Co-op and MDF programs have a very high potential to maximize returns on the budget for local advertising. However, most local partners opt to not participate in these programs. Described below are the reasons local partners choose to stay away from co-op advertising programs.
Rules and Restrictions
Co-op programs often consist of a variety of rules and restrictions. 38% of local advertisers believe that co-op programs have too may rules/restrictions (see image below). These rules may include target audience applicability, execution of advertisement, and messaging of advertisement. These restrictions may be detrimental for the local partner when the objectives of the brand and local partner do not align. The primary target audience of both partners may differ. For example, the primary age demographic for a retailer could be teenagers but they may have to tailor their advertisements towards adults if the brand providing co-op funds is primarily a brand that targets working adults. Additionally, there could be differences in the messaging of the advertisement. A brand may want to promote the low cost of a product but the retailer selling the brand’s products may want to showcase itself as a high-end retailer.
Limited Self Promotion
Funds for co-op advertising programs are provided by the brand. Therefore, the brand places pressure on local partners to heavily promote the brand. This can lead to excessive promotion for the brand and minimal promotion for the local partner. For example, a digital advertisement for a clothing brand that is sold through a retailer may incorporate limited space for the retailer while majority of the space is given to the clothing brand. Consumers will naturally focus on the clothing brand more than the retailer. This is particularly significant when it comes to digital advertising as consumers’ attention spans are low and it is imperative for an advertisement to ensure that necessary information is conveyed to the user while they are scrolling down a digital news feed. Being able to capture the users’ attention for a limited time period makes it more difficult for the local partner to self-promote. The users' attention is diverted towards the brand instead of the local partner.
Paperwork
38% of local advertisers believe that too much paperwork is a major obstacle to participation in Co-op programs (see image below). Paperwork includes legal agreements, reports on where and how the advertisement was used and, copies of the advertisement. Too much paperwork becomes a hindrance to participation in co-op programs as it requires a lot of time, effort and money, which local partners often do not have.
If brands are able to identify these problems and work with local partners to ensure that their needs and demands are met, they can develop long term relationships with their partners. These relationships will prove to be beneficial when creating long term marketing plans for both the brands and their partners.