Can Small Business Benefit from Co-operative Advertising?

cooperative advertising
Co-operative advertising benefits

One lesson that many small businesses quickly learn is the value of alliances with other businesses. Small business operators can form alliances with suppliers, vendors,  competitors, clients and even other businesses that have no direct dealing with them. One form of advertising we see amongst larger businesses, and particularly in the retail sector is co-operative advertising.

So, what Is Co-operative Advertising?

The co-operative advertising that many of us are most familiar with is when a retailer places an advertisement for a specific manufacturer’s products. Typically the ad will extol the virtues of Product X, and then the final text of the ad will state ‘available at Store Y’.  This ad is usually paid for by both the retailer and the manufacturer. The manufacturer may have also assisted with the advertisement design.

Co-operative advertising also occurs when a number of businesses in say, a shopping centre, pool together their resources to advertise the shopping centre. The end result is more business for all (hopefully) so why shouldn’t everyone pay a bit?

The supermarket catalogue that you receive in the letterbox is also heavily funded by the featured product manufacturers throughout the pages.

So, what are the benefits of co-operative advertising? The obvious benefit in advertising is the cost savings, where mass media campaigns cost companies many millions of dollars. By entering say, a 50:50 shared campaign with a vertical partner, then both companies can combine budgets to get double the exposure, or the same exposure for roughly half the costs.

Is co-operative advertising viable for my small business?

Clearly the answer is going to depend on the businesses involved, the costs involved and the type of advertising made. There are some good examples of small businesses banding together to make co-operative advertisements but its less common than for larger businesses. Part of the reason why small businesses don’t enter cooperative advertising is that the budget is relatively small. The other reason is that small businesses often might find it more difficult to calculate the ‘split’ between them and another business because they do not understand the benefit they actually get from the advertising.

Conclusion

The take home message from this is that small businesses should attempt to do research on where their customers come from. This is vital to know, otherwise there is no other good method of being able to measure the success of advertising. Watching sales data spike as a new campaign is run is useful, but sometimes other factors are involved such as economic fluctuations, seasonal changes in demand and other advertisements may have also had an impact on recent sales. Good data is the key here.

If you do manage to conceive a good co-operative advertising campaign and go ahead with it, be sure to keep good records on the costs incurred in doing this. If you are funding the advertisement, be sure to claim the money back promptly and insist it be paid within a certain time frame.

This article on co-operative advertising is brought to you by HirePulse, a leading Australian services directory, linking service providers and businesses together. Be sure to check out our website and prosper from the great opportunities presented. If you would like to read another business article by us, make sure to have a look at –  Business Advertising – Strategies for B2B, B2C, & B2G Advertising

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SMB Authors

This article is one of the excellent contributions from small business owners, decision makers and professionals.