Cooperative advertising allows manufacturers or wholesalers to share advertising costs with retailers, providing advertising opportunities that may otherwise be unaffordable. The main disadvantage is that the ad must feature products sold by the manufacturer or distributor sharing the cost.
Cooperative advertising is advertising where part of the cost is shared by a manufacturer or wholesaler. This allows retailers to run ads that they might not otherwise be able to afford. There are several advantages to cooperative advertising, and many companies have cooperative programs that people can take advantage of to help pay their advertising costs. It is important to review the offered contract before making a deal to confirm that it contains no surprises.
In a simple example of how cooperative advertising can work, a grocery store might decide it wants to run a full-page ad in the local newspaper. He may approach the companies he requests to see if there is any interest in cooperative advertising. A wholesaler who stocks fruit might agree; in that case, the grocer 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, he would pay part of the cost.
For retailers, cooperative advertising can provide advertising opportunities that would otherwise be difficult to obtain due to cost. Advertisements may be placed on television, radio or in print publications with the aim of publicizing the store’s name and familiarizing people with the type of products it carries. Especially for small businesses, cooperative advertising can make a big difference to their advertising budget.
Manufacturers and wholesalers like cooperative advertising because it can be used to raise product awareness in local markets. While national advertising campaigns can be valuable, adapting ads to local communities can help develop a customer base. For example, if people see XYZ brand tires advertised in a national campaign and see a co-op ad for a tire store that sells those tires, they might be enticed to make a purchase. It’s also generally much cheaper to place ads in local markets than national ones, so a co-op advertising budget goes further.
The main disadvantage of cooperative advertising is that it usually must feature products manufactured or sold by the manufacturer or distributor who is sharing the cost. Also, the ad must be approved before it can run, as companies want to ensure that ads reflect their values and messages. For example, a company that prides itself on family values would not want its products to appear in a suggestive or lewd advertisement.
People also use the term “cooperative advertising” to refer to an ad that is developed by two or more retailers together, with the retailers sharing the cost and developing the copy among themselves. For example, three local video stores might come together to place an ad in the newspaper encouraging people to rent videos locally with small businesses instead of renting movies in other ways.
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