Practical Ecommerce

How to Use Retail Co-op Funds for Content Marketing

Manufacturers and distributors that supply mid-market and enterprise retail businesses will sometimes pay those retailers to place ads alongside content as part of a cooperative advertising program. The secret to receiving this funding is in how the retailer asks for it.

Co-op advertising is common in the retail industry. It is normal for a retailer to place an ad specifically mentioning a brand and, in return, that brand reimburses the retailer for some portion of the advertising expense.

Some suppliers may even pay for 100 percent of the cost of advertising if the retailer uses ads the brand specifies or that meet other requirements.

Brick-and-mortar Legacy

Co-op advertising programs have their roots in brick-and-mortar retailing and in traditional advertising.

Ask for co-op funds for a newspaper ad or a radio commercial, and the answer is probably “yes.” But ask for the same amount of money to pay for an online article as part of a content marketing initiative and you might get “no.”

For many suppliers, content marketing is difficult to understand and justify.

First, your sales rep — the person who sells the supplier’s products to your company — may be responsible for approving co-op requests. This is a problem because sales reps are not typically marketing experts. He might know the product line well, but he doesn’t know content marketing.

Second, the executives at your supplier likely don’t understand marketing either. Your sales rep probably has to justify his decision to approve your co-op funding request to an executive, perhaps the company’s national sales manager, who also doesn’t understand content marketing, either.

Finally, content marketing can be hard to evaluate. If it co-ops a newspaper ad, a supplier bases the value of that ad on the newspaper’s circulation. Similarly, it has an idea of how much radio ads or television ads cost, and it will ask for a copy of invoices to justify the expense. Your supplier is used to making these sorts of valuations. But that supplier may not have a way to evaluate content marketing. From the supplier’s perspective, content marketing could be throwing away money.

Provide an Advertising Vehicle

So that is the quandary.

You want to have a robust content marketing program with professionally written and beautifully presented articles that attract, engage, and retain customers for your business. You understand that long term this sort of owned media will be much more valuable to your company than a simple newspaper ad.

If you want co-op funding, you also have to think of your suppliers and what they need: easy to understand and evaluate advertising.

The solution is to provide an advertising vehicle with your own content.

North 40 Outfitters, as an example, is a brick-and-click retailer based in Montana. The company regularly publishes “emagazines” via the Joomag digital publishing platform.

North 40 Outfitters creates online magazines that are part of a content marketing program — and a vehicle for co-op ads.

North 40 Outfitters creates online magazines that are part of a content marketing program — and a vehicle for co-op ads.

The editorial content is good for readers. And suppliers pay co-op money to have ads — emphasis on ads — in these electronic magazines.

Your suppliers understand what a magazine is, even if that magazine is online rather than printed. What’s more, your supplier may be more likely to pay for an ad in an online magazine, next to your written content, than it is to pay for the content directly.

As another example, a retailer in Idaho launched its second radio program in 2017. This radio show plays each weekend on four different stations with about 6,000 weekly listeners.

The retailer charges eight suppliers $750 each for a 30-second commercial that will run in a month’s worth of episodes, which is four or five weeks depending on how many Saturdays there are in a month.

Collectively, these commercials generate a total of $6,000 in co-op funds a month for the radio program. This radio show is also published as a podcast and transcribed for blog posts. It is an important part of the company’s content marketing.

In February, this same retailer is launching a monthly online magazine, using the Issuu publishing platform. It will ask its top 30 suppliers to place ads in various issues, and if successful, it will generate more than $200,000 in co-op advertising payments in 2018.

Funding Content

In each of these examples, the retailer is providing its co-op-paying suppliers with an easy-to-understand, traditional form of advertising.

The ads, however, are in the retailer’s own content-based product, be it a radio show or an online magazine.

This is an approach that just about any mid-market or larger ecommerce or brick-and-click business can execute.

There are a few things to do.

  • Be up front about your plans. Your suppliers need to know that it is your magazine. They need to understand your plans for promoting it and your expected circulation.
  • Settle on the ad cost. Co-op programs often reimburse a businesses for a portion of actual advertising costs. Suppliers are accustomed to seeing invoices for those costs, which you won’t be able to provide. So settle on the ad cost in advance and have your supplier’s representative sign an agreement.
  • Diversify your co-op advertising. Until you are able to establish a trust-based co-op relationship with your suppliers, make ads in your owned media a relatively small part of your overall co-op advertising investment.
Armando Roggio

Armando Roggio

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