Not all Co-op Advertising Programs are Created Equal

February 20, 2013 Jared Shusterman

Not all co-op advertising programs are created equal. Especially when using co-op marketing funds or Market Development Funds (MDF) to differentiate you from your competitors, simply offering a program doesn't ensure success.

More importantly, when you are selling your program through a sales channel that has the choice to participate in your competitors co-op marketing programs, how can you cut through the noise?

In our last blog-post - noted here - we identified the top reasons why local partners say they don't participate in co-op marketing opportunities. Here are some basic and not so basic things you can do to increase adoption and be a winner in your channel marketing efforts.

Best Practices - Basic

Over-communicate and publicize - although common sense, most of your local sales channels are bombarded with the daily issues of running a business. Make sure the program is clearly visible and mentioned as often as possible. Publicize it in areas your local partners frequent - whether its web chat rooms, a local intranet site, web banners or industry forums. Use e-mail and/or direct mail to push the program in-front of your partners.

Plan - If you wait to the last minute, you can't communicate the program properly.

Keep it Simple - As you probably already know with your local partners, anything too complex kills adoption. Make the program and rules easy to understand. Make it easy to sign-up for the program.

Best Practices - Not So Basic

Eliminate Reimbursement Programs - Requiring your local partner to "front" the money for your share of the co-op fund allotment decreases adoption. The size of the marketing expenditure, the sales cycle and the working capital of your business partner all impact how important this is. Anytime you are asking your local partners to submit a "co-op" claim, it means they are out-of-pocket for the length of your claims process. By marrying the marketing procurement process up with co-op funds, you can eliminate an archaic processes all together. Software enables you to automate these workflows preventing your partners from having to front your share.

Be Fair - Not all co-op is equal. Consider the marketing asset or program being sponsored. If your brand is getting 90% of the coverage compared to the brand of your local partner, a 25% share in the spend probably won't cut it. We see this scenario a lot. A national brand wants to control the branding and coverage on the majority of the asset, but wants to be the minority in paying for the marketing spend. What kind of incentive is that?

Create Fund Types Proportional to your Brand Restrictions - A 50% split of a co-op enabled program is not the same as a credit fund. A percentage split requires a partner to pay for their share of the spend. If you are heavily controlling coverage of your brand, consider building a credit fund (a piggy-bank) for your partner tied to their sales levels. This fund can then pay for 100% of any co-op marketing activity. By capping the fund, you can stay within the same budgets already allocated while dramatically improving adoption.

Throw in a Trial Freebie - Throw in a freebie to your partners. Create a program you know will drive meaningful impact for your network, and tease them with a trial. Your co-op marketing spend can pay for a small portion of the program. Your partners can get their feet wet, and once it works, they'll jump further in.

Although the above just identifies a few of the things to keep in mind, partnering with the right company can automate many of these key points - and drive successful co-op and MDF strategy to increase success and adoption of your programs.

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Co-op Funds Management
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About the Author

Jared Shusterman

Jared is the Chief Executive Officer of SproutLoud. Since 2006, he has been primarily responsible for strategic direction of the Company, as well as the oversight of SproutLoud's Partner ecosystem. Prior to SproutLoud, Jared worked in Thomas Weisel Partner’s internet and online advertising investment banking practice in San Francisco. He served as the lead analyst on a number of Corporate Finance and M&A deals including Newscorps’ buyout of Intermix Media (Myspace.com). Jared graduated with a B.A. in Finance and Marketing from the McIntire School of Commerce at the University of Virginia. Jared has an MBA from the Kellogg School of Management at Northwestern University and is a member of the Young President's Organization (YPO). Jared has been honored as one of the Top 40 Under 40 Entrepreneurs by South Florida Business Journal and a Top 50 Entrepreneur by Business Leader Magazine. Jared lives in South Florida with his wife and two sons.

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