Understanding Co-op Funding
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1 Understanding Co-op Funding Brandeis C. Hall VP/Training Here s What We ll Cover 1. How much money is available 2. The 4 key benefits of using co-op. 3. How co-op works. 4. How to use RAB s co-op tools. Page 1
2 Calculating The Co-op Some $50 billion of media advertising is financed through co-op programs. Calculating the Co-op In your Market $30 per capita x Market Population Two-thirds is usually spent in local media One-third goes unused 50,000 people x $30 = $1.5 million. $1 million is used $500,000 wasted. * *Revenue Development Systems Page 2
3 Calculating the Co-op In Your Market Market # 1: New York, NY Population: 15,730,000 15,730,000 people x $30 = $471,900,000 $ 314,600,000 is used in local media $157,300,000 is UNUSED. Calculating the Co-op In Your Market Market # 17: San Diego, CA Population: 2,648,300 2,648,300 people x $30 = $79,449,000 $52,966,000 is used in local media $26,483,000 is UNUSED. Page 3
4 Calculating the Co-op In Your Market Market # 26: Riverside-San Bernardino Population: 1,975,600 1,975,600 people x $30 = $59,268,000 $39,512,000 is used in local media $19,756,000 is UNUSED. Calculating the Co-op In Your Market Basically, $10 per person in your market goes unused Every year. Page 4
5 Four Key Benefits of Co-op A lucrative source of new revenue. Stretches a retailer s ad budget. Local retailers can tie into national manufacturer s programs. Rarely CPP or ratings driven. 9 Co-op Overview Heaviest Media Co-op Users: Newspaper Yellow Pages Magazines Other Print Broadcast TV Cable Radio And now Internet Page 5
6 Co-op Overview Present Using Co-op As Means for Expansion Co-op should always be positioned as a means of expanding, and not reducing an ad program. Companies are highly interested in integrated marketing campaigns. Bundle co-op resources for a retailer! Co-op Overview Co-op is available for On-Air Online Print Signage Events Promotions And more things you haven t even thought of Page 6
7 Co-op Overview: The Essential Triad Manufacturer The Co-op Triangle Retailer Radio Co-op Overview Local retailer runs advertising featuring a manufacturer s or supplier s product or service The manufacturer or supplier reimburses the retailer for (all or a portion of) the advertising based on the retailer s previous purchases. Page 7
8 Three Ways to Use Co-op Effectively Retail Programs Dealer Group Programs Distributor Programs Three Ways to Use Co-op Effectively Work with a single retailer to use accruals from one or more vendors to advertise one or more products/services 16 Page 8
9 Three Ways to Use Co-op Effectively You work with one manufacturer to combine the accruals from several retailers to advertise selected products/services 17 Three Ways to Use Co-op Effectively You work with one wholesaler or distributor to combine their own accruals to advertise selected products/services on behalf of their retailers 18 Page 9
10 Retail-Driven Co-op Retail Programs Work with a single retailer to use accruals from one or more vendors to advertise multiple products/services RAB 7 Steps to Successful Selling 20 Page 10
11 Prospecting for Co-op By Season: Paint Lawn / Garden HVAC Flooring Hardware Sporting Goods Boats Shoes Swimming Pools Auto Dealers Fireplaces Office Supplies Prospecting for Co-op Prospecting Indicator reports Page 11
12 Prospecting for Co-op Top 40 Business Survey Prospecting for Co-op Top 40 Business Survey Page 12
13 Prospecting for Co-op Other Media: 5 Basic Co-op Terms You Need To Know 1. Accrual: Co-op funds earned - based on a percentage of purchases from Manufacturer. (Actual $ banked) 2. Accrual Period: Time frame for accruals (set by Manufacturer). 3. Accrual Rate: Percentage of purchases to be reimbursed to the Retailer as co-op funds. (Usually 1%-5%) 4. Allowance: Percent of advertising invoice to be reimbursed to the Retailer up to the amount accrued (i.e. 100%, 50%) 5. Expiration Date: The date when the retailer no longer is eligible for reimbursement and the accruals revert back to the Manufacturer. 26 Page 13
14 RAB Co-op Directory Plan Examples RAB Co-op Directory Page 14
15 RAB Co-op Directory RAB Co-op Directory Page 15
16 RAB Co-op Directory RAB Co-op Directory Page 16
17 RAB Co-op Directory: Internet Co-op Options 1. Yes. 2. No. 3. With Prior Approval. 4. On a Case-by-Case Basis. Banner sponsorship Audio commercial Video commercial Pre-rolls Player banner ads Player sponsorships 33 RAB Co-op Directory Page 17
18 RAB Co-op Directory RAB Co-op Directory Page 18
19 RAB Co-op Directory RAB Co-op Directory Page 19
20 RAB Co-op Directory RAB Co-op Directory Cancellations and Changes To Existing Co-op Programs. It is the manufacturer s prerogative to change the marketing or program any time they desire. Many manufacturers have put their programs on moratorium during the recent economic downturn but will re-activate them as the economy improves. The RAB is adding programs almost daily. Your leads help. When you find a program or change to a plan not in the directory, send in the lead! Page 20
21 7 Steps to Co-op Success 1. Do your homework 7 Steps to Co-op Success 2. Meet with the Retailer Conduct a CNA Walk the store Ask what brands offer co-op Page 21
22 7 Steps to Co-op Success 3. Contact Manufacturer Use RAB Request Letter Manufacturer web site Get co-op program details Pre-approval of program Written approval of script 7 Steps to Co-op Success 4. Create a schedule / program Include more than on-air Adhere to budget guidelines Alert Traffic Department Detail everything Page 22
23 7 Steps to Co-op Success 5. Run Campaign 7 Steps to Co-op Success 6. Billing Fill out the affidavits / Tear sheets Collect paid invoice from retailer Other required documentation Send to manufacturer Copy for retailer / yourself Page 23
24 7 Steps to Co-op Success 7. Follow-Up Check retailer for feedback on program results Inquire about reimbursement from manufacturer Expedite reimbursement if necessary Plan next program RAB Co-op Tools Page 24
25 RAB Co-op Tools Sample Co-op Scripts RAB Co-op Tools Sample Co-op Scripts Retailer Introductory Letter Page 25
26 RAB Co-op Tools Sample Co-op Scripts Retailer Introductory Letter Manufacturer Intro Letter RAB Co-op Tools Sample Co-op Scripts Retailer Introductory Letter Manufacturer Intro Letter ANA/RAB Tear Sheets Page 26
27 RAB Co-op Tools Sample Co-op Scripts Retailer Introductory Letter Manufacturer Intro Letter ANA/RAB Tear Sheets Glossary of Terms RAB Co-op Tools Sample Co-op Scripts Retailer Introductory Letter Manufacturer Intro Letter ANA/RAB Tear Sheets Glossary of Terms Helpful Articles Page 27
28 Wrap-Up Work days out Be diligent and organized Follow-up on paperwork and reimbursement Use RAB s Tools & Resources Ask for help 55 Understanding Co-op Funding Brandeis C. Hall VP/Training bhall@rab.com Page 28
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