Cooperative advertising is when a manufacturer and retailer share advertising costs. Cooperative advertising programs are usually offered by manufacturers to retailers or distributors. These programs are beneficial for both of the aforementioned entities. The four major benefits of cooperative advertising are described below.
Financial
Cooperative advertising costs are shared by manufacturers and retailers. A manufacturer that teams up with a retailer will get the same exposure as the retailer, at a lesser cost. For example, if a retailer chooses to advertise with a full page ad in a newspaper, the manufacturer will get the exposure offered by a full page newspaper ad, but will not have to pay the full price for that advertisement. Reduced costs are also a perk for local retailers who often do not possess the financial means to advertise the way large manufacturers do.
Exposure
A retailer that teams up with a prominent manufacturer will benefit from the manufacturer’s brand value. Advertising alongside well-known brands will add value to the retailer’s store and improve its reputation. Manufacturers also receive positive local exposure from retailers who know their customers well and advertise according to their customers’ needs. Local retailers often have loyal customers in their locale. Advertising with them enables big brands to reach their retailer’s loyal customers. Additionally, the costs of cooperative advertising are shared. This enables both retailers and manufacturers to spend the money saved by sharing costs onto other forms of advertising, resulting in more exposure.
Methods
Retailers may benefit from large manufacturers’ research and marketing methods. It enables them to learn from the experiences provided through these programs and apply them to their own advertising techniques. Lessons such as effectively targeting customers, catering to customers’ needs, methods of tracking results and utilizing research from results in order to improve advertising may be applied to other advertising efforts by retailers.
Growth
Partnering with local retailers enables manufacturers to reach new audiences and expand their customer base. Advertising with local retailers in new cities is an effective method to expand a company’s reach. Local retailers may also maximize manufacturers’ return on investment by providing knowledge of their customers. Local retailers know their customers’ needs very well and help fill the gap between central and local advertising. They know what their customers respond to and may recommend the most effective ways of advertising for their locale.