How to Grow Media Sales with Market Development Funds and Co-op Advertising Funds

You can increase media sales by helping your local accounts access vendor funding for their advertising campaigns. These financial resources come in the form of market development funds and co-op ad funds. September is Co-op Advertising Awareness Month, a SalesFuel-sponsored event that serves as a reminder for media sellers to encourage local accounts to tap these funds for year-end advertising campaigns.

What are market development funds?

Market development funds, commonly called MDF, are funds that manufacturers and other vendors make available to channel partners, dealers, distributors, resellers, or retailers to support marketing and sales activities.

The goal is straightforward: Vendors benefit when their partners successfully market and sell their products, so they provide funding to support activities that can create demand.

Depending on the vendor's program, MDF may help pay for digital advertising, events, direct marketing, content, promotions, sales enablement activities, or other approved initiatives.

MDF programs vary considerably. Vendors may allocate funds based on sales performance, partner tier, strategic priorities, geographic markets, or other criteria. Some programs require partners to submit a marketing plan and receive approval before spending the funds.

What is the difference between market development funds (MDF) and co-op ad funds?

Although MDF and co-op advertising funds both help businesses pay for marketing, the terms aren't necessarily interchangeable.

Market development funds are typically broader. MDF may support a range of activities designed to develop a market and generate demand. That could include advertising as well as events, campaigns, marketing materials, lead-generation programs, or other initiatives.

Co-op advertising funds are generally tied more directly to advertising. In a co-op program, a vendor reimburses a partner for some or all of the cost of approved advertising that promotes the vendor's brand or products.

For example, a business might run a $5,000 advertising campaign featuring an eligible manufacturer's products. If the manufacturer's co-op program covers 50% of qualifying costs, the business could potentially receive $2,500 in reimbursement, subject to the program's rules and available funds. In particular, dealers and retailers accrue co-op advertising funds based on purchase volume and the rate set by the vendor.

Both programs share the same basic idea: Vendors help fund marketing that benefits both businesses.

What types of advertising qualify for vendor reimbursement?

Every vendor establishes its own eligibility requirements, so there's no universal list of advertising that qualifies for MDF or co-op reimbursement.

Depending on the program, eligible media formats and dealer activities may include:

• Digital display or programmatic advertising
• Paid search and social media advertising
• Email marketing
• Direct mail
• Print advertising
• Radio or television advertising
• Video campaigns
• Local sponsorships
• Events and trade shows
• Website or landing-page promotions
• Content marketing and lead-generation campaigns

Vendors may also establish specific requirements for how their products, logos, trademarks, pricing, or promotional messages appear in an advertisement.

That's why approval matters. Don't assume an expense will qualify simply because it promotes the vendor. Dealers must review the program guidelines and, when required, obtain approval before committing advertising dollars.

Media sellers can access intelligence platforms like AdMall to review MDF and co-op ad programs for thousands of brands.

What is the process for using MDF and co-op advertising funding?

Media sellers can help local retailers through the process of accessing funding. While individual programs differ, using MDF or co-op funds typically involves several basic steps.

• First, use a tool like AdMall to find out which vendors offer MDF or co-op programs. Share this information with your local accounts so they can learn how much funding they’re eligible to use, and when those funds expire.
• Next, review the program requirements with your accounts. Identify eligible media, reimbursement percentages, branding requirements, minimum spending thresholds, campaign dates, and documentation requirements.
• Then, help your account plan a campaign, featuring your media, and submit it for preapproval when necessary. Some vendors require partners to provide proposed creative, media plans, estimated costs, or other information before the campaign launches.
• After approval, execute the campaign according to the vendor's guidelines. Deviating from approved creative or placement requirements could jeopardize reimbursement.
• Finally, give your accounts the data they need to submit their claim and proof of performance. You may need invoices, screenshots, copies of advertisements, performance reports, proof of payment, or other documentation demonstrating that the campaign ran as approved.
• Monitor deadlines throughout the process. Missing a preapproval or reimbursement deadline can mean losing funding that otherwise would have been available.

Why is the end of the year important for using these funds?

Year-end can be particularly important because some MDF and co-op advertising programs operate on a "use it or lose it" basis.

Depending on the vendor, unused funds may expire at the end of a month, quarter, calendar year, or fiscal year rather than rolling over into the next period.

That makes the final months of the year a good time to review your available balances.

If your accounts have unused funds, there may still be an opportunity to put them to work with an approved advertising campaign. And because many businesses are already planning their next year's marketing strategy, year-end is also an ideal time to identify which vendors offer funding and incorporate those opportunities into upcoming campaigns.

Don't wait until the final days of the funding period, however. Campaign approvals, advertising schedules, proof-of-performance requirements, and reimbursement submissions can all take time.

How can media sellers make the most of MDF and co-op advertising funding?

Media sellers should make MDF and co-op funding part of their regular marketing conversations rather than something they bring up only at the end of the year. Monitoring AdMall’s weekly Media Sales Opportunities report to learn which vendors are running promotions that include co-op advertising is a good first step. As AutoTrader reports, dealers shouldn’t let “ad dollars go to waste.” When local accounts advertise with the help of co-op advertising, they sell more, and so do you. Read one media seller’s success story here.