Arizona Hispanic Chamber of Commerce

Taking Advantage of Co-Op Avertising

Q: Steve - One of the reps who supplies stuff for our business asked me if I would be interested in their co-op advertising program. Of course I have heard of co-op advertising, but truthfully, I don't know enough to make an informed decision. Any insight you could offer would be appreciated. Thanks!

John

A: I am a big believer in co-op advertising and think it is a far too-underutilized method of small business growth. Imagine getting one of your major suppliers to pay for half of a full-page ad you want to run in your Sunday paper, or half of a television buy you want to make. Sound too good to be true? It's not. Getting your major suppliers to help pay for your advertising is very possible, using a co-op advertising.

Co-op advertising is a cost-sharing arrangement between a manufacturer, supplier, wholesaler or distributor and your business whereby the manufacturer pays for part of your advertisement.

The catch is this: In exchange for paying for a sizable portion of the ad, the manufacturer or supplier will want the ad to mention their product or business. When a grocery store advertises a certain brand of bananas, when a tire store features a famous tire in its ads, or when a carpet company features a certain brand of carpet, you are seeing co-op advertising at work.

It is a classic win-win. For you, the small business owner, co-op funds offer a variety of possible benefits:

They allow you to reduce the cost of your current advertising, or advertise more.

They permit you to create bigger ads, or more colorful ads.

Because co-op funds can usually be used in any medium (television, radio, print, online, Yellow Pages, and so on), they make it possible to extend your brand into areas where you may not have had much reach previously.

By the same token, suppliers, manufactures, distributors, and wholesalers also benefit from co-op advertising programs:

Co-op ads increase overall awareness of their brand.

Co-op ads increase their sales.

Co-op ads increase their market share.

Are there downsides to co-op advertising? Yes, but not many. The main one is that the supplier will surely have restrictions on how the ad must look and how their product will be displayed. No big deal there.

So, is there co-op money available for you? You bet. Suppliers and manufacturers budget billions annually towards co-op advertising, and undoubtedly some of it goes untapped.

If you would like to start advertising with co-op money, here are the steps to take:

Learn about the programs available: You can begin to utilize co-op advertising by speaking with your major suppliers and finding out if they have co-op ad programs. If they do, get a copy of the rules for the program and be sure to follow them closely. Different programs have different requirements (size of the ad, placement of the logo or product, and so forth), so be sure to know what is required before placing your ad so that you will be eligible for reimbursement when the time comes.
Meet with your media representatives: Newspapers, magazines, and radio and television stations have ad reps that will help you with your ads. Have them assist you in creating an ad that will both reinforce your desired brand while also following the co-op ad rules. Yes, you want to fulfill your obligations and mention their product, but more importantly, you want an ad that highlights your business and draws in customers.
Keep good records: You need to keep accurate records of how much you spent on every ad with each manufacturer, and you also need to keep copies of the ad to show them your compliance.
Get reimbursed: To get reimbursed for your ad, you will need to submit a claim form that you will get from the manufacturer, along with a copy of the ad (if it's a print ad) or a copy of the script (if it was radio or television.) You will also present to the supplier and invoice and proof of payment. Then follow up.

Today's Tip: The "bible" of co-op advertising is a book entitled Co -Op Advertising Programs Sourcebook (http://www.co-opsourcebook.com.) It lists 4,000 co-op programs available. Though it has a remarkably hefty price tag ($637), it can likely pay for itself with one deal.