Co-op Funds – Never Assume

FishHookWormHC1310_S_72_C_RNever Assume!  I had the good fortune to travel to a new market this past week for 4-legged sales calls to non-advertisers with a newspaper client. Of the 8 preset appointments we struck unused co-op funding in each and every location…it was really like shooting fish in a barrel.

In each case, the business owner simply had no time to do the discovery on the do’s and don’t’s of the co-op plan and really had no desire to take time out of their busy schedule to reach out to the manufacturer contact for understanding. All of these businesses were successful in their own right, yet were willingly wasting hundreds and sometimes thousands of dollars in manufacturer ad support. Based on our authorized accrual research after the fact and basic math in presentations (about how much business have you done this year with this brand? Well 1% of $500,000 is $5,000), we estimated that those 8 non-advertiser calls had more than $40,000 in co-op money with the potential for over $60,000 in advertising solutions. Some of these accounts were not advertising anywhere at all…but hopefully now they will be.

These local dealer assumptions were not unique to this market nor are their challenges in understanding the manufacturer co-op policies totally unfounded. There are likely several businesses like these in your market with similar feelings. Their thinking is that the co-op plan is mysterious because the manufacturer doesn’t want them to use it, which is not the case at all. The key is making it easy for these beleaguered business owners who are as cut to the bone as we are.

One. Do the math for them. Roughly estimate their co-op accrual by multiplying “about how much business they do with the brand” by the plan’s accrual percentage. Then do the math for them on how much more reach and frequency they could get with their advertising by including co-op.

Two. Show them how it looks. Work out spec creative for them with each media product that makes sense for them. What would a newspaper ad look like? How about a single-sheet insert? And hey, what about a banner ad linking to a landing page with your newspaper ad?

Three. Explain how they get paid back. Co-op is like a rebate program for advertising where they have to submit all of the documentation to get credit on their account. If you can, offer to get them the needed documentation and the claim address to send it.

Dont be afraid to ask questions and never assume your accounts are well schooled in co-op. If you haven’t seen them running brand materials in their ads, chances are that they’re just like the 8 accounts I saw. And I’m thinking that $60,000 would help your budget goals also.

Tim BrennanTim Brennan

tbrennan@recas.com
309-678-8745
www.recas.com

April 2016 Targeting List

Title

Holidays
1 April Fool’s Day
22 Earth Day

Day Events
1 Fun Day
2 Children’s Book Day
2 National Peanut Butter and Jelly Day
3 World Party Day
4 Vitamin C Day
5 Caramel Day
Army Day
7 World Health Day
8 National Zoo Lovers Day
10 Golfer’s Day
10 National Siblings Day
11 Pet Day
12 Grilled Cheese Sandwich Day
15 Tax Day
16 Record Store Day
16 Save the Elephant Day
18 Pet Owners Independence Day
18 Record Store Day
18 Newspaper Columnists Day
19 National Garlic Day
19 Bicycle Day
20 Banana Day
22 National Jelly Bean Day
23 World Book Night
24 Pig in a Blanket Day
24 Teach Your Children to Save Day
26 National Pretzel Day
27 National Prime Rib Day
27 Tell a Story Day
28 Blueberry Pie Day
29 International Dance Day
30 International Jazz Day
30 National Honesty Day
30 World Veterinary Day

Week-Long Events

April 10-16 Library Week
April 10-16 National Volunteer Week
April 16-24 National Park Week
April 17-23 Karaoke Week

Month-Long Events:
Lawn and Garden Month
National Poetry Month
Jazz Appreciation Month
Decorating Month

The Sad Truth of Unused Co-Op Advertising Dollars

The Sad Truth of Unused Co-Op Dollars.   Regardless of how much these programs are touted by the manufacturer or the media, large amounts of any brand co-op program budget go unspent. And despite the misguided conception of many, manufacturers do indeed want their channel partners to take advantage of these programs since it gives them localized brand advertising at attractive media rates. Some manufacturers will have programs to move this money through different dealer programs to boost sales volume but many brands will still have large pools of unspent allocations on the books come year’s end.

