Automotive: Co-op in the Digital World
As audiences for broadcast media and print advertising decline, local dealers co-op advertising is one of the hottest growing sectors in the digital sphere. However, only about 20 percent of today’s dealers already know that co-op advertising is not just a form a cheap advertising for their dealership.
Many dealers have stated that if they present their programs to the OEM’s in a professional manner, the co-op opportunities are limitless. As OEM’s use to be more rigid, they are starting to understand that the dealers have a better idea of where, how and when to reach these potential prospects more so than the OEM on a local level. Third party sites such as AutoTrader.com and Cars.com have OEM approved co-op programs available for dealers in order to save them time, money, work and to receive the most available reimbursement for their co-op dollars. As automotive thought leader Brian Pasch pointed out that “co-op policies that are outdated need to be brought up at the OEM dealer advisory board meetings. If dealers don’t speak-up on what is WORKING, then co-op funding rules will continue to be misaligned with the dealer’s best interests at heart.”
Why are 80 percent of co-op advertising dollars used by 20 percent of the dealers? This is because of the complexity of the process and steps involved in receiving reimbursement like pre-approval, co-op statements, and frame by frame screenshots of artwork which varies from OEM to OEM. Many dealers don’t feel they have earned enough co-op dollars to make the process worthwhile for them because they don’t believe they are spending enough dollars to be eligible as co-op advertising dollars are accumulated from a percentage of your overall dealership sales. Ralph Paglia article “Take a Free Ride” reports that much of co-op advertising budget goes unspent each year, as few dealerships take advantage of these programs because “many dealers are not aware that co-op advertising reimbursements are available not only for traditional media, but for digital marketing as well,” says Paglia.
One of the first manufacturers to design a digital advertising package (DAP) that qualified for co-op funds was GM. Other OEM’s that are utilizing digital channels like FordDirect Search Engine Marketing (SEM) co-op program is 100% co-op eligible. More recently, the Chrysler co-op program was launched to get dealers nationally to try more digital advertising as opposed to print, radio and TV.
Co-op advertising is a win- win situation for both parties involved as it ensures your dealership has reduced advertising costs and more ads deployed at the same time. Before entering a co-op partnership there are a few standard guidelines like logo usage, whitespace requirements, general branding requirements and obtaining pre-approval before placing the ad that dealers should be aware of. This ensures that the dealership ad meets all co-op requirements and is guaranteed to get reimbursed quickly and painlessly. This entails either emailing of faxing the manufacturer or going thru online portals which vary’s between OEM’s.
Here are some tips for managing your co-op program:
- For all co-op programs available for your dealership keep a file stored on your computer. Use A calendar to show various periods, special seasonal events and expiration dates that are occurring with your OEM’s. In order for your dealership to get the most bang for your buck make sure to write down seasonal promotions when OEM’s may double up or add more co-op contributions to your dealerships co-op advertising.
- Even if your dealership doesn’t have a formal co-op plan, your OEM should still provide you with co-op dollars if you can convince them that your advertising you will help them sell more cars and thus reduce inventory levels. Always assume that co-op advertising funds exist for all vehicles your dealership carries.
- Just because your dealership makes small purchases, don’t be fooled to think that little co-op help is available to you. Regardless of how many vehicles you purchase from your OEM, many OEM’s will share ad expenditures with your dealership as this is a win-win situation for both your dealership and your OEM.
- Get pre-approval for all of your dealerships co-op advertising. This way you are guaranteed to get that portion of your advertising back from your OEM.
- Sites such as AutoTrader.com, Cars.com and Autoshopper will benefit as they currently have co-op programs in place for auto dealerships and their OEM’s. These sites have experienced professionals that provide pre-approval claims as well as the claim submission paperwork that is required to get reimbursement for your dealership.
Dealers need more digital co-op options in order to be successful with their marketing programs. As all dealers have different advertising needs, co-op programs should support this and think beyond traditional forms of advertising. The automotive industry needs more choices as digital advertising strategies continue to evolve. The future of co-op advertising will see these choices expanding onto other digital avenues including: co-op inventory advertising, landing page advertising, dynamic inventory based advertising, video retargeting, native video advertising, pre-roll advertising and digital radio advertising to name a few. We couldn’t agree more with Brian Pasch statement that “co-op programs should not force their dealer network in the same ‘box’ or use one specific solution. A more accommodating policy would give dealers the freedom of expression and an ability to showcase their creativity for their local market.”