If you run a small business, you won’t have the huge advertising budgets of large corporations. You also don’t have the kind of bargaining power to get deals on media space, or price breaks on production costs and professional services.
However, when a group of small businesses get together to form an advertising partnership, they can pool their resources and get a much wider reach and penetration. This is known in the industry as cooperative advertising, and it can be a cost-effective way to advertise a business that has a small marketing budget.
Cooperative Advertising—The Basics…
In laymen’s terms, cooperative advertising is simply a way for two or more businesses to join together in a mutually beneficial partnership to promote their brands. They share the advertising costs, including media and production, and share the space.
Pros of Cooperative Advertising
Let’s look at the upside of advertising in this way:
- Reduced costs. Whether it’s two businesses working together, or 10, the result is a much smaller investment to get the same number of advertising impressions. From billboards and bus shelter ads to digital campaigns and radio, you get the same reach for less money.
- Greater exposure. The more money you have to spend on a campaign, the more people you can reach. When you are pooling your money with another business (or businesses), you can pay for advertising mediums that generate a much bigger footprint. Instead of that small billboard tucked behind a bunch of trees, you’re getting a massive board on a major highway exit.
- Mutual prosperity. There’s an old saying; a rising tide lifts all boats. This can definitely be true when dealing with cooperative advertising campaigns. Separately, the outcomes of two different campaigns would have been ok. But together, both parties benefit from the union of the two brands.
Cons of Cooperative Advertising
There are also some downsides to co-op marketing:
- Less visibility. When you’re in a cooperative ad you’re sharing the same space, and time, with other brands. Instead of the focus being on you, it’s on multiple brands, and that can be off-putting to some small business owners.
- A lot of cooks in the kitchen. Advertising can be hard enough to do when only one company is involved. But add in other businesses, with conflicting ideas on messaging and target audience, and you can have a recipe for disaster. You must test the water and see if you can work well together before committing to a co-op ad.
- Conflicting messages. Brands that do cooperative advertising well do so because they have a shared audience and similar products or services (burgers and Coke go together beautifully). You can’t be the owner of a gym and expect to create a cohesive ad with the pizza joint next door.
- Branding limitations. Different brands have different standards, and this can cause some major conflicts. For example, Disney does not want to see any R-rated movies alongside its own movie offerings. This can make it tricky for companies like Netflix, HBO, Hulu and others to do promotions featuring Disney product. Make sure you will not be stepping on the toes of your partner’s brand, and vice versa.
Examples of Cooperative Advertising
If you’ve ever seen billboards featuring McDonald’s and Coca-Cola products, that’s a major piece of cooperative advertising. Most likely McDonald’s paid the lion’s share of the invoice as the board is overwhelmingly branded with red and yellow, a Big Mac meal, and perhaps even an arrow directing you to the nearest restaurant. BUT, Coca-Cola helps offset the bill and gets prominent placement on the ad. Everyone’s a winner.
In another example, four small businesses want to create a circular for an upcoming event—let’s say Black Friday. They are all based in the same town, in the same strip mall, but none of these businesses has the cash on hand to create and print the piece. In this case, they all benefit from cooperative advertising. Each business gets a share of the circular, and they all get in front of a lot more consumers than if they had tried to do it on their own.
If you are planning to engage in cooperative advertising, pick your partner carefully and make sure the outcome will be beneficial for both parties. Also, look at the real estate and see if one party should be paying more than the other, especially if they are getting more exposure and better placement on the campaign materials.