How can I maximize my advertising dollar?

Even on a limited budget, every retail business must advertise to keep new customers coming in the door. Co-promotions and cooperative advertising are two approaches to maximizing the value of your advertising dollars by sharing the costs. The supplier (typically a manufacturer or distributor) benefits because its product gains greater exposure at the same time its sales are increasing.

Co-promotion may be an option if you can split your ad costs with another local business serving your same target audience. Those costs could include sponsorships, ads, newsletters, fliers and bill stuffers. You may identify one or more vendors who are willing to share the cost of a trade show booth as well as the printed materials and staffing required for the booth.

With cooperative advertising (also known as co-op advertising), two or more parties are sharing certain ad costs. This arrangement may take the form of an incentive program, with manufacturers contributing dollars to the ad campaigns of distributors or retailers to encourage the promotion of certain products.

Suppliers who participate in co-op advertising programs usually give the retailer credits for purchasing their products or services. Those advertising credits can amount to 3 percent to 5 percent of the total purchase. The credits can be redeemed when the business owner buys advertising that the supplier approves. Often Yellow Pages advertising qualifies for co-op money.

The supplier sets the guidelines. Usually the ads eligible for co-op dollars feature the supplier’s brand exclusively. In addition the supplier may have to sign off on the ad and the chosen medium being used if not also the frequency. Sometimes suppliers have ad copy or scripts that must be used to qualify for a reimbursement. If not, the supplier probably will want to approve of the ad before it runs. Remember, however, that the ad should feature your business prominently in addition to playing up the product.

How do you get reimbursed for co-op advertising? There are two approaches. You may have to pay for the ad up front and then give the supplier a copy of the ad. For radio or TV ads, you’ll probably need to show the script and proof of the dates and times the ads were aired. Some suppliers, however, may issue credits that equate to their agreed-upon share of the advertising. Then the business owner can make future purchases from the supplier at a discount.



Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties