Advertising cooperatives are a different beast altogether. Unlike co-op funds, advertising cooperatives cost you money. But it may be the best money you ever spend, because you enjoy high-quality production and your fair share of the clout of a substantial combined media budget.
Advertising cooperatives (also known as dealer ad groups) are common in the franchising business and the automotive business. The franchise business discovered a long time ago that it can do a much better job at advertising if it asked each of its franchisees to pony up a percentage of gross sales, which then goes into a “war chest” where it accumulates until enough cash is available to do a large-scale media buy for all the franchises together. An individual store can’t hope to do advertising on a scale to match the combined budgets of many stores. Strength in numbers is the name of the game.
The advertising cooperative also uses its money to employ the services of an ad agency that produces top-quality TV, radio, and print advertising, as well as in-store, point-of-purchase display materials, and, in the case of food franchises, menus, banners, bags, and so on. If you’re in a business that can take advantage of the media buying power and quality production provided by an advertising cooperative, be sure to get involved. Your business will most likely benefit.
Showing posts with label Boosting Your Budget with Co-Op Programs. Show all posts
Showing posts with label Boosting Your Budget with Co-Op Programs. Show all posts
Tuesday, September 28, 2010
Submitting your co-op claims package
After your ads have run and your campaign is attracting customers in droves, all you need to do is submit your co-op claims package. Your package includes your preapproval form, your proofs of performance, and a written request for reimbursement of the promised percentage of the campaign.
Continuing with the paint store example from the beginning of this section, imagine that you’ve made the requested changes, the ads run, the campaign is a success, and hundreds of people with questionable color sense fight their way through your doors. The Putrid Peach paint is history. Now you just submit the entire package — the signed preapproval form, the notarized media invoices, the notarized radio scripts, the CD or MP3 file of the finished radio spots, and the newspaper tear sheets — to your supplier along with your written request for reimbursement.
There. Wasn’t that simple? Now all you need to do is wait for the co-op check to arrive in the mail. And, what’s the bonus to all of this hoopla? You got rid of that disgusting paint color!
Continuing with the paint store example from the beginning of this section, imagine that you’ve made the requested changes, the ads run, the campaign is a success, and hundreds of people with questionable color sense fight their way through your doors. The Putrid Peach paint is history. Now you just submit the entire package — the signed preapproval form, the notarized media invoices, the notarized radio scripts, the CD or MP3 file of the finished radio spots, and the newspaper tear sheets — to your supplier along with your written request for reimbursement.
There. Wasn’t that simple? Now all you need to do is wait for the co-op check to arrive in the mail. And, what’s the bonus to all of this hoopla? You got rid of that disgusting paint color!
Obtaining proof of performance
After you’ve made the manufacturer’s requested changes to your ads (if there were any), you need to make sure to get what’s called proof of performance from the media, which is really just verification that you ran the ads as you said you would.
To return to the paint store example from the preceding section, when you buy your ads from the radio station, advise them that you’re using co-op funds (they usually know precisely what information you need). Make sure you receive the following verifications and co-op information with the station’s invoices:
- A notarized copy of your finished script listing the number of spots run and the total dollar amount those spots represented in your total media buy. If you’re using more than one script, each script needs to be notarized with the above information.
- A notarized or certified invoice listing the run times of each spot, the title of the script for each spot, and the total dollar amount of the buy. Advise the newspaper how many tear sheets you need to provide for the manufacturer (tear sheets are copies of the actual printed page on which your ad appeared — the manufacturer lets you know how many you need to provide as proof of performance). The newspaper provides those tear sheets along with its notarized total invoice. (For more on newspaper ads, check out Using Print Ads.)
The media you’re working with should know what your manufacturer needs as proof, but if not, be sure to ask the manufacturer. The proof of performance looks different for every medium.
Getting your ads preapproved
Manufacturers don’t just hand out co-op money as if it were candy. You can contact a manufacturer about a potential co-op ad campaign, or a manufacturer may contact you and suggest one. But before you can begin to spend any co-op money (no matter whose idea it was), you must get your ads preapproved by the manufacturer you’re working with.
Suppose you own a paint store. One of your major manufacturers has told you that it will co-op an advertising campaign to sell 1,000 gallons of Putrid Peach paint it has lying around. Your supplier tells you that, if you contribute some of your ad bucks ( you pick the amount you think you’ll need to dispose of this paint within a reasonable amount of time), it’ll match you 100 percent up to $5,000. Your total ad budget could, therefore, be $10,000 — more than enough to buy some local radio time and a couple of big ads in the newspaper.
