COOPERATIVE ADVERTISING

Cooperative (co-op) advertising is an agreed-on sharing of specified advertising costs or other promotional costs among manufacturers and retailers or analogous groups. Co-op is an arrangement beneficial to both manufacturers and their business partners and an excellent way to expand advertising and promotion dollars. Co-op can extend far beyond the traditional print and broadcast media; in fact, many manufacturers now allow Internet advertising under the guidelines of their co-op advertising programs. The list of eligible media continues to grow, varies by manufacturer, and will be reimbursed provided it is agreed on and specified within the manufacturer’s plan.

What a Promotional Advertising Program Should Specify

• Who pays. How much or what percent of the cost of the advertising the retailer and the manufacturer each pay. Written programs should clearly specify he terms and rates for reimbursement.

• How co-op accrues. Accruel specifies what goods or services apply to the amount or allowance that is offered by the manufacturer for the advertising, how that amount is determined, and over what period of time. By law, the accrual must be proportional for all like outlets of participants, regardless of size or volume. For instance, manufcturers may not give retailers 5 percent of sales for a 100-unit purchase and 10 percent for a larger volume purchase, thereby unfairly rewarding the larter outlets. The degree of co-op must be the same for every retailer, although it can differ or be absent for wholesalers. Co-op may also be regionalized or otherwise limited as long as it is available to competing users.

• What will be promoted. This need not parallel how co-op is accrued. Often, all of the co-op earned is targeted on one or a few promotional leaders.

• When to promote. In planning your co-op advertising, consider any national ad campaigns scheduled by the manufacturer. Agree upon dates, seasons, or tie-in events and keep in mind the cut off date for using the current year’s co-op accrual dollars. In specifying dates, consider such possibilities as using unspent Christmas co-op for January sales.

• Where and how to promote. National organizations tend to favor name media. However, “shoppers,” “penny-savers,” and similar media may be a retailer’s best buy. Stay flexible. By law, not only must co-op be proportional, it must also be functionally available. That is, it may not be limited to what only the largest accruals can buy.

• Message approvals. Both co-op partners are responsible for claims about their products and services. Agree on who creates and who approves the advertising. To prevent conflicts, many manufacturers prepare advertisements and commercials that are easy and inexpensive for retailers to personalize. In fact, a great deal of the advertising that appears in newspapers is manufacturer-created so as to maintain the appropriate product or brand image.

• What is not covered. Many co-op programs exclude all creative or preparatory charges and cover only a specified percentage of the net cost of newspaper and magazine space or radio and television on-air time. Be sure to read the fine print of the written co-op plan to see what is eligible for reimbursement. With the increase in Internet advertising and the use of other alternative media, ACB has expanded verification beyond the traditional print media. Many manufacturers today have modified their co-op programs to allow the use of these media, although they will usually require that the retailer receive prior approval for advertising in selected media. The purpose of a co-op program is to promote the product or service better and sell more of it. If what will work isn’t in the current agreement, attempt to add it. Just remember: put it in writing!

Auditing Co-Op: How and Why

Most companies with substantial co-op programs audit retailer or other local chargebacks through an advertising checking service such as the Advertising Checking bureau (ACB). Local advertisers submit tear sheets of their ads (the actual pages on which the ads appeared) or some other proof of promotional activity, with invoices substantiating the cost. ACB keeps a running total of advertisements that appear in many U.S. newspapers and hundreds of magazines, with their actual cost to the advertiserrs. Like other co-op advertising services, it checks charge-backs and, where necessary, corrects them to their true rate. In most instances, the corrected charge-back is approved by the retailer.

When the original charge-backs are too high, an audit report specifies actual rates and an approved co-op amount. In case of conflict, the service, rather than the manufacturer, becomes a party to the disagreement. Thus, rather than a conflict between a supplier and a customer, you get a debate between accountants. If, as can also happen, charges are too low, notifying retailers about this can hardly be surpassed for creating goodwill. Many co-op agreements specify that claims for co-op reimbursement will be verified by an auditing service. Such services are in every major and most secondary markets and can be found in the Yellow Pages. Most of them specilize in local and regional media. A few, such as ACB, operate nationwide. If you are the co-op provider, the incremental cost for auditing could prove to be a valuable investment in helping maintain the integrity of your program. In the evolving world of promotional advertising, manufacturers should be certain to remain current in the Federal Accounting Standards board (FASB) regulations concerning advertising documentation requirements and policies.

NOTES ON THE NEWSPAPER/MAGAZINE ADVERTISING CHECKLIST

These notes are a supplement to the material presented in this article. They are not a self-contained substitute for that material.

1. Quotations. The total of all quoted and/or estimated costs accepted from outside suppliers, plus the known or estimated internal out-ofpocket costs. This is the amount given for budget approval in #2.

2. Budget approval. The amount either accepted from #1, or otherwise determined as a fair cost to do the project. If lower than the figure in #1, costs may have to be renegotiated with suppliers or the project modified to fit the dollar allocation.

3. Project approval. Once the project can be done for the amount in #2, a decision on whether the project is worth the cost, no matter how “fair” the individual charges may be.

4. Target audience. Determination of the target audience at whom the ad is focused. Usually this is done as part of a total marketing program. Everything else about this ad must then be controlled by that focus. How else will you decide the message and the media?

5. Message. This tells the writer what is to be said, not how to say it. The actual wording is the job of the writer in #9.

6. Benefits. The benefits keyed to the audience in #4. If none of those benefits seem particularly suited to that group, the choice of those benefits and why that particular audience was targeted must be reconsidered.

