Billions of dollars aimed at helping businesses stretch their advertising budgets are going unclaimed each year because many owners don’t know about co-op advertising, recent industry studies have revealed.
A relatively unknown form of advertising, co-op is a cost-sharing arrangement in which manufacturers and suppliers provide financial assistance for customers’ advertising programs. It can often make the difference in whether or not a small business can afford to advertise at all.
Use It or Lose It
“Co-op advertising is an excellent tool that hasn’t been used enough,” maintains Judy Cerveti, San Francisco co-op manager for Pacific Bell Directory. In fact, the Cooperative Advertising Information System reports that some $25 billion in co-op is available each year, of which only 60 percent is claimed.
“Co-op can be used in every medium – from the Yellow Pages to print ads, radio and TV,” says Cerveti. “It can help you expand your ad- vertising, as well as make the most of your advertising dollars. Some manufacturers are cut- ting back on their programs because they simply are not being used.”
Co-op advertising works in a number of ways. For example, a retailer can buy goods from a manu- facturer and accrue co-op funds based on the amount of purchase. Those funds can be returned in the form of a cash rebate, a credit to the retailer’s account or in products.
“If a beauty salon purchases Matrix products and features Matrix in its advertising, and if it is a registered Matrix dealer, the salon will be eligible for reimbursement in beauty products based on the amount of purchase,” Cerveti explains. “Both Matrix and the salon will benefit. The salon will make a higher profit on those products it re- ceived as reimbursement, and Matrix will receive broader market coverage through the salon’s adver- tising.”
She encourages owners of small businesses to find out if their vendors or manufacturers have co-op programs. “If they don’t, see if they would be willing to sponsor one with you. Tell them, `I purchase $10,000 (or whatever the amount) worth of products from you every month. How about sponsoring my ad?’ Don’t be afraid to ask. There are many manufacturers and distributors who would be very amenable to participating.”
Co-Op from A to Z
In case you’re thinking your firm is too specialized to take advantage of co-op advertising, you may want to reconsider. The Co-op Handbook, published twice a year by the Yellow Pages Publishers Association (YPPA), contains thousands upon thousands of co-op program listings. Indexed by brand name and company, each listing provides the company name, the type of plan it offers, whether mention of competitors is allowed, and the type and size of ads required.
“Air pollution control, adhesives and glue, feed dealers, greenhouse equipment and supplies, fishing tackle, lingerie and optical goods are just a few of the categories in the handbook,” enumerates Jo Kaplan, Pacific Bell Directory’s San Diego co-op manager. “However, the handbook is not available to the general public. If you want to know what co-op programs are offered for your type of business, you should contact your local Yellow Pages sales rep.
“Co-op advertising is growing; we’re seeing more and more in the Yellow Pages. Co-op should be an integral part of every company’s advertis- ing budget – especially during difficult economic times.”
Significant Cost Savings
Jeanette Betancourt, owner of Fandiego fan stores in San Diego, Escondido and Palm Springs, agrees emphatically. “Co-op advertising has worked phenomenally well for me. It pays for half of my advertising. I’m saving thousands of dollars each year.”
Betancourt found out about co-op advertising from the manufacturers with whom she places orders. “When you pick up a line, you are given copies of policies such as freight, minimum purchase, returned goods and co-op advertising. Most national brands have it,” she notes.
“Most of the time, you have to advertise according to their guidelines. For example, some won’t allow you to mention another company in your ad. Others will pay for a percentage of advertising space, so you can run the names of other manufacturers who will pay a percentage as well.”
Patti Barth, co-owner with her husband of the Peninsula Kawasaki motorcycle dealership in San Mateo, California, is a 23-year co-op veteran. “As soon as my husband and his former partner bought the dealership, I discovered that the previous owners hadn’t been doing anything at all with co-op.
“Now we use every cent of it, which saves us thousands of dollars in annual advertising costs. I’m amazed people aren’t aware co-op is there to be used,” Barth adds, “and that they don’t take advantage of it.”
Teaming Up
Manny Perez has teamed his advertising program with Head Sports Inc. for 20 years. Both a tennis pro and pro shop owner, Perez is an avid supporter of co-op advertising.
“Head Sports has been a very important part of my business,” he says enthusiastically. “Beyond the co-op advertising, the company has sponsored promising young players I’ve coached along the way. I also serve on the Head advisory staff, helping new retailers order the equipment they need. And because I’m on the staff, if a customer cannot find a particular model of racquet – perhaps Head doesn’t make it any more – the company will refer the customer to me if I carry the model.
“Co-op should be a small business owner’s first consideration when advertising,” recommends Perez. “Most entrepreneurs think co-op is only for large department stores. But more and more companies are aware of the growing importance of small businesses and want to help them succeed.”
The Scoop on Co-op
No two companies’ co-op advertising plans are exactly alike. They may differ on method of reimbursement, use of logo, whether competitors are allowed, and on prior approval. Each firm also has its own application method.Your sup- pliers may already have provided you with the relevant details. “Nine out of 10 companies send their customers information about using their co-op advertising programs, but many don’t have a clue about co-op so they just file it away,” notes Jo Kaplan, Pacific Bell Direc- tory’s San Diego co-op manager.
But in case you’ve misplaced your supplier’s requirements, here’s a look at a typical co-op program listing as it would appear in the Yellow Pages Publishers Association (YPPA) handbook:
Company Name: Yakkety Yak Answering Machines Co-Op Contact Person: Larry Toksalot Address: 1225 Sputter Lane, Chattynooga, Tennessee Products and Services: Answering machines, dictaphones Classified Heading: Answering Machines — Automatic Trade Names Covered: Patter Promoter, Gabby Haze Type of Plan: Retailer Timing: Calendar year Participation and Accrual: Yakkety Yak will reimburse four percent of all phone machine orders put into stock and invoiced during the approved advertising period. Reimbursement: Check Prior Approval: Yes Ad Requirements: * Competitors not allowed. * Non-competitors but prorated. * Color allowed but not reimbursable. * Logo must be prominently displayed. * Product illustration must appear in ad. Type of Ads Allowed: Display, four-color sections Type of Directories Allowed: Local, Foreign (multi or adjacent) Claim Documentation: Tearsheet; itemized invoice showing name of publication, size of ad, rate and total cost required. Submit within 90 days of publication.
For more information about YPPA listings, call your Yellow Pages sales rep. And to find out if your supplier offers a co-op program, talk to your distributor or contact the company itself.