Your next step is to get your ads preapproved by the manufacturer. In most cases, your supplier requires you to have all your advertising preapproved by the factory to make sure it adheres to the manufacturer’s co-op guidelines. Your supplier may have an approval form for you to fill out. Along with this completed form, you must submit copies of radio scripts, a CD or MP3 file of the final produced commercial(s), and at least a rough layout (plus a copy of the final, finished copy) for your newspaper ads. ( Be sure to ask what your manufacturer requires for various mediums.) Then the manufacturer’s advertising or marketing department either sends you a stamped approval as is or advises you to make certain changes. The department may also simply advise you of the required changes and stamp and sign the approval “Approved with changes.” Be sure to follow the manufacturer’s co-op rules and guidelines carefully, making whatever changes they request.
Never run co-op advertising without first obtaining signed preapproval from the supplier.
Suppose you own a paint store. One of your major manufacturers has told you that it will co-op an advertising campaign to sell 1,000 gallons of Putrid Peach paint it has lying around. Your supplier tells you that, if you contribute some of your ad bucks ( you pick the amount you think you’ll need to dispose of this paint within a reasonable amount of time), it’ll match you 100 percent up to $5,000. Your total ad budget could, therefore, be $10,000 — more than enough to buy some local radio time and a couple of big ads in the newspaper.
Your next step is to get your ads preapproved by the manufacturer. In most cases, your supplier requires you to have all your advertising preapproved by the factory to make sure it adheres to the manufacturer’s co-op guidelines. Your supplier may have an approval form for you to fill out. Along with this completed form, you must submit copies of radio scripts, a CD or MP3 file of the final produced commercial(s), and at least a rough layout (plus a copy of the final, finished copy) for your newspaper ads. ( Be sure to ask what your manufacturer requires for various mediums.) Then the manufacturer’s advertising or marketing department either sends you a stamped approval as is or advises you to make certain changes. The department may also simply advise you of the required changes and stamp and sign the approval “Approved with changes.” Be sure to follow the manufacturer’s co-op rules and guidelines carefully, making whatever changes they request.
Never run co-op advertising without first obtaining signed preapproval from the supplier.
Understanding the Rules, Regulations, and Restrictions
Each of your suppliers has a unique set of rules to which you must adhere in order to collect even a dime of co-op funds from them. The rules and restrictions set up within co-op programs can be so complicated that you may wonder whether these suppliers want anyone to even try to collect. But even though the restrictions can be a bit off-putting, if you follow the rules to the letter, your suppliers will reward you with either some extra cash to invest in advertising or some additional merchandise with which you can make a big, fat profit. All in all, the pain is worth the gain.
If you work with an ad agency, it may be able to help you navigate the rules and regulations. For example, my agency deals with several clients who count on co-op advertising funds to either augment or completely provide their advertising budgets. Because these accounts have hired my agency, we do all the work of collecting the funds for them. It’s one of the services we provide, and we do it month after month for multiple accounts (each with different rules of collection). Collecting co-op funds can be time-consuming, but if you know the rules and follow them, you can do it without much trouble.
When you’re working on your own, without an agency, you need to do the legwork yourself. In the following sections, I walk you through the process of using co-op funds — and collecting your money.
Co-op funds may be earned (and accrued) over a specific period of time and carry with them a deadline for use. This deadline is known as “Use it or lose it.” Make sure you find out about any deadlines imposed by manufacturers on the use of their available co-op advertising funds, and be sure to spend the money before it disappears.
If you work with an ad agency, it may be able to help you navigate the rules and regulations. For example, my agency deals with several clients who count on co-op advertising funds to either augment or completely provide their advertising budgets. Because these accounts have hired my agency, we do all the work of collecting the funds for them. It’s one of the services we provide, and we do it month after month for multiple accounts (each with different rules of collection). Collecting co-op funds can be time-consuming, but if you know the rules and follow them, you can do it without much trouble.
When you’re working on your own, without an agency, you need to do the legwork yourself. In the following sections, I walk you through the process of using co-op funds — and collecting your money.
