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Don't
Leave Co-Op Money On The Table
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| There’s a big cash envelope with your name on it that will pay for most, if not all, of a promotional products order. It’s either buried in your company’s ad budget or squirreled away with the firms that sell to you. But it’s still yours – so go get it. | |
What if there was a pool of money accessible to you that could pay for most or all of a promotional products purchase? What if all you had to do was make a couple of phone calls to get it? What if you were entitled to some of it by law? Forget about “what if.” There really is such a thing. It’s called co-op ad funding, and for a marketer it’s as close to a free lunch as you can get. Co-op advertising money is either buried in a budget at your company or sitting patiently in the accounts of companies you buy from. For many firms, it remains one of the best-kept secrets in advertising – and that’s too bad. Billions of dollars go unspent every year, usually disappearing when the budget expires at year’s-end. You likely already use co-op advertising, maybe to help pay for freestanding inserts (FSI) in newspapers or radio spots. But what you might not know is that these funds can also be used to buy imprinted products bearing your logo and at least one other (most likely a vendor/supplier of yours). The total national budget for co-op funding has no doubt declined a bit recently, as it’s directly linked to consumer spending, which has suffered in the past couple of years. But co-op advertising is probably even more important these days, when corporations are tightening their belts. If your firm is finding it difficult or impossible to find funding for a promotion, you might be able to partner with your vendors or clients and do it with co-op money. Or, if you’d given up on getting new golf shirts for your employees this year, you might turn to a supplier to help make it happen. Up to $100 billion is spent annually on co-op advertising, which encompasses a number of different names and categories, including promotional allowances, advertising allowances and market development funds. It’s difficult to get an exact figure because there are so many different transactions, and also because most firms’ advertising policies are private. In many ways, co-op advertising divides the world into haves and have-nots. Those who know about it continue to use it, often on a weekly basis (remember those FSIs). Those who don’t, often go through their entire business lives not knowing that there’s a tidy lump of cash sitting around waiting for them. The solution? Turn yourself into a have. Corporations only have to put up capital for a portion of the co-op funds they budget. They know a lot of it goes unspent. In other words, ignorance on your competitor’s part can be bliss for you. Hey, Big Spender As noted, if you work for any firm that does a lot of advertising, you know much of it gets doled out for FSIs, Yellow Pages ads, brochures/flyers, etc., but you might not be aware of how your counselor can help you get a piece of the action for imprinted items. It’s a fact that promotional products are a growing part of the co-op picture. They’re able to meet goals of boosting sales and rewarding customer behavior while delivering top-of-mind awareness and/or brand building – all requirements of co-op funders. A study done a few years ago by Rutgers University’s School of Business found that 75% of co-op programs allowed the use of promotional products. Judging by current trends in advertising, that percentage could even be higher today. This means that if you’ve been struggling to put together a great promotion with your clients, vendors or suppliers, there could be an easy, painless way to get the money for it. If you’re a retailer or reseller, you should know that most manufacturers who provide you products also have the equivalent of a cash-filled envelope with your name on it. You earn your co-op allowance based on how much of a particular product you’ve sold. Federal law generally requires that manufacturers offer the same kind of co-op deals to all customers, so legally your envelope is money you’ve already earned. If you don’t do FSIs and have already paid for your Yellow Pages ad, you might be able to spend your allowance on something a lot more fun and effective. “Yes, you can use your co-op advertising funds on promotional products,” says Joel Schaffer, a promotional consultant formerly active in co-op advertising circles. Getting Paid Want to get started using your co-op allowance? The best place to go is to the sales rep of a particular company you deal with. He’ll be able to tell you if they have co-op money available and how much you have coming to you – he might even be willing to assist in putting the whole thing together. Your counselor may be able to make some inquiries on your behalf, depending on the funder’s policies. At the very least, you can sit down with your counselor on one side and your sales rep on the other and talk about the possibilities. Co-op allowances will often pay half the cost of a promotion (or half the cost of a promotional product), but you don’t have to stop there. You can always find a second (usually non-competing) company to add its logo – and its co-op funds – to your effort. What you can’t do, unfortunately, is devise a Producers-type of scheme where you collect enough logos to pay for more than 