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Co-op Advertising

If your suppliers offer co-op advertising programs, it could save you lots of money.

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.

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

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