There’s an old saying that says “there’s no such thing as a free lunch”, but did you know that there IS such a thing as FREE ADVERTISING FUNDS? It’s true, that in many cases someone else will pay for your direct mail marketing program via cooperative, otherwise known as “co-op” advertising! Co-op advertising is a way for a business owner to pass part – or even all of a direct mail campaign to a supplier, or multiple suppliers (usually manufacturers or distributors). Some co-op programs fund as much as 100% of the cost of an advertising campaign. Manufacturers and distributors love Co-op advertising for their national brands because it drives traffic to local business who sell their brands.
Shocking fact: Most co-op dollars go unspent every year. Why? Because business owners don’t bother to go after these dollars. Why not? While this money IS “free,” it’s not “easy money.” It’s not difficult, but it is a process! Once you learn how to follow-the-money, and you understand the necessary paperwork, it’s not that difficult. As an alternative, you can ask your direct mail specialist if they will do the paperwork for you.
Here’s how a typical co-op advertising plan works: The local business owner accrues co-op advertising dollars based on their purchases from a manufacturer. Generally, these accruals run 1% to 5% of the business’s total purchases from the manufacturer/distributor. For example, if you purchased $10,000 of product this quarter from a participating vendor, and they co-op 2% of quarterly purchases, they will reimburse you $200, for your direct mail postcard that features their product(s). Keep in mind that co-op plans vary, and manufacturers impose various guidelines. So, yes, you’ve got to do some homework and some paperwork to find the “free” ad dollars. But they are there. How do you find out about manufacturers’ co-op plans? Your product’s sales representative should know about co-op plans they offer.
To find out which products you carry offer co-op, list the 5 or 10 top national manufacturers that supply most of your products. Call the manufacturers’ rep who handles your account (or the people who wholesale the products you carry). They are always looking for new ideas to move their products.
Every manufacturer works a little differently, each with specific guidelines you’ll need to follow. Some will provide pre-approved direct mail ads, others will expect your advertising rep to handle the layout (usually requiring submission for approval by the manufacturer prior to printing).
You should also expect to submit some documentation to the manufacturer or distributor after your postcards are mailed, and each supplier will have different requirements. Incomplete or incorrect documentation will delay the reimbursement of your funds, so make sure you cover all the details. Postal statements may be required, as well as a pdf file or a hard copy of the direct mail piece. Sure, this may seem a little overwhelming, but once you get the hang of it, it’s usually a simple procedure.
Most co-op plans expire on December 31st of each year. Any funds that you have accrued probably expire on this date and do not roll over. In other words, use it or lose it!
Remember that while it may seem like a lot of effort to get co-op dollars, when that reimbursement check comes in, it will all have been worth it. Of course, by then, you’ll already be reaping the benefits of a successful direct mail campaign!