So why do local dealers just watch these budgets dry up and blow away each and every year? Well, lots of reasons…

Complexities…because the earnings involved in these programs intersect with purchase volume, sales is involved to ensure communication and product availability. And because the advertising intersects with brand presentation in many media options, marketing is involved to make sure ads meet any compliance rules. And because the program involves dealer reimbursement for the advertising, finance is involved to verify auditing rules and validate payments. The more cooks, the more ingredients in the soup…

Small earnings and reimbursement percentages…because co-op funding is based on small percentages of wholesale purchases over different timeframes, a dealer can easily lose track of what kind of budgets are available. Beyond that, only a percentage of the total ad costs are paid back to dealers and usually as a credit on their account. The details involved can be tricky for one or two brands, let alone those stores that might have multiple vendors with co-op programs. Basic math skills are needed to work through the process, but even a little money back on advertising helps the bottom line.

Dealer trust…because the program appears complicated, the dealer perception can be that it’s not worth the headache. Advertising itself can be complicated enough without adding all of these other factors into the mix. The advertising content may be difficult to work into what the dealer usually tries to accomplish and there may have been instances that it was tried in the past and not covered under the program guidelines. if you can show how the creative can fit together simply and effectively while showcasing their local brand, it can certainly help take away the misgivings the dealer may have.

Paper shuffle…because marketing needs to approve the ad before publication and finance needs to see documentation after the fact, there are added steps in the process for someone to handle. Left to their own devices, the local dealers have no one beyond themselves to handle these steps, which are simple necessities in the co-op process. If your solution can gather all of the relevant material as part of the plan, at the very least it helps take care of details they won’t need to cover.

Co-op won’t sell your media solutions, but there is a reason that certain media types are approved for these programs. Most local players need to see what your solution can provide and how you can help their business by taking care of the details. Otherwise, dealers will continue to use what they can easily and the rest will simply go away again next year.

Tim Brennan Tim Brennan
tbrennan@recas.com
309-678-8745
www.recas.com

What’s a few BILLION dollars, right?

What’s a few billion dollars, right?

Right now is a time when there are a couple high-profile reports on co-op advertising usage. One came out last year from Borrell Associates with a focus on the changing face of co-op programs with the inclusion of digital spending options. In the study of 3,741 SMBs, they found broad adoption of digital platforms although complications with many programs showed fairly slow dealer progress with their brand partners in co-op support. Borrell also compared business co-op spending versus a similar study they did in 2012 and released the overall media detail report.

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Why would you say newspaper spending is down? Could it be your sales reps don’t know co-op well? Maybe your dealers don’t know it very well? Maybe you don’t know it very well? And 9% in 3 years…wow.

Tallying total available co-op at $36 Billion, Borrell goes on to estimate unused co-op at $14 Billion…both figures I would argue are underestimated. Co-op budgets are small percentages of wholesale purchases across a vast array of business categories and brands and often lost by accounts in the shuffle of day-to-day priorities. I’ve seen estimates that range much higher on both scores with guesses as high as 48% of total co-op going unused. Of course it’s all mostly speculation since it would be near impossible to gather anything close to a real number. Let’s all just agree that it’s a lot.

The real question comes down to why. Here are the responses the dealers gave:

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It’s always been part of the media sales gig to help walk local advertisers through the process involved. Their main concern is making the cash register ring and they spend very little time overall with marketing since they’re the ones answering the phones, sweeping the floors, ordering inventory, helping customers, etc. Most brand dealers know they have co-op, but may be a little muddy on the details and how to make it pay for itself.

There’s another study from the folks at Brandmuscle who last month released their 2016 State of Local Marketing report. It gets a little more granular on the detail but boils down to the same thing. Your local advertisers need help with this stuff. And if you won’t, who will?

Feel free to reach out to me directly and I’d be happy to send along copies of these reports. I could give you some specifics on who, what, where, and how we could help in your market…just say when. What’s a few billion dollars, right?

Tim Brennan, VP of Strategic Sales for Recas

tbrennabrennan_timn@recas.com
309-678-8745
www.recas.com

Co-Branding Focus your Advertising

MagnifyingGlassC1602_M_150_C_R
magnifying glass for co-op

Co-op advertising is generally just branded advertising with financial support from the supplier. One of my favorite clients over the years focused on the brand promotion aspect of the advertising sale first and foremost with a nod toward the potential reimbursement under the co-op guidelines. Her approach in the local market was that the dealer should advertise the branded promotions through local media to capitalize on the manufacturer’s national push and tell area consumers where to take advantage of it.

