4 Reasons Retailers Should Care About Co-Op Marketing

By Nikolai Lien

|

April 30, 2019

In last week’s blog post, we touched on the significance of digital co-op marketing. **Spoiler alert** it unlocks serious benefits for both brands and retailers alike. In this post, however, we’ll focus on the key advantages available to retailers.

Refresh: What Is Co-op Marketing?

Co-op marketing has been around for decades. Long before digital advertising came along, brands would strike deals with retailers—subsidizing the cost of the latter’s ads in exchange for additional exposure.

Local co-op marketing still exists. In fact, the total market represents around $70 billion per year. As you read this, digital co-op represents just a fraction of the above. But that fraction still represents $1.7 billion. It's growing rapidly and is essentially up for grabs.

Surprisingly, about 25 percent of this figure goes unclaimed by retailers. Some blame this on the fact that acquiring budgets can be a frustrating process. In other instances, retailers may deem it to be too much effort, or simply lack awareness.

The marketing landscape offers different channels for retailers to capitalize on co-op budgets. They may be offsite (content published on external sources) or onsite (a retailer’s website).

Let’s take an offsite example. Brands might subsidize a retailer’s ad spend for ads that promote their products on Facebook.  From an onsite perspective, sponsored product ads continue to flex their muscles.

So, as a retailer, what should you look out for? And why should you care?

Reason 1: Co-op Marketing Can Help to Increase Your Marketing Budget

The relationship between retailers and co-op partners can be complex. But the effect of a subsidized budget is obvious. If you agree to additional co-op funds from brands, you’ll have more spend to play with. And there’s a lot out there. In some research, co-op dollars represent between 12 and 25 percent of all marketing budgets. The more you engage, the healthier your spending power becomes.

Reason 2: More Incremental Revenue

By leveraging co-op dollars, you’ll be able to deploy a greater number of ad campaigns at a greater scale, leading to incremental revenue. This results in higher product turnover…. which in turn helps you to drive business objectives (like beefed-up sales and higher stock turnover).

Reason 3: Easier Accessibility and Overview of Co-op Budgets

In traditional co-op schemes, retailers can struggle from a lack of spending clarity. Technology sidesteps this issue. In digital co-op marketing, you can account for every last dollar. This means a richer perspective on each brand’s assigned budgets, along with any nuances in sales performance. Plus, with standardized reporting, you can quickly compare different accounts.  

Reason 4: The Right Support Can Make Raising Co-op Budgets Easier

Understandably, brands who enter into co-op arrangements want to know how their ads perform. Transparency reigns supreme in negotiations, but it needn’t be a hurdle. With the right system in place, retailers can comfortably show a brand’s co-op performance, making it easier to raise further budgets.

 

Industry leaders. World-class speakers.

Meet them on Oct.10 for the New York Know Go: a private event on Co-op Marketing, Sponsored Product Ads and the future of Retail Media.

·         Network with retailers, brands and technology vendors.

·         Discover the best ways to spend and measure co-op funds.

·         Learn how to compete with the industry giants.

Click here for tickets

 

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