Brand Frustration: Many Local Businesses Don't Utilize Co-op Dollars
National brands have either begun to reimburse 100% of co-op dollars for digital ads or make more "free money" available for the taking -- but many local stores, independent dealers and franchisees don't make the request. If they do, few effectively allocate the funds, and even fewer invest in digital media, according to Rick Ducey, managing director at analyst firm BIA/Kelsey.
Ducey said research with Balihoo -- which provides local marketing automation technology and strategic co-op planning -- found that local stores and dealers that request funds may spend it on newspaper and radio ads rather than digital.
Ducey insists that co-op spending can help local retailers develop more integrated campaigns, but they leave about half of the dollars on the table, despite increasing competition. Those that do spend it online might never fill out reimbursement forms. For some retailers, Ducey said the rules and reimbursement paperwork is a disincentive. Busy store owners often can't take time to understand co-op marketing to make appropriate decisions.
Companies with only $2,000 to spend may want to invest it online -- such as in search marketing -- because they will get better engagement results and return on investment, Ducey said. A recent report by Forrester Research shows how email and search drive repeat and new customers.
BIA/Kelsey forecasts digital spending to rise to about 25% of the local ad spending pie. Social and mobile are big growth components, but search is still strong. Mobile search is one of the biggest growth areas. Ducey said local businesses need to include search in their ad budgets to keep competitive and have an integrated strategy that leverages strengths of the entire purchase funnel.
In the automobile dealers and manufacturers category, BIA/Kelsey forecasts that marketers will spend about 20% more this year. "If you’re an auto dealer and not keeping pace, you may be more susceptible to more effective ad spending by your competition," Ducey said.