October is National Co-op Awareness Month. In the era of market disintermediation, manufacturers still need to help their dealers succeed in the local market. To do that, manufacturers continue to spend big money on co-op programs. But they are making changes.
Some of the biggest changes we’ve seen in co-op funding programs are in the automotive vertical. With the shift to digital advertising, some auto manufacturers have moved away from formal co-op programs. Instead, they give their dealers a marketing allowance. Dealers can count on receiving advertising support every month as long as they comply with manufacturer guidelines.
Auto manufacturers are also trying to control the way digital marketing is done at the local level. To be reimbursed for expenses associated with paid search or reputation management, dealers may need to use approved turnkey vendors. Local media companies can sell their services to local auto dealers, but first, they will need to contact decision-makers at corporate headquarters and follow the process to be added to the approved list. The great news is automotive manufacturers are increasingly open to funding dealer advertising costs for new digital formats ranging from mobile billboards to wi-fi messaging.
Digital Co-op and Channel Support
Major manufacturers in traditional industries are also loosening the digital purse strings. We’ve noticed outdoor power equipment dealers will reimburse dealers for video pre-roll advertising, when it’s done in accordance with their guidelines. Leaders in the tech industry are also on board with supporting their channel partners. Some of these vendors maintain market development funds (MDF) that are available on a program or project basis. The funding intent is the same as it is for co-op advertising programs: Vendors share share the cost of advertising with their dealers and channel partners.
Don’t let your clients get overwhelmed by vendor requirements like logo sizes and claim submission deadlines. Instead, work with them to set up a relationship with key vendors and help them learn the ropes. Once they see the power of matching funds in their campaigns, they’ll buy more advertising from you.
The Multiplier Effect of Co-op Funds
Media sales reps who have access to co-op funding information from a source like AdMall from SalesFuel can leverage the data. They'll make big sales for themselves and local business owners. One of our clients sold search marketing services to a local heating, ventilating and air conditioning dealer and used co-op funding to close the deal. That sale netted her company over $45,000. Another sales rep scored a $7,500 deal with a local sewing machine store. How? By helping the client tap into co-op funding that a vendor supplied to help cover the cost TV advertising.
A BIA Advisory Services study estimates that about half of the $70 billion vendors allocate for co-op advertising don’t get used. Many local dealers don’t realize that co-op funding is available. Or, they don’t understand how to use it. You can increase your sales by sharing co-op funding information with your prospects.
Co-op in 2020? We predict it will be bigger and better than ever.