Study: Local Advertisers Are Leaving Behind $14 Billion in Co-op Marketing Every Year

Share this:

man holding abstract icons

On a fundamental level, co-op marketing is a sensible advertising strategy for local businesses. If you’re an SMB on a budget, combining forces with manufacturers and vendors can offer financial stability and a sense of support between players in a local economy. Unfortunately, co-op marketing hasn’t translated well in the digital age, taking a backseat to a variety of fast, direct, Internet-centric opportunities.

Digital marketing company Netsertive and research firm Borrell Associates have collaborated on a report revealing just how wide the divide is between co-op and other forms of marketing — $14 billion wide, to be exact. That’s the amount left unused by brands and retailers alike who are paying more attention to search, display, and email marketing, the most depended-on methods noted by the report, in addition to other digital options like social media.

“The local retailer is the frontline of the business battle,” said Netsertive CEO Brendan Morrissey, “so it could be that they are looking for adjustments to respond to that direct market feedback they get every day, and this is driving them to seek out the digital opportunities.”

Co-op agreements are saddled with guidelines that can often be frustrating to work around. According to the report, 38 percent of local businesses cited “too much paperwork” as the greatest barrier to co-op marketing, and another 38 percent cited “too many rules.”

But Morrissey said that there are ways to apply the familiarity local businesses have with digital in general to a renewed emphasis on co-op. If businesses take an introspective approach (understanding the consumers they want to reach) and their brand partners take a proactive approach (using their expertise to support businesses in applying their specific capabilities to a co-op strategy) — together they can avoid the pitfalls that have plagued co-op marketing in recent years and potentially benefit from the financial value that still exists, untouched.

“What local businesses invest in needs to line up with what their priorities are as individual businesses,” Morrissey said. “Local businesses know that it can be very challenging to comply with the myriad requirements set out by their various brand partners, and what puts them most at ease is when they have someone they can turn to who can demystify all of that.”

One potential area in which co-op marketing can be used: mobile. Despite all of the hype that has surrounded mobile advertising and its capabilities, co-op marketing has been left out of that particular conversation. The report notes that “73 percent of brands and local businesses aren’t leveraging co-op funds for their mobile marketing efforts. Those that are remain focused primarily on mobile search and mobile-optimized websites.”

The technology-enabled instant gratification that has turned almost every conceivable industry upside down has also affected local marketing — why burden yourself with someone else’s restrictions and limitations when you can learn about and reach consumers online, quickly (if not in real time), by yourself? But co-op marketing is still sound, and the businesses and brands that leap on it might find it just as lucrative.

So what does Morrissey recommend in terms of executing a strategy?

“If you are a retailer, dealer, or local business that sells national brand products, immediately do an inventory of the co-op or MDF programs that those brands have right now,” he said. “Ask your brand reps which of their local retailers take great advantage of the available programs and how. Collect all of the documents on the various uses, guidelines, and reimbursement opportunities and identify areas where you may be leaving money on the table.

“If you are a brand, create a plan to reach out to your local partners and ensure they have all the information about your programs. Advocate internally to modify the guidelines so that partners can better take advantage of high performance digital channels and get stronger reimbursement rates as incentives. Find a partner who can quickly deploy both the education and the brand-compliant local marketing execution and leverage them to start building your digital future with local partners before it’s too late.”

Annie Melton is Street Fight’s news editor.