Order from Chaos: Technology’s Role In the Modern Retail Co-op

By Luke Metcalfe

on

September 20, 2018

Marketing co-ops are hardly a new concept. But an explosion of new brands and marketplaces means that large retailers are now selling wares from thousands of different companies. Setting up a co-op to facilitate marketing efforts between brands is incredibly complex and inefficient. As a result, both retailers and brands are missing out on the opportunity to co-ordinate media strategies and grow their ROI.

With rapid growth in the number of media channels and targeting options, both brands and retailers need to seize the opportunity by building a better co-op experience. Navigating the nuances of the brand/retailer relationship may still be an art, but technology can supply the science and structure needed to execute a modern, digital retail co-op.

A Lack of Structure

The optimal co-op process should function as a loop. The brands and retailer pool their budget, create a spending strategy, execute that strategy, and then report back. In an ideal world, reported findings fuel the budget and planning for the next campaign, and so on.

For many retail co-ops today, this efficient loop remains a pipe dream. Negotiations are done via email and documented in unstructured spreadsheets, which means that many co-ops are a mess. On the brand side, sales, marketing and product managers need to be in constant dialogue with the procurement, marketing and brand sales teams on the retailer side. 

That has to happen for every single brand, which means the retailer’s headaches are multiplied hundreds of times. Unsurprisingly, communication is difficult, structure is lacking, and it’s next to impossible to nail down a single process that can be applied across every single retailer.

How Can I Raise Co-op Marketing Budgets?

Even if brands could capture the communication piece, the fundraising process itself is overly complicated. Co-op marketing budgets can be raised in three ways:

  • Buying Negotiation: A pre-defined percentage of purchase volume is set aside as co-op budget. The retailer retains the right to allocate budget freely to the campaign of its choice.

  • Stock Replenishment: Sales based allocation of co-op budget. Depending on sales volume, the vendors commit to an additional budget allocation.

  • Performance Budget: Additionally, vendors have the opportunity to voluntarily assign additional co-op budgets in return for compelling performance reports.

Even if only looking through a digital lens, there are a variety of ways to apply these budgets. Funds can go towards the retailer’s site, via sponsored project listings. Money can also be spent off-site, using targeting tools to deliver search ads, shopping listings, paid social and programmatic display. All of these ads, of course, would link back to the retailer’s website. This ability to target audiences across different marketing channels gives brands more exposure for their products, driving brand perception and sales. Of course, this only addresses impression share and brand awareness. Tracking whether or not those co-op dollars led to the purchase of the advertised brand is a completely different challenge.

Better Reporting = More Informed Decisions

The final piece in the end-to-end process is reporting, which helps inform these decisions. All parties need a comprehensive overview of the campaign in order to validate the co-op's efforts. The retailers need an aggregated view of the co-op’s performance across all vendors. Meanwhile, the brand partners want to know the effectiveness of their investment in an increasingly granular way. These reports should ideally break down the co-op budget compared to ad spend, share of co-op investment compared to other PPC ads, and the share of retargeting compared to prospecting campaigns as well.

Given all of the potential headaches that come with building a modern co-op, it’s clear that the days of using spreadsheets to manage this kind of marketing are over. It’s more important than ever to build a streamlined model where every party has a uniform experience. This is why technology plays a bigger role in co-op marketing than ever before.

Technology-Driven Solutions

Ideally, co-op platforms should smooth out communication, budgeting and planning issues, helping retailers manage each step of the process. With these pieces under control, it’s easier to issue clear reports to every party. A co-op platform also makes it easier to adjust budgeting and campaign tactics based on the reporting, without having to basically restart the entire process with each brand each time. With more consumers turning to eCommerce, retailers need to invest in solutions that can facilitate a better co-op experience, uniting with their brands to profit during these changing retail times.

Learn more about co-op marketing, Sponsored Products and site monetization at [New York] Know Go on Oct.10. It's an exclusive event for retailers, their brand partners and tech vendors. As well as a keynote speech by Scott Galloway, and panels of the industry's leading figures, you'll also enjoy dedicated networking opportunities.

Buy tickets here.

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