Up To $35B Of Co-Op Ad Funds Go Unclaimed Annually

The failure to understand the co-op advertising process continues to leave billions of dollars unclaimed and unused, according to a recent white paper.

The Local Search Association released a white paper which estimates that of the total $36 billion to $70 billion annual co-op advertising dollars available from U.S. manufacturers, roughly between $14 billion and $35 billion go unclaimed.

Breaking through the Co-op Clutter, which details how co-op funds are an agreement between a manufacturer and a retailer, explains how advertising costs can create brand awareness and drive consumers to specific stores. 

The white paper indicates that inconsistent procedures from manufacturers, abundant paperwork, manufacturers that are slow to embrace digital like search engine advertising, and confusing rules for reimbursement make the process daunting for many local businesses.

About 43% of U.S. small businesses sell national brands that potentially qualify for co-op funds, according to a joint survey by Manta and the LSA. Of these, only 42% have taken advantage of co-op dollars.

"Many local dealers and media sellers see the co-op process as so murky and labor intensive that they decide it simply isn’t worth the effort," per the white paper.

To make matters worse, a lack of awareness that co-op even exists remains a challenge, particularly for very small, independent businesses. And even when those smaller businesses are made aware of co-op, they often need help sorting out how to access available funds.

A company's leadership creates the most issues around using co-op ad dollars, according to the white paper, because it requires a commitment from the C-suite and sales leadership. Brands were initially reluctant to authorize digital co-op fundings for fear they couldn't effectively monitor their brand's online image.

When asked which paid media brands use co-op funding for, advertisers said print, 60%; direct mail, 41%; digital, 36%; and broadcast, 36%.

The white paper also includes best practices for those wanting to tap into the unused dollars. It goes through the process of making co-op digital advertising part of the sales process, tracking performance, eliminating complexity, and using it for contests and promotions.

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