By Andreas Reiffen, Crealytics
Marketing
co-ops are hardly a new concept. But an explosion of new brands and
marketplaces means that large retailers are now selling wares from thousands of
different companies. Setting up a co-op to facilitate marketing efforts between
brands is incredibly complex and inefficient. As a result, both retailers and
brands are missing out on the opportunity to coordinate media strategies and
grow their ROI.
With
rapid growth in the number of media channels and targeting options, both brands
and retailers need to seize the opportunity by building a better co-op
experience. Navigating the nuances of the brand/retailer relationship may still
be an art, but technology can supply the science and structure needed to
execute a modern digital retail co-op.
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The
optimal co-op process should function as a loop. The brands and retailer pool
their budget, create a spending strategy, execute that strategy and then report
back. In an ideal world, reported findings fuel the budget and planning for the
next campaign and so on.
For
many retail co-ops today, this efficient loop is a pipe dream. Negotiations are
done via email and documented in unstructured spreadsheets, which means that
many co-ops are a mess. On the brand side, sales, marketing and product
managers need to be in constant dialogue with the procurement, marketing and
brand sales teams on the retailer side. That has to happen for every single
brand, which means the retailer’s headaches are multiplied hundreds of times.
Unsurprisingly, communication is difficult, structure is lacking and it’s next
to impossible to nail down a single process that can be applied across every
single retailer.
Even
if brands could capture the communication piece, the fundraising process itself
is overly complicated. Co-op marketing budgets can be raised in three ways:
● Buying Negotiation: A pre-defined percentage of
purchase volume is set aside as co-op budget. The retailer retains the right to
allocate budget freely to the campaign of its choice.
● Stock Replenishment: Sales-based allocation of co-op
budget. Depending on sales volume, the vendors commit to an additional budget
allocation.
● Performance Budget: Additionally, vendors have the
opportunity to voluntarily assign additional co-op budgets in return for
compelling performance reports.
Even
if only looking through a digital lens, there are a variety of ways to apply
these budgets. Funds can go towards the retailer’s site via sponsored project
listings. Money also can be spent off-site, using targeting tools to deliver
search ads, shopping listings, paid social and programmatic display. All of
these ads, of course, would link back to the retailer’s web site. This ability
to target audiences across different marketing channels gives brands more
exposure for their products, driving brand perception and sales. Of course,
this only addresses impression share and brand awareness. Tracking whether or
not those co-op dollars led to the purchase of the advertised brand is a
completely different challenge.
The
final piece in the end-to-end process is reporting, which helps inform these
decisions. All parties need a comprehensive overview of the campaign in order
to validate the co-op’s efforts. The retailer needs an aggregated view of the
co-op’s performance across all vendors. Meanwhile, the brand partners want to
know the effectiveness of their investment in an increasingly granular way.
These reports should ideally break down the co-op budget compared to ad spend,
share of co-op investment compared to other PPC ads, and the share of
retargeting compared to prospecting campaigns as well.
Given
all of the potential headaches that come with building a modern co-op, it’s
clear that the days of using spreadsheets to manage this kind of marketing are
over. It’s more important than ever to build a streamlined model where every
party has a uniform experience. This is why technology plays a bigger role in
co-op marketing than ever before.
Ideally,
co-op platforms should smooth out the communication, budgeting and planning
issues, helping retailers manage each step of the process. With these pieces
under control, it’s easier to issue clear reports to every party. A co-op
platform also makes it easier to adjust budgeting and campaign tactics based on
the reporting, without having to basically restart the entire process with each
brand each time. With more consumers turning to e-Commerce, retailers need to
invest in solutions that can facilitate a better co-op experience, uniting with
their brands to profit during these changing retail times.
Andreas Reiffen is founder and CEO of Crealytics. He
is a marketing technologist and an expert in data-driven online advertising.
His mission is to change the game in Paid Search and Product Ads.
