Advantages & Disadvantages of Cooperative Advertising

Cooperative advertising is a form of advertising where a manufacturer and retailer or distributor partner together to share the costs of creating advertisements for both businesses. For example, have you ever noticed that many fast food restaurants feature Coke or Pepsi products alongside a burger and fries in their advertisements? This is a form of cooperative advertising.

When you enter into an agreement with a retailer, should you agree to participate in cooperative advertising? Before you do, make sure you understand these advantages and disadvantages:

Self Promotion

Some cooperative advertising agreements have strict guidelines over how much of the advertisement should be dedicated to the manufacturer and how much to the retailer. It’s important to review these guidelines carefully before making a decision to ensure you are not given a small portion that won’t do much in terms of promoting your business.

Lower Advertising Costs

Of course, one of the benefits of cooperative advertising is lower advertising costs. Because you are sharing the cost with another business, you won’t have to pay as much out of your pocket. The smaller your advertising budget, the more beneficial this is to your business.

Conflicting Messages

If you and your partner in the cooperative advertising agreement do not have similar messaging strategies, it will be very difficult to come up with an advertisement you both approve. Make sure you do not sign a cooperative advertising agreement with another business that does not share your vision. For example, if the retailer you are working with wants to be depicted as a low cost, bargain store, but you want to be seen as a premium product, it will be very difficult for you to create an advertisement that can capture both of these messages.

Learning Experience

Working with another business is a great learning opportunity, especially for small manufacturers who don’t have much experience in advertising. Take this opportunity to learn how another business advertises their products. Which channels do they use? What have they found to be the most effective? Learning from another company will save you a lot of time and energy since you won’t have to put in the effort to research these items yourself.

Positive Association

If the company you are partnering with has a good reputation, partnering with them, even for a single advertisement will strengthen your reputation as well. Consumers will associate the partner brand with yours, and as a result, view you in a more favorable light because you joined forced with a brand they already love. However, the opposite can also be true. If you partner with a brand that is not well liked among your audience, you risk being viewed in a negative light by potential customers. That’s why it’s imperative you do your research before signing a cooperative advertising agreement to ensure you are working with a brand that does not have any reputation issues.

Retailers and manufacturers, have you ever participated in cooperative advertising? What did you think of your experience? Share your thoughts in the comments below!