100% of the bill. You cannot pocket any co-op money. The law intervenes in other ways in the co-op world. The government doesn’t like anything that smacks of price-fixing, so it watches co-op money carefully. If, for instance, a big company is spreading co-op money around among different retail outlets with the idea of keeping prices artificially high, Uncle Sam steps in. Another challenge: Promotional products still aren’t as well known to co-op budgeters, which means it might take some explaining and cajoling to get your order approved. Once the campaign is in full swing and is a success, however, there shouldn’t be any problems moving forward. Occasionally, a firm will direct you to its Web site to redeem your co-op dollars. That might be OK, but chances are the selection will be extremely limited. Working with your own counselor assures you’ll get almost any product you seek. The Imprinted Angle There are many promotional product uses that can be directly tied to sales. One obvious example is a gift-with-purchase. Another is a sweepstakes where the big prize is a high-end promotional product. A logoed product can also be redeemable for box tops or coupons. Promotional products are especially popular for loyalty programs and frequent-buyer promotions. Most supermarkets now have special cards for customers. Promotional products can be used to get shoppers to sign up for these cards. In addition, direct mail can be sent based on the information the patron supplies, which can include more incentive products or offers for them. From a funder’s standpoint, such programs are preferable because they can be easily measured in terms of exactly how many sales were made and/or how much sales increased. But Joel Schaffer, for one, doesn’t think firms should focus on sales figures alone. “Promotional products work on so many levels, they shouldn’t be judged by a simple how-many-jars-of-jam-were-sold standard,” he says. “Say there was a plumber who gets a tool belt from the hardware store and wears the store’s name and the logo of a plumbing fixture on all his jobs. That has to have value beyond a FSI, which is moldering in the recycle bin after a week.” Programs can also be built around holidays. A drug store, for instance, can have a July 4 sale and give away red, white and blue umbrellas featuring additional logos from, say, a soft drink and a sunscreen company. Back-to-school and Halloween promotions are just as easy to imagine. Right Time For Promotional Products If using co-op money for promotional products is new to you, that’s all right. They’re also getting more attention from co-op spenders. “Branded merchandise is hot, very hot,” Schaffer says. “And there’s an opportunity for [a smaller firm] to get into branded merchandise and get it paid for with co-branding.” Deb Kuhns, executive director of the National Association for Promotional and Advertising Allowances (NAPAA), which monitors the use of co-op advertising, also sees a trend toward more use of promotional products. Kuhns says that consolidation among larger companies is drying up some of the traditional channels for co-op advertising. Fewer companies, after all, mean fewer logos. But that’s being offset by less traditional forms of co-op advertising, including imprinted products. “In industries where people respond primarily to Yellow Pages or newspaper ads, it may be more difficult,” she says. “But for other industries, like high tech and some durable goods, I think they’re much more flexible … and likely to see all kinds of promotional opportunities.” Kuhn is also seeing more use of co-op money to reward customer behavior. For example, a Web ad might reward a browser with a promotional product for clicking through several screens or completing a survey. Use It, Don’t Lose It As noted, co-op funds disappear on December 31 every year. That’s why it’s probably a good idea to check during the fall to see how much is still sitting in your accounts at different firms. “Isn’t it a sin for you to let any money go to waste?” asks Schaffer rhetorically. “Wouldn’t it be wonderful to buy 20,000 calendars with what’s left over from your co-op money that you didn’t use?” Schaffer suggests stocking up on several years worth of promotional products using end-of-year funds. Let one firm pay for your pens, another for mugs or T-shirts, another for holiday cards. Still, you don’t have to wait until November to visit the co-op well. Consider the following:
Connie O’Kane is a senior writer for Imprint. |
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| Pizza and free Internet music – it was the perfect combination to go after the slacker crowd. Under the promotion, Pizza Hut customers received an access code that allowed them to go on CDNOW’s Web site to create a custom, six-song compact disc. The CD – imprinted with both logos – arrived three weeks later. About 800,000 custom CDs were created. product courtesy CDNOW |  |
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Four
different entities added their logo to these towels, which were
waved by a frenzied crowd at the Philadelphia 76ers home playoff
game. product courtesy Philadelphia 76ers |
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| Poultry-firm Louis Rich Inc. and Boise Cascade Office Products footed the bill for this cutting board and other promotional products used to support a recipe contest. The winning recipes were distributed by CD-ROM. product courtesy Boise Cascade Office Products |  |
