Wednesday, September 5, 2012
Co-Op Advertising Presents Untapped Financial Opportunity for the Interactive Marketing Ecosystem, According to IAB & Local Search Association

‘Co-Op Advertising: Digital’s Lost Opportunity?’ Points to Critical Barriers That Need to Be Addressed In Order for Online Channels to Reap the Sector’s Benefits

NEW YORK, NY (September 5, 2012) — Spotlighting a sector of the digital advertising economy that offers great financial opportunity, but has yet to be fully embraced, the Interactive Advertising Bureau (IAB) and the Local Search Association (LSA) today released an in-depth whitepaper entitled “Co-Op Advertising: Digital’s Lost Opportunity?” The report looks at digital entryways for the traditional advertising practice of splitting costs between manufacturers and retailers when an advertisement benefits both parties. Outlining co-op advertising’s potential rewards for the interactive ecosystem, the paper also highlights challenges that would need to be overcome in order to take advantage of its merits.

Quantifying the potential value of digital co-op advertising the paper cites a recent study by Borrell Associates (Online Co-Op Advertising, May 2012) that estimates the online co-op market currently has $1.7 billion available, but estimates $450 million is untapped “for lack of participation.”

“This is a huge opportunity for stakeholders across the interactive arena, from technology vendors to mobile providers and search engines to publishers,” said Patrick Dolan, Executive Vice President and COO, IAB. “As we look to expand the digital marketing and media space, it is obvious that co-op advertising can no longer be overlooked. There is simply too much money being left on the table.”

“We see the use of online and mobile platforms as an essential path forward by manufacturers and advertisers to extend their reach and continued success utilizing co-op advertising programs. The opportunity is tremendous,” said Brad Carson, Vice President of Operations, Local Search Association.

While the value proposition is clear, the report also addresses hurdles that need to be faced in order for online co-op advertising to thrive:

  • Complexity and multiplicity of digital channels - Unsurprisingly, on both the manufacturer and merchant sides, the sheer amount of knowledge required to advertise in digital channels is a formidable barrier.
  • Lack of infrastructure - On the manufacturer side, co-op advertising sometimes falls under the auspices of marketing, but more frequently is a function of either the sales or the finance department, areas inherently unlikely to be versed in digital marketing strategies or tactics.
  • Lack of guidelines and requirements - Co-op advertising program rules around issues such as logo usage, the mention of competitive products, and general branding requirements have long been established in traditional advertising channels, and internet advertising brings with it a range of new challenges (e.g., manufacturer rules around bidding on brand or trademarked terms in search engine marketing).

Offering guidance on next steps in digital gaining a foothold in the sector, “Co-Op Advertising: Digital’s Lost Opportunity?” provides recommendations to meet those challenges head on:

  • Awareness - Just as manufacturers and retailers are unaware of the potential benefits of online advertising, not to mention the actual tactics and techniques for executing digital campaigns, so too is the digital ecosystem largely blind to the potential and the workings of co-op advertising.
  • Education - Channels, metrics, targeting, and the like are close to a foreign language for many retail executives, particularly the “mom ‘n’ pop” retailer.
  • Standards and best practices - Small, online co-op advertising does exist, particularly in automotive and durable goods. Closer examination of how successful programs in these verticals function can lead to case studies and ultimately help create templates on which broader co-op programs in different industries can be based.
  • Technology - Development of platforms that enable workflow automation would go far to make the co-op advertising process easier for manufacturers and the often over-burdened merchants who run co-op campaigns. Also useful would be a database of co-op programs and digital asset management for logos, creative executions, and brand elements, which are offered by a few service providers today.
  • Publisher initiatives - Assist in helping to re-establish the co-op ad manager role, this time with a view toward online display advertising.
  • Cooperation with co-op ad management companies - Many legacy co-op program management companies have expanded into the digital, yet are unconnected with mainstream publishers and industry trade groups.

Working with the LSA, IAB is currently kicking off an education campaign to help its members better understand co-op advertising and learn how to fully access the sector.

The complete “Co-Op Advertising: Digital’s Lost Opportunity?” report is available for download at www.iab.net/coopadvertising.

About the IAB
The Interactive Advertising Bureau (IAB) is comprised of more than 500 leading media and technology companies that are responsible for selling 86% of online advertising in the United States. On behalf of its members, the IAB is dedicated to the growth of the interactive advertising marketplace, of interactive’s share of total marketing spend, and of its members’ share of total marketing spend. The IAB educates marketers, agencies, media companies and the wider business community about the value of interactive advertising. Working with its member companies, the IAB evaluates and recommends standards and practices and fields critical research on interactive advertising. Founded in 1996, the IAB is headquartered in New York City with a Public Policy office in Washington, D.C. For more information, please visit www.iab.net.

About the Local Search Association
The Local Search Association is the largest trade organization of print, digital, mobile and social media that help local businesses get found and selected by ready-to-buy consumers. Association members include U.S. and international directory publishers, search engine marketers, online listings and review sites, digital advertising agencies and mobile search providers. The Association has members in 29 countries.

IAB Media Contact
Laura Goldberg
347.683.1859
[email protected]

LSA Media Contact
David Fishman
Fleishman-Hillard
212-453-2115
[email protected]