22% of Co-op and Market Development Funds Support Local Events

Wed Oct 19, 2016

Kathy Crosett

In its most recent State of Local Marketing, Brandmuscle surveyed over 2,000 local businesses co-opand 200 brand companies to get a picture of what’s happening with co-op funding. Small businesses, when they have enough internal resources, are enthusiastic users of co-op funding. Brands continue to use co-op funds to reach consumers in the local market. These brands are gradually making the transition to digital media, but they have reservations about one specific format and that isn’t likely to change soon.

SMB and Co-op Money

As a media sales rep, you know showing a client or prospect how to pay for advertising while using someone else’s money is a huge deal. In the Brandmuscle survey, about 62% of local businesses were eligible for co-op funding. The smaller businesses, those that spend less than $5,000 a year on marketing, rely heavily on specific strategies that often don’t involve co-op funding:

  • Direct mail 53%
  • Websites 76%
  • Facebook 74%
  • Sponsorship 46%

Smaller businesses, including your clients and prospects see these ad strategies as easy to use and less expensive than traditional media. For example, only 27% of these businesses use newspaper while 16% use TV.

Some of these businesses are eligible for co-op funds, but don’t use them. SMB owners are busy people and many of them perceive the use of co-op programs as being complicated and time-consuming. If you have access to a service like AdMall, co-op plan information for thousands of brands is at your fingertips and can be a big selling point when you’re pitching your media to a prospect. You can make life easier for your clients by finding data on active plans and helping them process claim forms.

Brands and Co-op Programs

About 55% of local businesses which carry branded products use co-op funding. These marketers understand the benefits of working with brand partners to get reimbursed for their marketing activities. In fact, nearly half of their ad budget, for 50% of these businesses, is funded by brand partners.

At the same time, brands continue to have a big interest in getting out the word about their products at the local level. The good news for media sales reps is that brands tend to favor traditional media in their co-op programs. The Brandmuscle study included a review of how brands spend the co-op and market development funds they make available to local affiliates. For 2015, these numbers broke out as:

  • Traditional 60%
  • Digital 18%
  • Local events 22%

For now, brands remain very cool to funding social media efforts for their local affiliates. Brandmuscle research reveals that brands are worried about control. Typically, a brand wants to control its message and appearance in the marketplace at all levels. Allowing local affiliates, in real time, to portray their take on a brand in a social media environment, would result in a loss of control.

Your Action Plan

The takeaway message from the Brandmuscle study is that major brands continue to favor traditional media in the co-op funding programs. They are also increasing their spending, with local affiliates, on local event sponsorship. These events also need to be advertised in local media, which represents additional opportunity for selling your space to your clients. The next time you meet with clients and prospects, remember to suggest the use of co-op funding as a way to reduce their costs.

 

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About Kathy Crosett

Kathy is the Research Director for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel.

View all posts by Kathy Crosett
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