7. Headline. The headline’s subject, not its wording. Pick the one thing most likely to attract the target audience; usually the key benefit from #6.

8. Offer. Make the offer a major reason to get the advertised product or service from you and to do it now, especially if a competitor’s options are available. As the advertiser, do not be afraid to echo your competition. If you can’t do better, at least stay even. Note that the offer can appear anywhere in the ad as long as the design gives it such prominence that it can’t be missed.

. Writer. The checklist shows the person who appoints the writer.

* If certain things must be said in a specific way, let the writer know before he or she begins . . . and whether this is a legal constraint or a management decision. If the latter, management should be willing to at least consider alternatives.

10. Designer. The person responsible for choosing the designer.

* Good designers often surprise, so do not be hasty to say no to what you may not like at first sight. It is the designer’s job to know how to appeal visually to the targeted audience. All of us, and especially the younger generation, are becoming more visually oriented. Designers are right more often than they are wrong.

11. Colors. The use of color in newspaper and magazine ads almost always gains readership. So does size. If dollars are set and you must choose one of the two, ask each media representative for facts and figures on which works better in their specific medium. If still undecided, pick color. For low-cost, striking effects, ask about “spot color,” the use of any amount of a single color; just so it does not cover the entire ad.

12. Typesetter. For advertising that requires design skill, use professional typesetting. Limit in-house desktop typesetting to straightforward flyers, reports, and other simple-to-create projects.

13–14. Photography/art. Both who selects the photographer and/or artist and who gives the technical as well as the aesthetic instructions (not necessarily the same person!). Unless the person doing or given the assignment is an expert in art reproduction for newspapers and/or magazines, discuss this with the filmmaker in #16 before any photography or art is ordered (For instance learn about shooting photos for “contrast” or “detail” and what the disk and/or the camera can and cannot “see.”) Much more about this is included in the Prepress Checklist.

15. New art. “New art,” formerly called “camera ready,” is the all-inclusive term for illustrations, photography, and type put into position to create the ad. Once digitized it becomes an electronic file. It is the last chance to change anything at relatively low cost. It includes every instruction to the disk producer or filmmaker in writing. If another department or an outside service or agency does this, the person who assigned the project goes over it with them. For major projects, the disk producer or the filmmaker should be present also. Everyone involved must understand the instructions and understand them the same way.

16. Disk/Film. Preparation of preprinting disk or film also includes proofs (photographic copies of what the printed ad will look like) for final approval, as well as for each publication. The proof is checked against every instruction on the original art to make certain it has been followed. It is literally checked off so nothing is overlooked. Equally important, the proof is examined to see whether those instructions make sense in what is seen now. Newspaper advertisements seldom are as “sharp” (clear) in print as on the proof. If for any reason the ad is hard to read on the proof, it will probably be impossible to read when printed. The original instructions must also specify how many proofs and what kind will be needed. Each medium’s rate card has this information. Most ask for one proof; some want more.

17. Shipment. Let the prepress firm ship the film to its destination—even if it is across the street from your office. That is part of their know-how and their responsibility!

18. Media. Does the focus of the media match the target audience focus in #4? If not, why this selection—unless it is the only paper in town? If there is no good medium for what you are advertising, use what is available . . . and work on building a mailing list.

19. Dates. Differentiate among the four key dates in making magazine selections: A. Closing date. The date by which ad space must be reserved (ordered) for the ad to appear in a specific issue. B. Mechanical date. When the material from which the ad will be printed—usually digitized, sometimes film, or new art—must be at the publication. If art is required, check with the publication to learn exactly what they mean by this term. C. Cover date. The date printed on the publication’s cover. D. Out date. The dates on which the magazine will be mailed and when it will appear on newsstands. These may be up to a week apart. 20. Size. Have a reason for the size of the ad. Note that it often costs less overall to create a single larger ad and use it everywhere than to pay for the creation of smaller versions for less important and less expensive media.

21. Space cost. Dramatic discounts are possible when someone advertises fairly frequently in the same medium. Almost all publications combine “space” with “frequency” discounts to make it possible to run more advertising at lower per-ad cost. The media buyer, the person responsible for purchasing the space, should ask media representatives about “rate holders,” the smallest ads accepted by a medium, and whether there are any other ways to save. Since media representatives may not be able to negotiate rates other than those given in their rate card, check with the media buying services found in major city Yellow Pages about the possibility of negotiated rates!

22. Notification. Notify or confirm orders, including telephone orders, to each medium by fax or mail. Use a reservation form similar to the one. Although reservation on a purchase order or letterhead is accepted by practically everyone, the use of a media form gives a better assurance that all pertinent instructions will be covered.

23–29. Mechanical checks. Someone has to be responsible for checking each of these items before anything may be printed. Make sure that the responsible person does check them and signs off in writing. In many organizations, the logo—the organization’s name, address, and telephone number— is stored in its own computer file, and must be used from that art. It is an excellent safety measure, providing every such file is corrected when there is a change. Experience shows that practically no one really checks logos. Wise advertising directors make themselves the exception.

30. “As run” copy. Some one person must be responsible for maintaining a file of all ads “as run”; that is, as they actually appeared in each publica tion. The printed copies should be used for this file. Normally, only a single copy of the page on which the ad appears accompanies the invoice—even when the advertiser requests two or three. So if accounting must see the printed ad before a medium is paid, let them see the original as proof, thank them for their care, and leave with them a reproduced copy “for the record.”.