Co-op funds may be earned (and accrued) over a specific period of time and carry with them a deadline for use. This deadline is known as “Use it or lose it.” Make sure you find out about any deadlines imposed by manufacturers on the use of their available co-op advertising funds, and be sure to spend the money before it disappears.
You’ve found your funds, now how do you get the dough?
After you’ve located the funds you need, you must run an obstacle course on your way to collecting them, providing all the proof the vendor requires that you actually ran the ads (see the section “Understanding the Rules, Regulations, and Restrictions” in this part). Then, and only then, will you receive your co-op funds in some form or another.
Suppliers can pay co-op funds in strange and unusual ways, including, but not limited to:
Suppliers can pay co-op funds in strange and unusual ways, including, but not limited to:
- Cash reimbursement
- Additional merchandise
- Discounts off future merchandise purchases
Knowing who to talk to
Each of the vendors who sell to your store has assigned a sales representative to work with you. These people visit you on a regular basis — of course they do, they want to sell you stuff! These sales reps are a great place to start the process of finding co-op funds. Even though they may not be inclined to offer you information on co-op funds on their own (because of some bonus arrangement they may have with their employers), they can definitely tell you about them if you ask.
If you get a positive response from one or more of these sales reps, get the lowdown on how you can go about collecting some of this money. Ask what you need to do to qualify for funds, and what, if you do qualify, they require you to do in order to receive a check. If the manufacturer’s rep tells you that no co-op funds are available to you, press the issue and ask whether vendor dollars are an option (which have no strings attached other than a few initial qualifiers).
You may also want to talk to the marketing and/or advertising managers of these suppliers. These people control the advertising funds (including co-op money), which means you can get your answer straight from the horse’s mouth. If the marketing or advertising manager says that the company doesn’t offer co-op funds, show how smart you are by asking for vendor dollars. This question definitely gets a marketing or advertising manager’s attention because, chances are, he’s never mentioned these available dollars to anyone.
If you’re working with an ad agency, ask your agent what her experience is with businesses similar to yours, and where these other businesses may have found co-op money. Agency people know where the bodies are buried, as they say in the ad biz. I even know of one group of radio stations in my area that has a co-op department for the express purpose of helping its direct advertisers find money they may not otherwise have known was available to them. (Of course, the radio stations benefit from this found money, too, because the companies spend that money advertising on their radio stations.)
One way or another, ask as many people as you can think of within the various companies you deal with about co-op funds. Unless you’re selling something obscure like arts and crafts made by individuals, you’re likely to find some hidden money somewhere.
If you get a positive response from one or more of these sales reps, get the lowdown on how you can go about collecting some of this money. Ask what you need to do to qualify for funds, and what, if you do qualify, they require you to do in order to receive a check. If the manufacturer’s rep tells you that no co-op funds are available to you, press the issue and ask whether vendor dollars are an option (which have no strings attached other than a few initial qualifiers).
You may also want to talk to the marketing and/or advertising managers of these suppliers. These people control the advertising funds (including co-op money), which means you can get your answer straight from the horse’s mouth. If the marketing or advertising manager says that the company doesn’t offer co-op funds, show how smart you are by asking for vendor dollars. This question definitely gets a marketing or advertising manager’s attention because, chances are, he’s never mentioned these available dollars to anyone.
If you’re working with an ad agency, ask your agent what her experience is with businesses similar to yours, and where these other businesses may have found co-op money. Agency people know where the bodies are buried, as they say in the ad biz. I even know of one group of radio stations in my area that has a co-op department for the express purpose of helping its direct advertisers find money they may not otherwise have known was available to them. (Of course, the radio stations benefit from this found money, too, because the companies spend that money advertising on their radio stations.)
One way or another, ask as many people as you can think of within the various companies you deal with about co-op funds. Unless you’re selling something obscure like arts and crafts made by individuals, you’re likely to find some hidden money somewhere.
Finding Out Which of Your Suppliers Have Co-Op Funds Available
The suppliers of many of the products that you sell most likely have available advertising funds that they’re happy to provide you — if you follow their sometimes convoluted rules and go to the trouble to ask for it.
For example, I have one client who told me that, in his first ten years in business, he never applied for co-op advertising funds because he didn’t know they existed. Not a single manufacturer from whom he was buying merchandise had bothered to tell him they had co-op funds available to augment his very limited ad budget. So what’s the moral to this story? If you want co-op funds, you have to ask!
