Co-Op Helps Strech Advertising Dollars

Billions of dollars aimed at helping business-
es stretch their advertising budgets are going
unclaimed each year because many owners don’t
know about co-op advertising, recent industry
studies have revealed.

A relatively unknown form of advertising,
co-op is a cost-sharing arrangement in which
manufacturers and suppliers provide financial
assistance for customers’ advertising programs.
It can often make the difference in whether or
not a small business can afford to advertise
at all.

Use It or Lose It

“Co-op advertising is an excellent tool that
hasn’t been used enough,” maintains Judy Cerveti,
San Francisco co-op manager for Pacific Bell
Directory. In fact, the Cooperative Advertising
Information System reports that some $25 billion
in co-op is available each year, of which only
60 percent is claimed.

“Co-op can be used in every medium – from
the Yellow Pages to print ads, radio and TV,”
says Cerveti. “It can help you expand your ad-
vertising, as well as make the most of your ad-
vertising dollars. Some manufacturers are cut-
ting back on their programs because they simply
are not being used.”

Co-op advertising works in a number of ways.
For example, a retailer can buy goods from a manu-
facturer and accrue co-op funds based on the
amount of purchase. Those funds can be returned
in the form of a cash rebate, a credit to the re-
tailer’s account or in products.

“If a beauty salon purchases Matrix products
and features Matrix in its advertising, and if it
is a registered Matrix dealer, the salon will be
eligible for reimbursement in beauty products
based on the amount of purchase,” Cerveti explains.
“Both Matrix and the salon will benefit. The salon
will make a higher profit on those products it re-
ceived as reimbursement, and Matrix will receive
broader market coverage through the salon’s adver-
tising.”

She encourages owners of small businesses to
find out if their vendors or manufacturers have
co-op programs. “If they don’t, see if they would
be willing to sponsor one with you. Tell them,
`I purchase $10,000 (or whatever the amount) worth
of products from you every month. How about spon-
soring my ad?’ Don’t be afraid to ask. There are
many manufacturers and distributors who would be
very amenable to participating.”

Co-Op from A to Z

In case you’re thinking your firm is too special-
ized to take advantage of co-op advertising, you
may want to reconsider. The Co-op Handbook, pub-
lished twice a year by the Yellow Pages Publish-
ers Association (YPPA), contains thousands upon
thousands of co-op program listings. Indexed by
brand name and company, each listing provides
the company name, the type of plan it offers,
whether mention of competitors is allowed, and
the type and size of ads required.

“Air pollution control, adhesives and glue,
feed dealers, greenhouse equipment and supplies,
fishing tackle, lingerie and optical goods are
just a few of the categories in the handbook,”
enumerates Jo Kaplan, Pacific Bell Directory’s
San Diego co-op manager. “However, the handbook
is not available to the general public. If you
want to know what co-op programs are offered for
your type of business, you should contact your
local Yellow Pages sales rep.

“Co-op advertising is growing; we’re seeing
more and more in the Yellow Pages. Co-op should
be an integral part of every company’s advertis-
ing budget – especially during difficult economic
times.”

Significant Cost Savings

Jeanette Betancourt, owner of Fandiego fan stores
in San Diego, Escondido and Palm Springs, agrees
emphatically. “Co-op advertising has worked phe-
nomenally well for me. It pays for half of my ad-
vertising. I’m saving thousands of dollars each
year.”

Betancourt found out about co-op advertising
from the manufacturers with whom she places
orders. “When you pick up a line, you are given
copies of policies such as freight, minimum pur-
chase, returned goods and co-op advertising.
Most national brands have it,” she notes.

“Most of the time, you have to advertise ac-
cording to their guidelines. For example, some
won’t allow you to mention another company in
your ad. Others will pay for a percentage of ad-
vertising space, so you can run the names of other
manufacturers who will pay a percentage as well.”

Patti Barth, co-owner with her husband of
the Peninsula Kawasaki motorcycle dealership in
San Mateo, California, is a 23-year co-op veteran.
“As soon as my husband and his former partner
bought the dealership, I discovered that the pre-
vious owners hadn’t been doing anything at all
with co-op.

“Now we use every cent of it, which saves us
thousands of dollars in annual advertising costs.
I’m amazed people aren’t aware co-op is there to
be used,” Barth adds, “and that they don’t take
advantage of it.”

Teaming Up

Manny Perez has teamed his advertising program
with Head Sports Inc. for 20 years. Both a
tennis pro and pro shop owner, Perez is an avid
supporter of co-op advertising.

“Head Sports has been a very important part
of my business,” he says enthusiastically. “Be-
yond the co-op advertising, the company has spon-
sored promising young players I’ve coached along
the way. I also serve on the Head advisory staff,
helping new retailers order the equipment they
need. And because I’m on the staff, if a custo-
mer cannot find a particular model of racquet –
perhaps Head doesn’t make it any more – the com-
pany will refer the customer to me if I carry
the model.

“Co-op should be a small business owner’s
first consideration when advertising,” recommends
Perez. “Most entrepreneurs think co-op is only
for large department stores. But more and more
companies are aware of the growing importance of
small businesses and want to help them succeed.”

The Scoop on Co-op

No two companies’ co-op advertising plans are
exactly alike. They may differ on method of re-
imbursement, use of logo, whether competitors
are allowed, and on prior approval. Each firm
also has its own application method.Your sup-
pliers may already have provided you with the
relevant details. “Nine out of 10 companies
send their customers information about using
their co-op advertising programs, but many
don’t have a clue about co-op so they just file
it away,” notes Jo Kaplan, Pacific Bell Direc-
tory’s San Diego co-op manager.

But in case you’ve misplaced your sup-
plier’s requirements, here’s a look at a typi-
cal co-op program listing as it would appear
in the Yellow Pages Publishers Association
(YPPA) handbook:

Company Name: Yakkety Yak Answering Machines
Co-Op Contact Person: Larry Toksalot
Address: 1225 Sputter Lane, Chattynooga,
Tennessee
Products and Services: Answering machines,
dictaphones
Classified Heading: Answering Machines
— Automatic
Trade Names Covered: Patter Promoter,
Gabby Haze
Type of Plan: Retailer
Timing: Calendar year
Participation and Accrual: Yakkety Yak will
reimburse four percent of all phone machine
orders put into stock and invoiced during the
approved advertising period.
Reimbursement: Check
Prior Approval: Yes
Ad Requirements:
* Competitors not allowed.
* Non-competitors but prorated.
* Color allowed but not reimbursable.
* Logo must be prominently displayed.
* Product illustration must appear in ad.
Type of Ads Allowed: Display, four-color
sections
Type of Directories Allowed: Local, Foreign
(multi or adjacent)
Claim Documentation: Tearsheet; itemized
invoice showing name of publication, size of
ad, rate and total cost required. Submit
within 90 days of publication.

For more information about YPPA listings, call
your Yellow Pages sales rep. And to find out
if your supplier offers a co-op program, talk
to your distributor or contact the company
itself.

About author

SMB Reviews
SMB Reviews 492 posts

SMBReviews is committed to providing small and mid-sized business owners with the information and resources they need to select the best service or product for their company.

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