Cooperative advertising is simply shared advertising. The most obvious advantage to the
retailer is that much of the advertising cost is paid by an outside source such as a
manufacturer or wholesaler. These parties interested in the sale of their goods will often
pay up to 50 percent of the advertising expenses, if you as the retailer feature a
particular product or brand in your advertisement. This is your choice.
Decide if cooperative advertising can help improve your sales and profit. Such
advertising publicizes a close relationship with a well-regarded brand. Brand
identification with your store can draw customers. Consumers look to trusted brands. By
promoting your association with well reputed products you create a sense of reliability
and confidence in the mind of the consumer.
If a brand you’re selling has consumer appeal, cooperative advertising is a good
investment. If you get a 50 percent share as a dollar-for-dollar match—you in effect
save 50 percent on your advertising costs. That’s an offer that’s hard to beat,
when you are trying to gain visibility in a market made on repeat advertising. Keep in
mind that the manufacturer or wholesaler will generally reimburse you after you have
incurred and paid for the expense. Be sure you have budgeted for the cash flow of the
advertising expense.
Cooperative advertising is a way to stretch your advertising dollars. By pooling your
resources you will be able to buy substantially more space or time in the advertising
medium of your choice. Or you may choose to run the same volume of advertisements and
simply utilize the 50 percent reimbursement as a cost savings. More often than not a
retailer will use cooperative advertising to pump up the size and frequency of advertising
during a promotion or peak season. The manufacturer often supplies recommended layout and
copy for cooperative ads. In some cases, specific elements will be required in order to
receive the cooperative support.
Cooperative advertising can be a real benefit to a retailer. However, you need to make
this decision carefully. There are a few constraints on cooperative advertising. First,
you will have to make some compromises in the advertisement to accommodate your ideas and
the manufacturer’s or wholesaler’s messages. In some cases, this will mean
pre-approval of your ads. Most of the time it will mean your invoice and advertisement are
reviewed after-the-fact. If your advertisement met the criteria set forth by the
manufacturer or wholesaler you will be reimbursed.
Cooperative advertising should be integrated in your planning for an overall
advertising budget that covers each season. Be wary of committing to unplanned expenses
that add to your overhead costs. Cooperative advertising should be considered a component
of your efforts, not a license to increase overall advertising spending by 50 percent.
Also evaluate the return on cooperative advertising. Do the ads increase consumer
spending, foot traffic and awareness? If yes, then you have found that cooperative ads are
a benefit to the success of your small business advertising campaign.
If you would like to discuss advertising strategies, including cooperative advertising,
call the SCORE Association (Service Corps of Retired Executives). By calling 1 (800)
634-0245, you can receive a referral to the SCORE chapter nearest you. SCORE is a
nonprofit, volunteer service organization. More than 12,000 working and retired business
owners and executives donate their time and talent to serve as business mentors.
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