Look at all the brands you’re selling, read every factory invoice, calculate what you’re spending with each of your suppliers, and go after them for ad bucks. Chances are, at least some of the companies who supply you with inventory have co-op or vendor dollars available. This Finding Out Which of Your Suppliers Have Co-Op Funds Available section helps you get the co-op ball rolling.
Knowing Who Uses Co-Op Funds
Each week, you probably receive one or more multi-page, color brochures from your local supermarkets. These brochures are filled with this week’s bombastic specials on everything from soft drinks to bathroom tissue, dog food to deodorant — and they usually contain coupons you can use when you shop at their stores. These newsprint brochures are almost entirely paid for with co-op funds provided to your local grocer by the companies that produce the dozens of items listed inside. Each of the manufacturers, suppliers, or distributors pays for the percentage of advertising space it receives in each brochure.
For instance, if the toilet paper company is getting one full page of a 20-page flyer, it tosses 5 percent of the total cost of the brochure into the pot. By advertising only those products that provide co-op funds, your grocer can, in theory, produce and distribute these weekly brochures without spending a dime of his own money.
Virtually any small business you can think of sells products for which co-op ad funds are available. If you’re a store owner, look around your store, and you may be able to identify products from big-name manufacturers who, in all likelihood, have co-op or vendor dollars set aside to aid you in selling these items.
Many small businesses either don’t know co-op money is available, or they find the thought of collecting the funds too daunting. For this reason, a lot of available cash is left on the table because small businesses often think they have better things to do than fill out forms and adhere to certain rules in order to collect a few extra bucks to throw at advertising. You can work this situation to your favor, however, by taking advantage of the money your competitors aren’t seizing for themselves. Yes, it’s work. But when you receive a nice check from one of your manufacturers, or some free goods, or a big discount off your next purchase, the extra work is well worth your time and trouble.
Supply and demand are very important things to remember when you’re considering co-op funds. Here’s an example for you to mull over: The manufacturers and distributors that supply the grocer provide a certain amount of co-op money based on the total amount of their products the grocer purchases. If the grocer buys 1,000 cases of creamed corn for a special price and then advertises “dramatic savings” on that merchandise in his weekly mailer, he may get $1,000 in extra co-op funds as part of his deal with the creamed corn supplier. And you can bet that the grocer won’t buy 1,000 cases of any particular brand of creamed corn unless he also gets a boost of co-op money from the supplier to help him peddle it.
When you add up all the items advertised in these flyers, you can be sure that someone in the grocer’s advertising department spent a heck of a lot of time finding and figuring out what money was available from which suppliers, and how to collect and spend it. A local chain of supermarkets for which I have done advertising work has a full-time employee who does nothing but handle co-op funds.
The grocery business is just one example of who takes advantage of co-op funds and what they must do to collect them. Many other businesses offer co-op funds. For example, when you walk into a bookstore and see certain books displayed prominently at the front of the store or on end-caps (the face-out display of books at the end of an aisle), you probably know those store owners or managers didn’t feature those particular books simply because they enjoyed reading them. Instead, the publishers of the books on display cooperated with the store owners by spending money to advertise those books. And those promotions typically tie in to some theme or holiday, such as books by African-American authors during Black History Month (February), coffee-table books at the December holidays, or golf and other stereotypically “manly” pastimes around Father’s Day.
And, of course, it’s not just bookstores that do this: Hardware and homeimprovement stores partner with the manufacturers of the tools and raw materials they sell, and even service businesses may be able to find companies that offer co-op funds available to them, if the service includes products available from other vendors. In other words, co-op opportunities are as diverse as the companies that offer it. But you can always find a catch — there’s no such thing as a free lunch (free creamed corn, perhaps, but no free lunch). The retailer or small business (that’s you) must adhere to certain rules and make certain purchases in order to qualify for and collect co-op money.
But don’t be dismayed — it’s worth it! (For more on these qualifiers, check out the section “Understanding the Rules, Regulations, and Restrictions.”) Another form of cooperative funding is called vendor money. Vendor money is in addition to any of the manufacturer’s co-op funds you may be entitled to. It’s usually passed along to the squeakiest wheel — the clever retailer who knows it exists and has the cheek to go after it. Vendor money has no strings attached; you receive it either in the form of cash or as a discount on future purchases.
