Will Walmart’s new strategy change the nature of co-op and vendor trade promotions? It’s a topic that Jack Neff explores in a recent Advertising Age column. In a traditionally funded co-op ad, a vendor might expect to have its product or company name mentioned 2 or 3 times or the brand or company logo may appear on the screen. But the major focus of these ads has typically been all about the local retailer. This year, Walmart has given vendors more exposure and increased their creative input in co-op ads. In return, Walmart has benefited from capturing more trade promotion ad revenue.
Industry analysts also say that Walmart has probably traded the best positions in its stores for access to more marketing funds from vendors. For example, a vendor who ponies up big ad money can expect to see its products placed in high-profile end caps where consumers are sure to see them. It’s also important to note that Walmart ‘s sheer size puts it in a unique position to demand more marketing funds from vendors. Neff estimates that Walmart may have grabbed nearly $100 million in vendor marketing funds for the most recent quarter.
Neff mentions that, for now, retailers such as Target seem to be staying with the more traditional co-op ad format. In that case “Target brand gets the play.” However, as marketers study Walmart’s approach which “substantially surpasses the item-price callouts once common and still widely used by other drug and grocery retailers”, they may decide to try to bargain with vendors and change the way co-op ad programs work.[Source: Neff, Jack. Walmart Ups the Ante with Brand Co-op Ads, 11.30.09]