$450M in potential digital ads for SMBs from manufacturers will go unused.
If retailers increased their attention towards co-op digital advertising, their profits might also increase.
According to a Borrell Associates report, the co-op digital ads marketplace during 2012 will reach $1.7 billon. And 70 percent of 1,345 small and medium-sized businesses recently surveyed were not using this form of advertising, leaving money on the table, said the Williamsburg, VA-based SMB research firm.
Co-op advertising has been around for years, and is designed to be a cost-effective way for manufacturers and retailers to work together on marketing campaigns. After a retailer buys the co-op promotion, the manufacturer normally sends the merchant an ad to customize or localize. Sometimes the manufacturer simply sends product images and copy and leaves putting the promotion together to the retailer. Whatever the case, the manufacturer then must accept the retailer's ad before it goes live.
After the digital ad campaign runs, the retailer will get a certain amount of credit against future orders from the manufacturer. If the retailer uses the credit and sells the product, the return on investment for its initial co-op ad purchase lifts.
Kip Cassino, executive VP at Borrell Associates, said the retailers' product credit often equals around 50 percent of the co-op ad purchase. "Sometimes, it's more than 50 percent," he said.
The manufacturer, theoretically, might see a higher conversion rate and more sales when the merchant customizes or localizes the ad. Nowadays, a $1.7 billion slice of the co-op pie - overall $22.4 billion during 2012, including offline - is in digital, Borrell Associates says, while estimating $450 million in potential digital co-op ads will go unused.
From the company's report: "As one digital seller told us, 'The amount out there is crazy.'"
Want to learn more?
Attend ClickZ Live New York March 30 - April 1. With over 15 years' experience delivering industry-leading events, ClickZ Live brings together over 60 expert speakers to offer an action-packed, educationally-focused agenda covering all aspects of digital marketing. Register today!
Christopher Heine was a senior writer for ClickZ through June 2012. He covered social media, sports/entertainment marketing, retail, and more. Heine's work has also appeared via Mashable, Brandweek, DM News, MarketingSherpa, and other tech- and ad-centric publications. USA Today, Bloomberg Radio, and The Los Angeles Times have cited him as an expert journalist.
Singapore, 5-6 March
Bangkok, 17-18 March
Hong Kong, April 2015
A Buyer's Guide to Affiliate Management Software
Manage your performance marketing with the right solution. Choose a platform that will mutually empower advertisers and media partners!
Google My Business Listings Demystified
To help brands control how they appear online, Google has developed a new offering: Google My Business Locations. This whitepaper helps marketers understand how to use this powerful new tool.
March 3, 2015
1:00pm ET/10:00am PT