The relationship between manufacturers and retailers is a special one – a symbiotic one in which both parties can benefit each other with the right advertising techniques.
The key? Co-operation.
When we onboard brands to our platform, we recommend they get behind our program by paying a percentage of the cost through cooperative advertising. Co-op advertising is a cost-effective approach for manufacturers and retailers to share cost to better reach their target markets.
Through these co-op funded programs, we’ve added over 10,000 retailers representing brands across multiple verticals. But for newcomers to the concept, here’s what you need to know:
Co-op advertising is a joint advertising effort established between a manufacturer and a retailer. Its purpose is to save both parties’ money by sharing costs of advertising at the local level.
Co-op ads depend on a partnership between the manufacturer and the retailer. In such a partnership, manufacturers give retailers funds based on the number of products they sell. Retailers benefit from greater brand exposure without the increased ad spend while manufacturer benefit with increased business at a lower cost.
As a manufacturer, it’s up to you how high a percentage to subsidize a retailer’s advertising budget. We recommend a 50/50 split for manufacturers who use co-op funds with our platform, though some may cover 75% or even pay 100% of the advertising cost. Manufacturers can decide on how much to pay based on the previous year’s purchases, a retailer’s current orders, or the like. You are in control of the amount you offer.
As a retailer, you would be remiss not to take advantage of co-op advertising. With free money sponsored by the manufacturer, you can receive a reimbursement of your marketing costs each time you run an advertisement or marketing campaign that features the manufacturer’s wares. With some manufacturers willing to pay 100% of your advertising costs, local advertisers can benefit from the co-op agreement.
The co-op theory is simple: The more you spend on advertising, the more exposure your brand receives. Spending money on advertising through a co-op system results in stronger marketing efforts, more branded content across digital channels and more buzz surrounding your products. Using co-op funds on social media advertising is one of the best ways to maximize results.
In a February 2019 Adweek article, Andreas Reiffen outlined the benefits of shifting co-op advertising funds to digital channels – only 20 percent of nearly $70 billion invested in co-op marketing is being used on the digital front ($14 billion). With roughly 75 percent of ad-induced sales coming from paid search and product listing ad (PLA) campaigns, digital co-op marketing is a relatively untapped well that retailers and manufacturers can benefit from.
If your manufacturer offers these funds, make use of them to grow your social media advertising budget and make a greater impact on your audience. Failing to take advantage of co-op ad money is a costly mistake that could result in manufacturers slashing their budgets.
Engaging in a co-op program is an advantageous opportunity that can lower advertising costs and achieve outstanding ROI in your digital marketing campaigns. It’s both easy and practical too:
As a retailer and manufacturer, you should be taking advantage of co-op advertising programs. Put the money toward social and digital media advertising to expand your reach, increase customer engagement and boost website traffic.
Learn more about how brands use co-op programs for social growth through the ThumbStopper platform by clicking here.