Build Your Small Business With Co-Op
And Co-Branding Advertising

by Tom Egelhoff

Author Tom EgelhoffIf you've been in business long enough to have developed a relationship with vendors and suppliers then 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 picking up part or in some cases all of the advertising expenses.

Let me begin by defining each term and then I'll deal with how to use each one individually.

Co-Op Advertising: In this form of advertising a retailer would promote a specific brand of merchandise that the store carries. A clothing store might promote a designer brand of clothing.

Since the ads would be designed to sell more of that brand of clothing then 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 brand of soft drink promoting the NutraSweet® sweetener.

In a local small town it might be as simple as the local video game store teaming up with a pizza shop and giving out each others coupons.

Usually co-branding creates an additional benefit for the consumer. The pizza buyer would receive a two-for-one game rental coupon with the pizza or the movie renter would get a $2.00 off 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 one in more detail and how to make them work for you.

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Co-Op Advertising: Two Rules To Know

The two things you need to know right off the bat about co-op advertising.

One, is that most vendors are not going to come screaming to you that they have co-op money available.

And, two, it make 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 on a regular basis 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.

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Make The Contacts

The first step in your quest for co-op money is to contact everyone who supplies you with products and find out what their co-op procedures are. Usually they are going to be pretty strict.

Their logo has to be a certain size, perhaps certain colors, and other restrictions.

Before going to the expense of an ad make sure you submit it to the manufacturer and get their written approval before placing it.

Don't for get to check with your local media. Radio, TV and other media often give co-op if they are featured in your ads as well. After all they advertise too.

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Know The Rules Of Co-Op Advertising And Follow Them

I mentioned this above but I should enforce it more strongly here. These folks will not give you any money if you stray even slightly outside their guidelines.

They are extremely strict and you must follow every instruction to the letter or you give them 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. And 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.

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Don't Forget Why You're Doing Co-Op Advertising

Yes, you are promoting a brand name but don't forget that the principle reason for the ad is to make the customer contact your business.

Your space in the ad may be limited so make sure that your business information is displayed as prominently as possible.

he whole reason for the ad is to get business for you not the manufacturer. If you get it so will they.

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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 then the company may increase their share of the money they share with you.

The more you buy the more they will give you to grow your business.

Know where the breaks are. In some cases you may get more co-op money if you got 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.

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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 and 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 too.

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Co-Branding: Rules To Remember

The first and most important rule: 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 to.

So, if you have reason to believe that a "60 Minutes" camera crew may show up on your doorstep then this is not a company that you want to do business with.

Your customer base is going to be affected by any alliance you make. So make sure that any company you deal with has the quality and service that your customers are accustomed to.

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Who Benefits From Co-Op Advertising?

Before entering into any relationship you must feel confident that it is mutually beneficial to both parties. And the products or services offered must provide a worthwhile benefit to both parties.

What if your customers really like your side of the arrangement but the other side is resistant after awhile and decides to end the relationship?

Some things you'll need to consider are: Is this 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?

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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 just to make sure that there is no misunderstandings it's always a good practice to write down what each party is going to do.

You may not have to have a lawyer involved but if it's a substantial commitment it never hurts.

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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 up side is that a successful mutual respect may be your reward along with your business profits.

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Set Goals And Objectives

What is expected from this joint venture? Sales objectives must be set and met that are agreeable to both parties.

A method of measurement must be set up that will demonstrate the success or failure of this program. Cross training of sales people may be necessary so they understand the pros and cons of both businesses.

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The Last Word On Co-op And Co-branding Advertising

As you can see each of these two methods of advertising has some good and bad parts that may or may not fit your business. The co-op advertising should help the small store owner and the co-branding the larger company.

The best feature of both is that there is more exposure of 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 cost 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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