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Co–op Advertising: Stretch Your Advertising Dollar

Want to stretch your advertising dollar? Consider cooperative (co–op) advertising. Co–op advertising is a cost–sharing arrangement between a manufacturer and a retailer. The retailer places an ad that is partially paid for by the manufacturer in exchange for the manufacturer's product being mentioned in the ad.

For example, my father had an expensive, prominent billboard on the San Diego Freeway in Los Angeles that said in a large font "Carpet World...Elegance Underfoot." At the bottom of the billboard, in much smaller print, it said "Featuring Ban–Lon Carpets." Ban–Lon paid for most of that ad. That is co–op advertising. Similarly, when a convenience store advertises a certain product, you can bet that that company helped pay for the ad.

Collectively, manufacturers earmark approximately $30 billion annually to help small businesses stretch their advertising budgets according to the Yellow Pages Publishers Association (YPPA). Yet surprisingly, according to the YPPA, much of that money goes unused. Co–op opportunities are available in every medium, from yellow page listings to print ads to radio and TV spots.

For example, "A Cut Above", a hair salon in Portland, Oregon, has used co–op advertising to simultaneously reach more people and funnel its profits into growth activities instead of advertising. A Cut Above sells the Aveda™ product line and joined its co–op program five years ago. The salon has used Aveda's co–op money to advertise on movie theater screens, in the phone book, and in the newspaper. The subsequent increase in revenues has allowed the shop owners to expand and remodel the salon.

To start using co–op advertising, ask your suppliers what co–op programs they offer. Follow their rules carefully to be sure you get reimbursed. Some suppliers require that ads feature only their products, not any other supplier's. Others simply ask that no competing products be included.

Normally, you will need to pay for the ad up front, and for reimbursement, present proof to the supplier that you mentioned their products. For print ads, just a copy of the ad exactly as it was printed will work. If you buy TV or radio ads, you'll need a copy of the script with station affidavits of dates and times aired. You will also need to document the cost of the advertising, usually with copies of invoices from the publication or station where you ran the ad. Finally, you will need to submit a claim and your documentation. The supplier should detail their individual procedures.

Here are a few additional ideas to make the most of co–op advertising:

  • If you're preparing your own ads, work with an advertising professional to create an ad you think will appeal to the manufacturer. Keep in mind the image the manufacturer presents in its own ads. The vendor will normally supply you with camera–ready (or digital) artwork of its logo and/or product.
  • Make sure that you understand the vendor's guidelines for co–op advertising. Some vendors have severe restrictions about how their name can be used while others are far more lax. Your vendor should have some written guidelines for you. Follow them closely so that you can be assured of getting a reimbusrsement.
  • Make sure your company's name stands out in the ad. Your goal is not so much to sell the supplier's product but to get customers into your store.
  • If there's no established co–op program, pitch your ad campaign to the vendor anyway.
  • Expect vendors to help out. After all, you're bringing them business.
  • As with any type of advertising, make sure that you are complying with all regulatory and legal requirements.

For more information about co–op opportunities, pick up a copy of the Co–op Source Directory (National Register Publishing, part of Reed Elsevier New Providence, 800–521–8110).


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