Use Co-Op and Co-Branding Advertising to Build a Successful Small-Town Business
How to use other people's money to help build your small-town business
If you've been in business long enough to have developed a relationship with vendors and suppliers, it may be time to consider co-op and/or co-branding advertising.
These two methods will help you advertise your products at a lower rate by having another entity pick up part or, in some cases, all your advertising expenses.
Let me define each term, and then I'll deal with how to use each one individually.
Co-Op Advertising: In this form of advertising, a retailer promotes a specific brand of merchandise that the store carries. A clothing store might promote a designer brand of clothing. Since the ads could be designed to sell more of that clothing brand, the manufacturer will pay part or all of the advertising costs. In some cases, the manufacturer might produce all the ads with a spot in the ad for the store name, hours, phone, etc.
Co-Branding Advertising: One of the most common forms of this kind of advertising is a soft drink brand promoting the NutraSweet® sweetener. In a local small town, it might be as simple as the local movie theater teaming up with a pizza shop and giving out each other's coupons. Usually, co-branding creates an additional benefit for the consumer. The pizza buyer would receive a two-for-one movie rental coupon with the pizza, or the movie renter would get a $2.00 off coupon on their pizza order.
As you can see, there are advantages to both kinds. And sometimes, they can be used together. So, let's look at each in more detail and how to make them work for you.
Co-Op Advertising: Two Rules To Know
There are two things you need to know right off the bat about co-op advertising. One is that most vendors will not come screaming to you that they have co-op money available. And two, it may take a while for you to get your co-op money.
These payments sometimes take forever to work their way through the approval system. But once you begin using co-op regularly, even though it may be six months later, your monthly checks should start showing up. Pin your vendor down about when to expect payment and get it in writing if possible.
Make The Contacts
The first step in your quest for co-op money is to contact everyone who supplies you with products and learn about their co-op procedures. Usually, they are going to be strict. Their logo must be a specific size, perhaps certain colors, and other restrictions. Before going to the expense of an ad, submit it to the manufacturer and get their written approval before placing it.
Don't forget to check with your local media. Radio, TV, and other media often give co-op if they are featured in your ads. After all, they advertise too.
Know The Rules And Follow Them
I mentioned this above, but I should enforce it more strongly here. These folks will not give you money if you stray even slightly outside their guidelines. They are extremely strict, and you must follow every instruction to the letter or provide them with an out not to pay you. It's not that companies are out to get you to pay for their ads, but they want their business presented in the best light possible.
Bottom line. Get everything, and I mean everything, in writing. Submit copies of all ads and approval documentation with your co-op request for payment. This will also speed up your payment in some cases.
Don't Forget Why You're Doing This
Yes, you're promoting a brand name, but don't forget that the principal reason for the ad is to make the customer contact your business. Your space in the ad may be limited, so make sure your business information is displayed as prominently as possible. The whole reason for the ad is to get business for you, not the manufacturer. If you get it, so will they.
The More You Give, The More You Get
Keep accurate records of how much product and how much co-op you use. If your co-op is successful, the company may increase its share of the money it shares with you. The more you buy, the more they will give you to grow your business.
Know where the breaks are. You may sometimes get more co-op money if you go up one more level. The added expense will probably be much less than the cost of the advertising and the increased business it will produce.
Take The Bull By The Horns
If you check with your suppliers and they do not offer co-op advertising, perhaps you need to make a proposal, show it to them, and ask them to consider starting a co-op program. The worst thing that can happen is they may say no. But they may also say yes.
Co-Branding: Rules To Remember
The first and most important rule is that you are hanging your name out there with someone else. You must be sure that they are above reproach. If they have a scandal or public relations problem, it suddenly becomes your problem. So, if you have reason to believe that a "60 Minutes" camera crew may appear on your doorstep, this is not a company you want to do business with.
Your customer base is going to be affected by any alliance you make. So, ensure that any company you deal with has the quality and service your customers are accustomed to.
Who Benefits?
Before entering any relationship, you must feel confident that it benefits both parties. And the products or services offered must provide a worthwhile benefit to both parties. What if your customers like your side of the arrangement, but the other side is resistant after a while and decides to end the relationship?
You'll need to consider whether this is a long-term or short-term arrangement. Do both companies have the ability to supply needed products and services equally? Are both companies strong financially in case of economic problems or slow sales periods?
Get It In Writing
For most people in small towns, a handshake is probably enough for a binding agreement. For most of us, our word is our bond. But I have noticed that there are attorneys in small towns, too. So, to ensure there are no misunderstandings, it's always a good practice to write down what each party will do. You may not have to have a lawyer involved, but if it's a substantial commitment, it never hurts.
It's A Partnership
Make sure you can get along with the person you are co-branding with. You are, in essence, creating a mini-partnership, and both of you will have a say in advertising and other financial concerns. The upside is that successful mutual respect may be your reward and business profits.
Set Goals And Objectives
What is expected from this joint venture? Sales objectives that are agreeable to both parties must be set and met. A measurement method must be established to demonstrate this program's success or failure. Cross-training salespeople may be necessary so they understand the pros and cons of both businesses.
The Last Word On Co-op And Co-branding Advertising
As you can see, these two advertising methods have good and bad parts that may or may not fit your business. Co-op advertising should help small store owners and the co-branding of larger companies.
The best feature of both is that there is more exposure to your business at a lower cost, and one of my goals is to keep advertising costs low but profits high. Co-op advertising is a great way to test advertising at half the price, plus the co-op advertiser has a track record of testing the co-op ads they use. So, take advantage of this "free" money and put it to good use as you build a successful small-town business.
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