Co-Op Dollars

Use manufacturer's co-op money to promote your company.

By Beatty McCaleb

Getting the most for your advertising dollar means working all your options, and there is one that goes without notice all too often: co-op advertising.

Co-op advertising is where the advertising costs are divided between two or more companies. Generally speaking, this incentive is offered by manufacturers to distributors to encourage the promotion of products or the brand itself. This may make the difference with small distributors in whether or not they can afford to advertise at all.

The percentages paid will vary, with the manufacturer paying at least 50 percent and upwards, depending on the qualifiers.

The media are broad and include print ads, sales collateral, brochures, mailers, signage, Web site ads, wear- ables and advertising special-ties, now referred to as “endurable advertising.”

The Cooperative Advertising Information System reports that some $25 billion in co-op is available each year, of which only 60 percent is claimed. Guess what? Each year, billions of dollars go unspent because the plans are not well prepared, the details are not cohesive, the implementation is too complicated, and people just ignore the offerings.

Co-Op Criteria
Manufacturers exert a considerable amount of time approving the co-op funds and have the best of intentions with the release of the qualifications. Their wish may be to focus on new products, a new or enhanced logo, or to emphasize brand awareness. The manufacturer's program details should include eligibility requirements, amount of dollars available, the percent each party is responsible for, contact persons for administration, timelines, acceptable media and reimbursement guidelines.

Manufacturers typically begin the process with their advertising, marketing and sales personnel. Larger companies might contract with third parties to establish themes, layouts and schedules. Designs can be made to incorporate two parties at the outset. Imprint consideration needs to be addressed to accommodate artwork graphics, taglines, Web sites, etc. Technology affords the advantages of transmitting critical files without the need for assumptions, resetting type or judgmental art decisions.

Distributors also may have their own campaigns, as they are selling a multitude of lines, and have choices for participation. They may want to be in some suppliers' programs and out of others. Manufacturers should consider, of course, having funds available for individual distributor custom programs, within their imaging constraints.

Up-Front Considerations
Impediments frustrate everyone, especially “after-the-fact” when rules are interpreted and expenses are “dis-allowed,” whether right, wrong or marginal. The following are some considerations to prevent those impediments from occurring:

• Graphics may be an issue; if colors are to be precise, then pantone matches should be noted up-front.
• Are multiple colors to be used, or the less expensive, one-color imprints?
• If there are logos, vector artwork should be made available.
• If promotional products are approved, are there limitations? For example, certain handles on travel mugs will not fit in vehicle drink holders.
• Writing instruments may accommodate two full-color logo imprints, but does the co-op program cover the additional color run charges?
• Time constraints, deadlines and schedules need to be published and adhered to.

There are in excess of 750,000 items available in the ad specialty industry. While each can be personalized, certainly not all can accommodate two brandings. With this many selections, homing in on appropriate, effective marketing items may appear exhaustive. Many co-op programs will include printed catalogs or Web sites for participating distributors to browse. Categories include bags, business/computer accessories, calendars, clocks and watches, drinkware, golf accessories, office and desk items, writing instruments, stress relievers and wearables. Apparel is popular in co-op advertising as there is plenty of room for two logo sewings.

Making It Work for Both Sides
No two companies' co-op advertising plans are alike. They may differ on prior approvals, use of logos and method of reimbursement. The application process will vary. Distributors will likely have several national manufacturers to consider working with and have to make choices predicated on their budget considerations.

The biggest problem occurs when distributors do not use their co-op dollars because they view them as too cumbersome to administer. Manufacturers are reluctant to promote co-op advertising “because no one ever uses it.” The two sides have to get together because it is valuable for both parties. Distributors should assign someone to manage on their end, and manufacturers should have one “go to” contact in their operation.

Distributors have interests in representing their manufacturers in the best light; at the same time, they want to present their enterprise, likewise, with prime professional presentations. Sharing of the costs allows for a win-win scenario if done with both parties in mind at the outset.

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The PEI Journal • Second Quarter 2007 • Volume 1, No. 2 • Contents are Copyright © Data Key Communications, Inc.
All rights reserved. • Nothing may be reproduced in whole or part without written permission of the publisher.