Henry Ford understood that the continual investment in advertising was necessary for a business to be successful. “Stopping advertising to save money," he said, "is like stopping your watch to save time.”
Some Metro Detroit business owners have discovered that their radio advertising doesn’t have to be sacrificed at all when belts need to be tightened. It turns out there’s a deep pool of “free money” that can be dipped into for the singular purpose of advertising. These funds are called cooperative funds, or co-op for short.
Inc. Magazine defines co-op advertising as “the sharing of costs for locally placed advertising between a retailer and a manufacturer of the products they sell.” Often, the manufacturer will cover 100% of the cost of advertising. In other words, free advertising.
Manufacturers love co-op because it extends the marketing of their products. Detroit area small business owners love co-op funds because they contribute to the growth of their businesses through consistent advertising.
According to BIA Advisory Services, more than 40% of all small business owners qualify for co-op funds. It is also reported that less than half of the $70-billion available is ever claimed by business owners.
Stearns & Foster, for instance, is a major brand of mattresses. There are many Metro Detroit business owners who sell the company's products. Each of these local dealers could accrue co-op funds equal to 5% of the wholesale cost of the products they sell during the year.
If an S&F dealer in Livonia, for example, sold $900,000 worth of the company's products last year, then that store would receive $45,000 in advertising credit. This could include buying commercials on Detroit radio stations.
To claim co-op funds, small business owners must comply with each manufacturer’s guidelines. Stearns & Foster, for instance, requires pre-approval for dealer radio commercials; product exclusivity within the ad; and a notarized affidavit of performance from the participating radio stations. A tiny bit of work for free advertising money.
Not every manufacturer offers 100% co-op reimbursement. But most do provide support. These plans generally fall into six categories. Metro Detroit small business owners should ask each of their vendors which type of programs they offer.
When a Southeast Michigan small business utilizes its coop advertising, Entrepreneur Magazine offers the following tips to maximize results:
The US Small Business Administration advises, "Advertising, if done correctly, can do wonders for your product sales, and you know what that means: more revenue and more success for your business." So, why wouldn’t a local small business advertise on Detroit radio, especially when it can be done with someone else’s money?