Co-op Advertising

Something you'll hear me say over and over again is that every part of your organization must be monetized. From Accounting through Warehousing and beyond, every department has to make money on its own - enough to absorb its own costs of operation and staffing and still have something left over. Co-op advertising is a perfect example.

The idea behind co-op advertising is that you purchase advertising space - typically in an expensive media outlet or catalog (perhaps even your own catalog) - and resell part of that space to Customers or Vendors who otherwise couldn't afford to advertise in that outlet.

If your Vendors produce physical goods, you might let them buy ad space in your catalog in return for a certain volume of their products. This is cheaper for the Vendor - their cost to produce that good is nowhere near what they're asking you to agree it's worth in credit. And if your cash flow is tight, getting product in exchange for space in a catalog that you've already paid for can seem like a good deal.

The real goal in selling co-op space is to turn a profit on those sales. If you buy a full page ad in a given magazine, for example, charge your Vendors or Resellers at least 20% more for the space than you paid. If you've picked the right outlet, your Vendors / Resellers want to get in on it, but the monetary divide is too wide. But they may be able to afford an 8th of your space in exchange for what a 6th would cost.

Tip 2: Don't expect Salespeople to sell co-op space if you don't spiff them for it. It's not going to happen. You know why? Because it's a distraction from selling your goods and / or services, and they know it. Better to hire someone who is brought in specifically to sell co-op and reward them when they do.

If a Vendor agrees to be in your publication or media outlet, make sure they follow your guidelines for submission. Don't let them push you around; there's not a PR fellow around that hasn't had to deal with such guidelines, and yours are likely to be far more reasonable than many.