How can a small retailer or distributor maintain a high profile
without spending lots of money? One answer is co-op
advertising.
Co-op advertising is a cooperative advertising effort between
suppliers and retailers-such as between a soda company and a
convenience store that advertises the company's products.
Both retailers and suppliers benefit: retailers because co-op
advertising increases the amount of money they can spend on ads,
and suppliers through increased local exposure and better
sales.
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Although each manufacturer or supplier that uses co-op
advertising sets up its own individual program, all co-op programs
run on the same basic premise. The retailer or distributor builds a
fund (called accrual) based on the amount of purchases made from
the supplier. Then, when the retailer or distributor places ads
featuring that supplier's products, the supplier reimburses all
or part of the cost of the ad, up to the amount accrued.
To start using co-op advertising, begin by asking your suppliers
what co-op programs they offer. Follow their rules carefully to be
sure you get reimbursed. Some suppliers require that ads feature
only their products, not any other supplier's. Others simply
ask that no competing products be included.
Though procedures may vary, there are three basic steps to
filing a claim for reimbursement. First, show "proof of
performance." For print ads, this is just a copy of the ad
exactly as it was printed. If you buy TV or radio ads, you'll
need a copy of the script with station affadavits of dates and
times aired.
Next, document the cost of the advertising-usually with copies
of applicable invoices from the publication or station where you
ran the ad. Third, fill out and submit a claim form, which you can
get from the supplier.
Other steps to make the most of co-op advertising:
- Keep careful records of how much you've purchased from each
supplier.
- If you try something unusual, such as a sales video or a
catalog, get prior approval from each vendor before
proceeding.
- If you're preparing your own ads, work with an advertising
professional to prepare an ad you think will appeal to the
manufacturer. Keep in mind the image the manufacturer presents in
its own ads.
- Make sure your company's name stands out in the ad. Your
goal is not so much to sell the supplier's product but to get
customers into your store.
- If there's no established co-op program, pitch your ad
campaign to the vendor anyway.
- Expect vendors to help out. After all, you're bringing them
business. If your vendor doesn't offer co-op money, look for
someone who does.
- Be sure to follow up. Money goes only to those who submit
claims.
Excerpted from Start Your Own Business: The Only Start-Up
Book You'll Ever Need, by Rieva Lesonsky and the Staff of
Entrepreneur Magazine, © 1998 Entrepreneur Press