What is Co-op Advertising?
Co-op, or cooperative, advertising is a cost-effective way for manufacturers and retailers to advertise. Here’s how it works. A retailer mentions a manufacturer, or includes their photos and content, in advertisements. In return, the manufacturer pays the retailer back for part or all of the advertisement. The formula for this transaction differs depending on the partnership, as does the platform where the ad runs. Overall, this collaboration allows both retailer and manufacturer to reach a combined target market in a economical way.
How Co-op Advertising works
Co-op advertising can only exist if there is some sort of partnership or collaboration between two entities. Typically, this happens between a manufacturer and a smaller retailer or local business. The manufacturer reimburses the retailer for part of the cost of the advertisement, in return of including manufacturing photos, graphics or information in the ad.
It cuts costs
Co-op advertising should significantly cut costs for retailers. It is often used by retailers who has small advertising budgets or need to conserve advertising dollars. The manufacturer's contribution is not always money, though. It can range from monetary donations to physical displays or other promotional material. But, ideally this would replace an expense the retailer would have had to pay, or enhances the advertising campaign in some way.
It reaches the same target audience
Co-op advertising only works if both entities are trying to reach the same target market. Collaboration on an advertising campaign must be with the same end goal in mind, otherwise the campaign will not mutually benefit both parties, and the partnership will likely break down.
Why is Co-op Advertising Important?
It's a huge money-saver
Co-op advertising is especially valuable for small businesses that have very small advertising budgets. Manufacturers can step in to provide material or cash, that a retailer can then use in a campaign that benefits both parties. An effective co-op advertising campaign can cut down on cost of media placement, production and creative costs.
It makes a business seem legit
By getting the support of a well-known manufacturer, a small business can seem more legitimate. Consumers may view an unrecognizable business more favorably, if they recognize the manufacturer that is also featured in the ad.
It helps the manufacturer
As stated above, a co-op advertising campaign must benefit both the manufacturer and retailer to be successful. For the manufacturer, a co-op advertising campaign can help reach smaller markets and communities that may be overlooked by competitors. These campaigns can also create a large group of small business allies that a manufacturer can lean on when needed.