What is Co-op Advertising?

Co-op advertising is short for “cooperative advertising”. Co-op advertising is an arrangement between a manufacturer (or distributor) and their reseller to market a product or service for the benefit of both parties. Typically, a manufacturer will give their resellers some portion of money (either through reimbursement, discounted purchase price, or some other form of financial arrangement) in order to market their products.

Co-op advertising can be a very powerful tool for the local business owner. By definition small businesses lack resources, and most small business owners are responsible for many if not all parts of business operations. Developing marketing campaigns, messaging, creative, and then executing this marketing effort is usually only thought of while lying in bed at night trying to not worry about keeping the business going.

This is where co-op advertising comes in. Utilizing the much larger resource pool of the manufacturer which has developed marketing campaigns and provide added funds from such an agreement can improve the quality of advertising, broaden the scope of its distribution and execution, and drive partnership between the manufacturer and reseller. It can also create important links between products and the small business owner who handles the product for the manufacturer. Above all, it can attract customers loyal to a certain product to a vendor whose name had not before been associated with that product.

All manufacturers and distributors have certain rules that resellers must follow in order to be in compliance as receive their co-op advertising funds. These rules vary from manufacturer-to-manufacturer and industry-to-industry. All of these programs require proof of performance in order to get co-op marketing funds, and many co-op marketing programs require prior approval before executing co-op marketing campaigns. Some of these restrictions, guidelines, and rules concerning proof of delivery is why an estimated $14 billion in available co-op marketing funds go unused every year. The friction and paperwork sometimes required by an already overwhelmed business owner is also a contributing factor.

The benefit to the manufacturer is that they are selling more products and services through their reseller channel, and the benefit to the reseller is that the manufacturer is offsetting some (and sometimes all) of the investment of the advertising.

There are many other benefits to this arrangement:

• Manufacturers will craft the messaging, design, and even the offer for the resellers so that the messaging is controlled and universal through the reseller network
• Resellers get the benefits of being able to use the marketing assets and expertise of the manufacturer without the expense and effort of creating marketing themselves
• Both parties benefit from less expensive advertising (since both parties bare some of the investment)
• Manufacturers benefit from the resellers’ local knowledge of their markets, thus making the marketing more efficient through local buying
• Resellers may benefit if the manufacturers have negotiated lower rates based on marketing through large networks across many markets
• Manufacturers get more distribution and a wider amplification of their marketing messages with dozens, hundreds, or even thousands of resellers marketing in their local areas
• Local businesses can increase their legitimacy and reputation by aligning themselves with well-known, respected brands and create a halo effect which then increases the sales of their other products and services