Commentary

Search Loses Millions In Co-op Advertising Opportunities

1. kevin lee from Didit / eMarketing Association / Giving Forward, September 5, 2012 at 3:45 p.m.

   Co-Op advertising is a win-win in the search engine marketing area. When properly managed and coordinated, an OEM and a retailer can both benefit with reduced channel conflict. One does need to make sure tha tco-op dollars are not resulting in competing bids on the same keyword (ie two retailers using Co-Op dollars at the same time). Again, centralized coordination is key when any form of auction-based media is being used to deploy co-op dollars.
   Google Shopping will be a particularly good fit for co-op dollars because the dollars can be deployed at the product level (not a generic keyword).
   I highly encourage retailers and their suppliers to get together for Q4 and execute some campaigns that wouldn't be possible without the support of both the retailer and the manufacturer.

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Rob Schmults from Intent Media, September 5, 2012 at 4:06 p.m.
I am less bullish that Kevin even while agreeing with many of his points (e.g., importance of coordination). Here's why: if I am a retailer, running my SEM program efficiently, what do I use co-op $ for? Retailers might simply pocket the co-op money as a subsidy for SEM they were going to do anyway. Or if the manufacturer succeeds in ensuring that the co-op is being used for incremental spend, what type of SEM is that likely to deliver? Presumably it would entail bidding up terms the retailer is already efficiently buying and/or buy terms known to be otherwise inefficient. While this would be ok for the retailer -- they aren't footing the bill -- doesn't feel like a good use of the manufacturer's money. And if the manufacturer sells direct, there's the double hit of having the retailer use your money to artificially inflate the cost of relevant terms, screwing up the manufacturer's SEM efforts as a result. I could definitely see use cases where co-op funding SEM is in the manufacturer's best interest (e.g., support a new product the retailer otherwise won't take; help reduce an overstock without mark downs), but in general SEM is probably the wrong place to spend co-op (and I'm saying that as a performance marketing devotee). Better to fund increased commissions/special incentives for affiliates, fund RTB and retargeting, and/or special promotions -- all of which can drive sales but don't have the same ability to be optimally tuned they way SEM can be.
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Timothy Daly from Vincodo, September 5, 2012 at 4:40 p.m.
There are numerous issues at hand when it comes to co-op advertising where successful strategies are negated by the restrictions from the engines. Manufacturers gain little value if the retailer does little more than camp out on the branded terms of the manufacturer. Those searches were the result of branding initiatives by the manufacturer, not co-op dollars. Its even less valuable if it is to supplement spend. For the co-op expenditures to be valuable for the manufacturer, it needs to be applied to the most general of keyword terms reflective of the manufacturers business that are the consideration process starters. To execute, the retailer needs to give up relevancy in favor of co-op dollars, therefore the retailer has the potential to see their CPC rise due to negative quality score impact, thus nullifying the co-op dollars. Further, that lack of relevancy in ad copy and landing pages could have a negative impact on conversion for the retailer as well. I've evaluated a number of co-operative advertising campaigns, rarely does a win-win exist because objectives of each party are contradictory to paid search best practice. Almost always a win-lose for one party or the other.
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Paula Lynn from Who Else Unlimited, September 5, 2012 at 7:45 p.m.
Not a new problem. Co-op money is limited as well as limited use. Individual local retailers do not receive enough co-op for an on going program and many do not want to be saddled as a one dimensional seller or use the lousy co-op "art". When a salesperson attempts to congregate co-op money among retailers, the first question is always who else and how much with a get back to me when you have x number no matter how many reassurances of an all or nothing deal. It becomes a waste of time. Now add in on line search problems as discussed and there still will be unused money. I do believe many manufacturers/distributors count on it because the apportioned funds go back home for other uses and not sitting as live cash accounts.
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Shane Vaughan from Balihoo, September 6, 2012 at 10:36 a.m.
Great article and I love the discussion.
However - I have to say that I'm on the completely other side of the fence as most of the commenters here. I think there is a HUGE opportunity for search in co-op advertising. There are a couple of key considerations to make it effective:
1. The implementation of the local search campaigns needs to be aggregated with one provider (not split out amongst all of the resellers). This gives a single view into the performance of all of the campaign and allows the provider to use aggregated data across the multiple small campaigns to optimize. Additionally, this allows the single-provider to work directly with the manufacturers national SEM, and other resellers spend, to mitigate competitive issues.
2. The traffic must be driven to a co-branded website shared between the local reseller and the national brand (as opposed to the local resellers standard website). This ensures brand-consistency and provides the metrics and reporting to both the local reseller and the national brand.
With these two things in place, including paid search into a co-op program can bring significant benefits including:
1. SERP dominance. Whether branded or generic terms terms, owning the SERP is extremely valuable for any brand. By enabling an army of local resellers to participate in SEM (all with unique URL's) you're putting your brand in a position to completely own the SERP (both PPC and SEO).
2. Drive local relevance. Consider the search term "Sony big screen TV". Now, consider the term "Sony big screen TV, Boise, Idaho". By adding the geographic modifier, the searcher is telling us that they are further down the purchase cycle, they're ready to buy and they want to do it in a brick and mortar instead of online. By enabling your resellers to participate in PPC, you're able to capture these searchers and direct them to what they want - a local offline reseller of your product.
3. Metrics/tracking. Most co-op advertising is a total crap-shoot in terms of performance. In fact, the Borrell study mentioned in this article indicates that the majority of co-op is spent on direct mail. While that could be trackable, the manufacturer never has visibility into the performance. With a single-provider SEM vendor and shared landing pages, the manufacturer has direct line of sight into the performance of the program.
This is turning into quite an essay...so I'll hold for now. However, you can see that I'm very confident that SEM can be effectively enabled in co-op program. In fact, I happen to be giving a webinar on it next week, you can check it out at: http://bit.ly/TrgihZ
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Paul Baron from WebTel Marketing, September 7, 2012 at 10:20 a.m.
I am interested in this discussion and appreciate the topic and comments. I am a proximity advertising platform provider for WiFi & BT campaigns, building out a presence in venues, shopping districts, and retail across the US. I would like to learn more about working with both retailers and content providers who want to leverage this technology to reach more consumers, or increase loyalty, at the point of purchase. Thanks for reaching out to me with your direction and further comments. paul@webtelmarketing.com
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