Co-op advertising is advertising in which part of the cost is shared by a manufacturer or wholesaler. This allows retailers to take out ads which they might not otherwise be able to afford. There are a number of advantages to co-op advertising and numerous companies have co-op programs which people can take advantage of to help pay advertising costs. It is important to review the contract offered before making an agreement to confirm that it contains no surprises.
In a simple example of how co-op advertising can work, a grocery store might decide that it wants to take out a full page ad in the local paper. It can approach companies it orders from to see if any are interested in co-op advertising. A wholesaler which stocks fruit might agree, in which case the grocery store would feature one or more of the company's products in the ad as part of the cooperative advertising agreement. If the wholesaler approved the ad, it would pay part of the cost.
For retailers, co-op advertising can provide advertising opportunities which would otherwise be difficult to obtain due to cost. Ads can be placed on the television, radio, or in print publications for the purpose of getting the store's name out and familiarizing people with the kind of products it carries. Especially for small businesses, co-op advertising can make a big difference in an advertising budget.
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Manufacturers and wholesalers like co-op advertising because it can be used to increase product awareness in local markets. While national ad campaigns can be valuable, tailoring ads to local communities can help develop a customer base. For example, if people see XYZ Brand Tires advertised in a national campaign and then see a co-op ad for a tire store which sells those tires, they may be drawn to make a purchase. It is also usually much cheaper to place ads in local markets than national ones, so a co-op advertising budget goes further.
The key drawback to co-op advertising is that it usually must feature products made or sold by the manufacturer or distributor who is sharing the cost. Furthermore, the ad must be approved before it can be run, because companies want to make sure that ads reflect their values and message. For example, a company that prides itself on family values would not want its products appearing in a suggestive or salacious ad.
People also use the term “co-op advertising” to refer to an ad which is developed by two or more retailers together, with the retailers sharing the cost and developing the copy with each other. For example, three local video stores might get together to place an ad in the paper encouraging people to rent videos locally with small businesses rather than to rent movies in other ways.