A study reveals $14 billion in brand co-op marketing funds are left on the table each year. Netsertive released, ‰ÛÏThe Changing Face of Co-Op Marketing Programs,‰Û report. The report explores how digital marketing trends are altering the co-op landscape and the persistent barriers to adoption that brands and local businesses face.

‰ÛÏOur research with Borrell Associates found that brands are leaving billions in annual revenue untapped as a result of inefficient and outdated co-op marketing programs,‰Û said Brendan Morrissey, CEO and co-founder, Netsertive, in Netsertive and Borrell Associates Announce ‰ÛÏThe Changing Face of Co-Op Programs‰Û Report.åʉÛÏUp to 40% of co-op marketing funds earmarked by brand managers for local advertising remain unused each year. It‰Ûªs time to revitalize co-op marketing programs with a focus on digital marketing channels, and to reinvent the broken relationship between brands and their local business partners.‰Û

Key survey findings include:

  • ‰ÛÏCo-op‰Û is a Dirty Word among Brands and Local Businesses. While 53% of brands and 65% of local businesses participated in co-op marketing programs last year, both report dissatisfaction and persistent challenges. Half of brands cite a lack of digital marketing knowledge among local businesses as the biggest barrier to co-op marketing success, while local businesses cite ‰ÛÏtoo much paperwork‰Û (38%), ‰ÛÏtoo many rules‰Û (38%) and a lack of information (31%) as their biggest challenges.
  • Local Businesses are Leading Digital Marketing Spend Locally. When it comes to local marketing spend, a majority of local businesses (61%) prioritize digital advertising over newspaper (56%), direct mail (53%), radio (45%) and cable TV (35%). Brands, meanwhile, still favor traditional mediums ‰ÛÒ newspaper (85%), radio (71%) and direct mail (71%) ‰ÛÒ over digital advertising (69%).
  • Search & Display, Email Marketing are Still the Most Impactful Local Marketing Mediums. Despite the recent landslide of digital marketing innovation, brands and local businesses still depend on search & display (62% and 67%, respectively) and email marketing (46%) to drive leads and sales locally.
  • Brands and Local Businesses Aren‰Ûªt Prioritizing Mobile Marketing. Despite growing device dependency among consumers, 73% of brands and local businesses aren‰Ûªt leveraging co-op funds for their mobile marketing efforts. Those that are remain focused primarily on mobile search and mobile-optimized websites. In fact, 61% of local businesses report having mobile-optimized websites.
  • Adoption of Digital Video Advertising is Lagging Locally. A full 83% of brands do not provide co-op funds to support partner use of digital video advertising. In fact, 46% report that less than 20% of their local partners currently use digital video advertising and 68% rate partner knowledge of the medium as ‰ÛÏnovice‰Û or ‰ÛÏpoor.‰Û Additionally, 22% of local businesses report never having used digital video advertising.
  • Millennials are Driving Local Sales Opportunity ‰ÛÒ and Brands are Missing Out. While 43% of local businesses reported an increase in sales to Millennials in 2014, the majority of brands (68%) do not yet offer co-op support for Millennial targeting at the local level.

‰ÛÏWe were stunned to discover that advertisers are leaving $14 billion in ‰Û÷free advertising‰Ûª on the table ‰ÛÒ about twice as much as three years ago,‰Û said Gordon Borrell, CEO, Borrell Associates. ‰ÛÏThis is because co-op programs are out of sync with local advertisers‰Ûª changing needs, particularly in the digital realm. With a few adjustments and the help of new technologies to grease the skids, brands have a big opportunity to tweak these co-op programs in a way that transforms local business partners into an incredibly sophisticated and powerful sales force.‰Û

Think about this when you’re going after Media Advertising Purchasers. Do your research on co-op before you call on auto dealers. Bring the 3.5% of adults who intend to purchase or approve mass media advertising (TV, radio, newspaper, direct mail, etc.) for their company some information they might not know about. Ad Purchasers are 139% more likely than average consumers to be new to the market, so help them out with some friendly hometown tips! 45% of Media Purchasers are active on LinkedIn, so try talking to them there. Also, they are 116% more likely than average to be on Instagram, so that’s a fun place to catch them too.