In this four-part series, we’ll be looking at the co-op marketing challenges retailers and brands must be ready to tackle in 2019. We’ll identify the top five challenges facing each side —and discuss how these challenges can be overcome. When discussing brands in this article, we are referring to manufacturer brands. Specifically, those supplying retailers with their consumer goods.
If you’re unfamiliar with online co-op marketing, check out our introductory article on the subject:
For busy readers, we’ve provided a quick summary of the article’s content at the top. If you find the topics interesting, they are discussed in more detail below.
1. Establishing tracking and verification processes
2. Identifying a sustainable and scalable workflow
3. Communications and collaboration
4. Financing, acceptance, and approval
5. Brand safety
If you missed the first part of this series, it can be found here.
This challenge is two-fold. First off is knowing which retailer to pursue co-op activities with. Brands typically work with more retailers than they can count. The key here will be consolidating the retailers’ capabilities and culture with the brand’s objectives and goals. This will not be straightforward, as any information will typically come with some level of opaqueness. Overcoming this will require a lot of time spent probing retailers with qualifying questions. Brands must gain an understanding of what can be done and with whom.
Which brings us to the other side of the communications challenge. Brands do not typically have established access to and communications with the retailers’ performance marketing teams. Brands, being the retailers’ suppliers, will tend to communicate primarily with the retailers’ merchandisers or buyers. These people, typically located in an entirely different part of a retailer’s organizational structure, may not even know the names of the performance marketers in their own organization. Even if fully motivated to facilitate these discussions between the brand and their marketing teams, they may find this matchmaking difficult to carry out. The harmony of working across departments and teams on an ad-hoc basis shouldn’t be taken for granted. It is only natural for people to feel protective over their own work. A merchandiser may be worried about risking her relationship with a brand by handing their information over to a performance marketer she has never worked with or spoken to. For this reason, brands asking for introductions may encounter some hesitancy from their primary contacts on the retailers’ side.
Another challenge facing brands concerns acceptance. Any dollars sent on to the retailer for co-op purposes will have to come from somewhere. Will they come out of the branding budget? So called market development funds? If so, who signs off on that? Alternatively, it could come out of the performance marketing budget. Unless the person who pushes the brand to engage in online co-op also approves performance marketing budget shifts, this could be where everything stops.
One thing is convincing retailers to accept your money in exchange for visibility. Convincing those affected adversely by the proposed changes is another challenge entirely. This financing can also take the form of discounted stock. The retailer who typically spends $10M on the brand’s stock will receive it for $9M, on the expectation that they spend the $1M difference on co-op marketing efforts. In this case, the brand’s co-op champion will likely have to sell the idea to a series of internal employees, each with differing areas of focus and concerns. The benefit that will convince a marketer might mean very little for the person managing pricing and fulfillment. Failure to properly convince all internal stakeholders may be the difference between a successful co-op campaign and one that never even got started.
One big issue related to co-op marketing is the merging of two separate companies’ brand identities. Unless both sets of identities, values, and messaging somehow align (miraculously) , compromises will have to be made.Here, things also get tricky. How can a premium apparel brand, that focuses on quality and ethical manufacturing, unite forces with a retailer primarily focused on price and convenience? The solution to this can only be found through communication and clear, explicitly stated brand safety guidelines. Decision-makers must be sensitive to things their opposite numbers do not want to be affiliated or associated with. A brand may be willing to accept that not all of their strengths or values are mentioned in every single ad they appear in. They will be much less likely to accept an ad that flies directly in the face of these values. Finding whichever mutual characteristics the brand and retailer share—and using these as the guiding compass for creative decisions—will be the most effective path to collaboration.
Further, depending on how closely aligned the retailer and brand are on these topics, a creative approval process may need to be put in place. Let’s say the retailer’s marketing team has an idea for a campaign or ad concept. The brand gives the go-ahead, and only when both sides are satisfied with the creative proposals will it see the light of day. Experience has trained performance marketers to deem whichever ad has a good investment yield as good. When working across companies, this definition of good can be overly simplistic. Especially when venturing into unexplored areas of marketing, it can be better to slow down and make sure everything is being done in a manner both parties are comfortable with.
Stay tuned to www.nyknowgo.com for the continuation of this series. The next article will begin our exploration into co-op challenges facing retailers in 2019.
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