Co-Op Advertising: Digital’s Lost Opportunity? A new study by IAB & Local Search Association

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Co-Op Advertising: Opportunities in Digital


Spotlighting a sector of the digital advertising economy that offers great financial opportunity the IAB and the Local Search Association 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.

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.