Search Loses Millions In Co-op Advertising Opportunities
Merchants and brands could capitalize on co-op digital marketing opportunities, especially when it comes to search engine marketing and advertising for local and neighborhood stores and services, but a "very substantial portion" of co-op agreements prohibit all Internet advertising, according to a white paper released Wednesday.
In what some consider a lost opportunity, a white paper published Wednesday by the Interactive Advertising Bureau (IAB) and the Local Search Association (LSA) analyzes how to move the strategy online, and ways that manufacturers and retailers can split the cost of advertising when it benefits both.
Co-op advertising isn't new, but less than 1% of the dollars are invested in the online channel, according to Bob Houk, executive director of the Trade Promotion Management Associates (TPMA), which the study cites. Search remains one of the biggest losers when it comes to missed opportunities.
It turns out that fewer than 33% of manufacturers take Internet advertising into consideration when mapping out a co-op ad strategy. The study explains that out of the more than 1,000 co-op advertising programs, representing about 1,700 brands in the Local Search Association database, only 223 participate in some form of Internet advertising. Of those, 35 manufacturers "forbid" using co-op dollars in online advertising channels.
A study by Borrell Associates published in May estimates the online co-op market currently has $1.7 billion available, but $450 million is left on the table. Add the majority of co-op programs not investing in digital channels, and the white paper estimates the co-op market could generate between $5 billion and $10 billion yearly.
Platform technology providers and engines lose, as well as brands with tight budgets. The white paper also outlines challenges and stumbling blocks such as resistance to change, the need for pre-approval on campaign processes, attribution and verification roadblocks, lack of guidelines and processes, and the fact that for smaller manufacturers the role of marketing typically falls within sales.