The Pros and Cons of Co-op Marketing – and How to Avoid the Pitfalls

Co-op marketing isn’t always a perfectly smooth process, but with some due diligence, pre-planning and quality communication, you can flip the challenges into benefits. 

Cooperative marketing is a partnership between two or more brands that collaborate on a marketing campaign, or it can be a cooperative arrangement between a primary brand and its franchisees, dealers or local branches. The entities that are involved share costs, resources and ideas with the goal of gaining mutual benefits. It can be a win-win for all parties for numerous reasons.

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Let us break down some of the pros and cons of co-op marketing for you, as well as present some tips that can help you turn those cons into pros.

Pros of Cooperative Marketing

When created strategically with a clear path ahead, cooperative marketing offers each party many benefits. Consider the following:

1. Small organizations that do not have an adequate marketing budget can boost their efforts by partnering with larger organizations. By having a partner to share the costs, the smaller organization is in a better position to increase sales. Additionally, the ROI can be maximized for both parties.
2. Both organizations can boost awareness of their brands. Additionally, national or international organizations that partner with small, local businesses can reach audiences within specific regions, further increasing awareness of their brands in those communities.
3. Both organizations can also reap the benefits of being associated with the other organization, and they can build trust with their audiences.
4. In the case of cooperative marketing involving a parent organization and its franchisees/partners, the parent organization can ensure that its branding and messaging remains consistent. At the same time, the down-channel partners have the ability to modify certain elements of marketing materials to address the local market.
5. Marketing efforts are streamlined, simplified and consistent – particularly if the strategies involve the use of Through Channel Marketing Automation (TCMA).
6. If they do involve TCMA and warehousing/fulfillment, each organization involved can have readily available marketing materials produced on-demand featuring appropriate, consistent brand messaging and art.
7. Organizations that work together to promote their brands can benefit from producing larger quantities of marketing materials, which reduces the cost of each item due to economies of scale.
8. The organizations can complement each other in their messaging, enhancing the appeal of their products in the eyes of the audience. (Think: “Doritos is better with Pepsi.” Each one sounds just a little more enticing when it’s paired with the other.)
9. Collaboration contributes to new ideas, strategies and tools you can use to meet your respective goals.

Cons of Co-Op Marketing and How to Mitigate Them

Co-op marketing does have its downfalls, but they don’t have to be the rule. Partners can prevent or overcome most, if not all, of them with some strategic planning, regular data analysis and strong communication.

Following are a few of the possible cons of co-op marketing and how to prevent them:

1. Rules are not clear to the organizations, departments or people involved in the cooperative – or the rules are clear, but people don’t engage with the new approach. 

How to Prevent or Resolve It: Creating a formal, written cooperative marketing agreement is the first step. Ensure the role of each party is clearly defined and that each person is qualified to do the job they are asked to do.

2. The financial contributions or time spent on the project are not fair, adequate or feasible.

How to Prevent or Resolve It: Clearly define how much time and money will be spent, where the expenses will come from and how much each party will contribute to the partnership. This isn’t always a 50-50 match, as small organizations might not have the budget or bandwidth to invest as much as a larger organization. However, each party should get back what it put in.

3. Marketing strategies are haphazard and inconsistent.

How to Prevent or Resolve It: Before embarking on this venture, all parties involved should explore relevant data and make decisions about which marketing avenues they will pursue based on this data. 

Which social media platforms will be leveraged? Which CRM will the partners use to gather and analyze data? How will the parties determine their goals and identify the effectiveness of their strategies? At what point will strategies be revisited and updated to reflect findings? Will email marketing, content marketing and SEO be involved? How much of the strategy will be based on direct response marketing, and which direct marketing provider will they use? 

These are only some of the many questions that should be answered and agreed upon by all parties.

4. In a down-channel partnership, only a small number of franchisees or other partners want to be involved.

How to Prevent or Resolve It: Offer incentives or friendly competition to get your franchisees interested. Reward them for their successes. Make it fun. Depending on the type of organization you represent, you may wish to stress how much of an impact they can make in your community or for nonprofit organizations you may be working with. 

For example, set up a competition based on which location can achieve the highest number of sales within a given period – or which location can garner the highest number of donations to an applicable homeless shelter, for instance – and reward the winners with recognition that they can use as bragging rights or as an internal source of pride.

5. Bottlenecks may occur due to differing opinions.

How to Prevent or Resolve It: Collaboration will lead to success, but it’s important to clearly identify the individuals who are most qualified to make specific decisions. Having too many people’s opinions in the mix can get complicated. You may wish to take everyone’s input into account, yes, but then dedicate one or two people from each organization with expertise in each applicable facet to make the final decisions.

These are only some of the pros and cons of co-op marketing. By working with the right partners and marketing solutions providers, however, you can prevent or overcome most challenges, resulting in a positive collaboration that benefits all parties.

At Phoenix Innovate, our strategic solutions and innovative technologies, including our proprietary CenterPoint digital storefront platform, create positive opportunities for nonprofit, healthcare, manufacturing and educational organizations. For more information, email us through our website or call us today, and browse our case studies to see how Phoenix Innovate has created transformative and sustainable solutions through co-op marketing initiatives.