Her vision of the process was really co-branding the local store to the manufacturer product with frequent advertising. This built a strong association of the local store with the brand and should provide some long-term recognition to play off any other manufacturer promotion. Since any national advertising by the manufacturer really just focuses on the “what and why” of the product messaging, she looked to leverage the same brand message with her clients to focus on “where” for the local audience. She was VERY successful with this approach.

Her work with the local advertiser targeted the specific need for brand association with her audience and, while she would provide the co-op plan detail and manage the brand compliance work, co-op reimbursement was secondary to the conversation. She would be happy to explain how co-op worked and what to submit for plan reimbursement, but left those details for the advertiser to manage on their own. She worked exclusively on the co-branding concept regardless of whether the dealer had enough (or any) co-op money for the campaign simply because this was the best way to drive traffic and sales.

How could this concept work for you? What sort of local brand champions might you find in your market for Allstate Insurance, Benjamin Moore Paints, Castrol Motor Oil, Delsey Luggage, Emerson Air Conditioners, etc?

For those that would like to target a specific consumer promotion tied to a major manufacturer brand in June, there are plenty to choose from. In the motorcycle category you can aim at your Honda, Victory, or Yamaha dealers…in the tire category you can aim at your Goodyear, Hankook, or Michelin dealers…in the boating category, there’s expiring co-op plans with Honda Marine and Suzuki Marine. There are always branded opportunities…

Sometimes the process just needs a brand and an aggressive local reseller, so you don’t have to overthink the co-op detail. Just look for your local brand champion.

Tim Brennan
tbrennan@recas.com
www.recas.com

Co-op Is Simply Localized Brand Advertising

LocallyHeadingC0712_S_72_C_RCo-op advertising arrangements are baked into the local sales process of most every brand name you know. From Allstate Insurance to Zerex Antifreeze, part of the supplier’s selling process is to build the brand nationally and engage the local seller with support for the same branded advertising at the market level. None of the national branded messaging tells the consumer where to buy the product; that’s left to the channel partner to run in local media, sometimes with the same brand content but now with where and why messaging.

As with all things, some of these co-op plans are simpler than others, but it should never be assumed that the dealer is fully aware of the details and how to use them in their own advertising efforts. With some manufacturer co-op efforts, up to a third of the established budgets for these programs can be left unused…mostly through their small to mid-sized retail partners that don’t have the resources to plan and execute with all of the program detail. With these local merchants, there is a need for assistance with ad design, manufacturer approval of the content, and co-op claim assistance to gather the advertising reimbursement.

Most co-op programs have specific guidelines for most local media products. From newspaper and direct mail to broadcast and online, these programs will have specific content requirements and claiming procedures to reimburse their channel partners for local advertising. The budgets for these programs are generally based on a percentage of wholesale purchases and are left to the local partners discretion on where and how that funding is allocated.

Agencies are stepping into the void of dealer adoption to simplify the co-op process. They offer opt-in solutions with various media types and an emphasis on digital to engage the dealer channel and perform all of the media buying functions on a regional/national scale. This, of course, will largely take local media options and individual dealer versioning off the table.

Take a look around your market area and note the local merchants with brand name signage in their locations. Paint stores with Benjamin Moore, Pittsburgh Paints…Insurance agents with State Farm, Nationwide…Oil Change Shops with Quaker State, Castrol…Flooring Stores with Mohawk, Karastan…Motorsports locations with Yamaha, Honda…not to mention all of your Auto Dealers.

All of these locations have some level of advertising support from their manufacturer partners. Some of them are better at utilizing these resources than others, but it is the rare media sales executive that will go the extra mile and offer some level of assistance here. That, in and of itself, could make all the difference in your sales efforts…since co-op can foot a sizable portion of the bill.

With your one login to Recas.com you can set the foundation to build revenue with some of your local accounts. As with anything worthwhile, there will be some legwork involved. And when that legwork gets too strenuous, you can always tack on Recas support to your service to help with some of the heavy lifting and then we can add more ideas into the funnel.

Tim Brennan
VP, Strategic Development for Recas
309-678-8745
tbrennan@recas.com

www.recas.com

Sales & Graphic Design ideas to increase local advertising!