Co-op Advertising Program 101 (Reduce Stress and Optimize Returns)

Advertising Compliance, Co-op Advertising

Simply put, co-op and compliance advertising programs form cost-sharing partnerships between manufacturers and retailers. The parent brand subsidizes their local retailers' ad budgets either by providing funds upfront or reimbursing them for marketing efforts. The reimbursement percentages can vary, but are normally very large (as high as 100%). These programs provide a way for small businesses to dramatically increase their ad budgets, magnifying the strength and reach of local campaigns. The benefit to local retailers is obvious: more money for the marketing budget. It's also important to understand what parent brands get from ad co-op and compliance programs.

Co-op advertising helps take large brands to local markets.

How to Participate in Advertising Compliance Programs

To participate in an ad compliance program, local vendors have to play by the manufacturer's rules. That means adhering to a set of style guidelines and other requirements that standardize the way each retailer reaches their local market. For example, many co-op advertising programs separate some funds that can only be claimed for online efforts, because manufacturers understand the benefits of digital marketing.

Some brand guidelines are more restrictive than others, but all of them have been carefully created by the manufacturer's marketing team, often with the help of trade promotion management companies. Ad compliance programs are built to improve the way local distributors market the products, ensuring that their efforts are good for the parent brand. The theory here is that what's good for the goose is good for the gander. When retailers reach their local audience more effectively and make more sales, the manufacturer also benefits.

Co-op advertising programs offer a huge opportunity to small businesses, but vendors have to play by the rules.

What Are the Disadvantages of Co-op Advertising Programs?

One potential downside of advertising compliance is that it puts restrictions on how a company can advertise.

The biggest risk of participating in an ad compliance program is closely tied to the primary benefit– co-op advertising encourages local retailers to spend above their means. The potential for increased funds allows small businesses to create ambitious campaigns, but a declined claim can leave the retailer alone on the hook for a large expense. It's absolutely critical to get claims paid so your business doesn't end up shouldering the cost alone.

When a small business masters advertising compliance, they can safely spend their advertising budget with confidence that they'll get the money back. Some dealers like to think of ad money spent similarly to accounts receivable. As long as the claim gets approved, those funds will come right back into the marketing budget. To avoid financial trouble, it's good to start by understanding how to work within the program's rules and requirements.

Who Manages Ad Compliance Programs?

Most manufacturers don't control their co-op advertising programs in-house. Instead, they trust experience trade promotion management companies to manage the day to day. These companies normally have a well-defined system, which allows informed marketers to streamline workflows and get their claims paid. Work closely with the relevant trade promotion management company to understand how their program functions and what you can do to maximize returns.

Trade promotion management companies help manufacturers develop their brand to local approach.

How to Reduce Risk of Co-op Advertising

Since ad compliance programs have been so carefully created, it should be made clear to the local vendors how to ensure reimbursement from co-op advertising. There are a handful of steps that will help small businesses get better returns from ad compliance efforts:

  • Work Ahead – Most compliance programs offer a way for retailers to get their marketing efforts pre-approved. Submit a plan, and the trade promotion management company will either respond with approval or requested revisions. Make all the suggested edits if needed, then keep submitting until your ad has received prior approval. If your creative team isn't known for being punctual, this might be the time to find a better fit.
  • Know the Rules – Not every marketing effort will be eligible for reimbursement. The co-op program may decline all or part of a claim if the deem it to be ineligible. Before instigating an ad buy or other marketing expense, it's important to know if the cost will be covered when it comes time to submit for reimbursement.
  • Submit on Time – Advertising co-op and compliance programs place utmost importance on timeliness and attention to detail. If a claim is submitted late, or without proper support, it will not be reimbursed. If you don't know what kind of supporting documentation to include with a claim submission, it's a good idea to find out ahead of time.

If someone in-house at a small business has a consummate understanding of the relevant ad compliance program, that's great. If not, it's likely better to trust an agency with co-op advertising experience. The cost of paying an agency is considerably less than the cost of having claims declined. It's imperative for dealer's to have an expert managing their ad compliance– inside information, industry connections, and proven workflows can guarantee co-op reimbursement. Handled appropriately, these programs can revolutionize ad spending and help businesses increase penetration in their local markets.

Co-op programs are especially important to automotive companies

Digital Marketing for Car Dealers

Here at Buddy Gardner, we can leverage our expertise with advertising compliance to take charge of your entire co-op account, from ad creation to claim submission. Connections within some of the top trade promotion management companies in the United States help us accelerate workflows to ensure claim approval. Our clients even get an Advertising Co-op Reimbursement Guarantee to give them complete peace of mind. When small business owners and other leaders don't have to worry about their advertising claims, they have more time to focus on the big picture: making more sales and growing the company.

Getting involved with ad compliance or a co-op advertising programs is a great idea for any small business with the opportunity to do so. Elevated standards and an increased budget increase the effect of a vendor's marketing efforts, and produce measurable improvements over time. There are enormous benefits with minimal risks when a retailer can work with ad compliance instead of against it, so demystify the co-op process, eliminate stress, and optimize returns.

Contact us today to learn how we can streamline your advertising co-op account and ensure maximum reimbursement.

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