Cooperative advertising is a type of advertising agreement between the manufacturer and retailer of a product. The manufacturer and retailer form an alliance to pay for advertising costs to increase sales. The manufacturer of a product will often provide money to the retailer for the purpose of purchasing local advertisements.
Cooperative advertising is an agreement that recognizes the importance of sales. The manufacturer of a product knows the retailer is an important part of the sales process. If the retailer can sell more products, the manufacturer will be able to produce more products and sell them to the retailer. This means the manufacturer has a vested interest in the success of the retailer. In order to promote the success of the retailer, the manufacturer agrees to enter into a cooperative advertising agreement.
When a cooperative advertising agreement is used, the manufacturer will typically send a certain amount of money to the retailer of the product. This is done so the retailer can use the money to purchase advertising in its local market. Purchasing advertising in the local market is usually much less expensive than coming up with a national ad campaign.
Retailers can utilize local methods of advertising, such as through the newspaper, radio, and television. Local retailers will be able to get much better deals on local advertising with this method. Since products are sold on a local level, retailers want to be involved in their local area and reach consumers in the best way possible.
In most cases, the vast majority of money used for cooperative advertising is spent on newspaper advertisements. Many studies have shown that this type of advertisement is more successful than other methods available. A lesser percentage of the money is spent on television and radio ads. In some cases, money from cooperative advertising programs will be spent on Internet marketing as well.
Cooperative advertising programs are based on sales volume. This means companies who sell the most products are going to get the most advertising dollars from the manufacturer. Typically, manufacturers have several retailers with whom they are working. This means they have to allocate the money that is going to be spent on cooperative advertising programs to the businesses that are going to use it the best. Companies that produce sales are going to get the bulk of the advertising dollars.