For instance, if the toilet paper company is getting one full page of a 20-page flyer, it tosses 5 percent of the total cost of the brochure into the pot. By advertising only those products that provide co-op funds, your grocer can, in theory, produce and distribute these weekly brochures without spending a dime of his own money.
Virtually any small business you can think of sells products for which co-op ad funds are available. If you’re a store owner, look around your store, and you may be able to identify products from big-name manufacturers who, in all likelihood, have co-op or vendor dollars set aside to aid you in selling these items.
Many small businesses either don’t know co-op money is available, or they find the thought of collecting the funds too daunting. For this reason, a lot of available cash is left on the table because small businesses often think they have better things to do than fill out forms and adhere to certain rules in order to collect a few extra bucks to throw at advertising. You can work this situation to your favor, however, by taking advantage of the money your competitors aren’t seizing for themselves. Yes, it’s work. But when you receive a nice check from one of your manufacturers, or some free goods, or a big discount off your next purchase, the extra work is well worth your time and trouble.
Supply and demand are very important things to remember when you’re considering co-op funds. Here’s an example for you to mull over: The manufacturers and distributors that supply the grocer provide a certain amount of co-op money based on the total amount of their products the grocer purchases. If the grocer buys 1,000 cases of creamed corn for a special price and then advertises “dramatic savings” on that merchandise in his weekly mailer, he may get $1,000 in extra co-op funds as part of his deal with the creamed corn supplier. And you can bet that the grocer won’t buy 1,000 cases of any particular brand of creamed corn unless he also gets a boost of co-op money from the supplier to help him peddle it.
When you add up all the items advertised in these flyers, you can be sure that someone in the grocer’s advertising department spent a heck of a lot of time finding and figuring out what money was available from which suppliers, and how to collect and spend it. A local chain of supermarkets for which I have done advertising work has a full-time employee who does nothing but handle co-op funds.
The grocery business is just one example of who takes advantage of co-op funds and what they must do to collect them. Many other businesses offer co-op funds. For example, when you walk into a bookstore and see certain books displayed prominently at the front of the store or on end-caps (the face-out display of books at the end of an aisle), you probably know those store owners or managers didn’t feature those particular books simply because they enjoyed reading them. Instead, the publishers of the books on display cooperated with the store owners by spending money to advertise those books. And those promotions typically tie in to some theme or holiday, such as books by African-American authors during Black History Month (February), coffee-table books at the December holidays, or golf and other stereotypically “manly” pastimes around Father’s Day.
And, of course, it’s not just bookstores that do this: Hardware and homeimprovement stores partner with the manufacturers of the tools and raw materials they sell, and even service businesses may be able to find companies that offer co-op funds available to them, if the service includes products available from other vendors. In other words, co-op opportunities are as diverse as the companies that offer it. But you can always find a catch — there’s no such thing as a free lunch (free creamed corn, perhaps, but no free lunch). The retailer or small business (that’s you) must adhere to certain rules and make certain purchases in order to qualify for and collect co-op money.
But don’t be dismayed — it’s worth it! (For more on these qualifiers, check out the section “Understanding the Rules, Regulations, and Restrictions.”) Another form of cooperative funding is called vendor money. Vendor money is in addition to any of the manufacturer’s co-op funds you may be entitled to. It’s usually passed along to the squeakiest wheel — the clever retailer who knows it exists and has the cheek to go after it. Vendor money has no strings attached; you receive it either in the form of cash or as a discount on future purchases.
Boosting Your Budget with Co-Op Programs
- Clearing up what co-op advertising funds are
- Finding suppliers who have funds you can use
- Being aware of the supplier’s restrictions
- Applying for, and receiving, co-op money
Many suppliers, manufacturers, and distributors of various major products and goods have advertising money set aside for use by their retailers. These funds are called cooperative advertising (co-op for short). The term cooperative means just what it says: If you spend some money, the manufacturer will also spend some money — the two of you cooperate to get the advertising job done.
Although co-op advertising is sometimes very complicated, frustrating, confusing, and time-consuming, it’s well worth the effort. Co-op funds are wonderful when you can add these extra dollars to your own advertising budget and use them to make a much bigger splash in your market. In this Boosting Your Budget with Co-Op Programs, I give you the information you need to put co-op funds to work for you, demystifying this often-confusing part of the advertising arena.
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