there an opportunity here? Absolutely.
So where is the money going??
Research shows that local marketers are still focusing co-op efforts on legacy media.
• Yellow pages
• Direct Mail
How does digital fit into all of this? More and more brands are re-vamping co-op programs and updating the rules to not only allow for, but to encourage the use of digital advertising. Certain brands (like for example car dealerships) are being extremely prescriptive on exactly how co-op dollars need to be allocated for digital. In fact, some dealerships are required to spend 50% of co-op funds on digital advertising.
The biggest hindrance to tapping into these dollars seems to be the perception of the complexity of it all. How doe we show proof of delivery? How do we show creative? How does it all work? Different co-ops have different rules and those rules do need to be navigated. So how can your help your clients manage this process? First, by encouraging them to see what co-op dollars are available. We can help with this – send us the client and brands you are looking for and we can do some digging for you. While business owners need to be aware of the rules that impact them, you can certainly be a resource.
According to LSA, There are three key factors to consider with digital co-op and they are not as difficult to navigate as you might think:
1. Brand Compliance: All brands will have specific requirements related to the appearance of the brand logo, the advertised product, ad copy, and occasionally a minimum advertised pricing component. Within the limited space available for online display, these factors become more complex. Most major brands will have an advertising standards document which should detail the necessary components. Regardless, in all cases, digital ad creative should be pre-approved with the manufacturer to ensure co-op compliance.
2. URL Linkage: Many brands will have specific requirements on where any digital display ads should link. Some brands are fine with the simple link to the dealer site, but many are moving to linking to specific interior pages of the client’s website that mentions the product. Always consult the program guidelines for detail and direct any questions to the manufacturer co-op contact BEFORE the campaign runs.
3. Proof of Performance: The minimum requirement for a co-op submission on digital programs will be a media invoice for activity and visual documentation for each invoice line item charged back to the program. All specific documentation requirements should be reviewed with the co-op contact during the pre-approval process. At a minimum, have the co-op contact review a copy of the monthly reports you receive from us and make sure that those will suffice as proof of performance.