From The Co-Op Files, “The Truth Is Out There.”

LMA Co Op

The Local Media Association just released a new study that summarizes some of the current thinking and analytics around co-op. “Co-Op: Are You Leaving Money on the Table?” reports that, “digital co-op is now offered by 69 percent of manufacturers . . . but at least 40% of it – more than $14B is left unused.” Is this true? It depends, and your experience may vary from your expectations if you set out blindly to capture the pot of unspent co-op gold.

As media sales team search for new sources of revenue to drive growth, inevitably attention turns to marketing dollars available through digital co-op advertising programs. Manufacturers and brands believe in local marketing and have long put their money where their mouths are by offering up co-marketing dollars for their local business partners. Savvy media sales people have cracked the code on co-op and used this knowledge…along with not insubstantial effort…to drive pockets of sales growth.

Various estimates from “industry insiders” range from $20B upwards toward $100B depending on how one defines co-op money, market development funds, brand network funds, etc. For media sellers, what’s mostly meaningful is what money can be allocated to paid ad inventory and can be tapped cost-effectively.

That large sum of unspent co-op money to spend on paid digital media advertising is an attractive target for any selling team. So why is it unused and how do sellers get to it? In this premium research report, the goal is to provide some answers by summarizing recent research and reports and by sharing case study insights.

To the extent there’s any  secret sauce in unlocking access to that $14B in unused co-op money, it’s really more a matter of elbow grease than secret sauce. It’s hard work to understand, comply with and track co-op programs and this is one reason why businesses leave the money alone. But if media sellers and adtech firms can become part of the solution, this incremental spend can be, and indeed is, being unlocked in meaningful ways.

The LMA report quoting BIA/Kelsey research reports that co-op advertising is popular with SMBs, sometimes accounting for up to half of total ad spend among those who use co-op funds. This means that be helping a company tap into co-op funds, you might literally double their spend with you.  However, the report quotes SalesFuel’s CEO Lee Smith as calling free unused co-op money a “misnomer” as those funds may not be easily tapped for various reasons.

Ultimately, the paths to unlocking those digital co-op dollars are not always easy nor obvious. But where there’s the potential for incremental spending, we’re sure to see sales leaders paying attention and experimenting with ways to achieve revenue growth opportunities.

 

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