Digital Media Key to Co-Op Program Growth, but Brands Lag - eMarketer
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Digital Media Key to Co-Op Program Growth, but Brands Lag

Brand marketers slow to include digital in co-op program media mixes

August 25, 2015 | Advertising & Marketing

Digital marketing is changing the cooperative advertising landscape and offering both brands and local businesses new opportunities to reach customers. However, many brands are not only struggling to keep up in this digital era, but also leaving more advertising dollars—about $14 billion—unused.

Obstacles to Participating in a Co-Op Program* According to US Brand Marketers, July 2015 (% of respondents)

According to July 2015 polling by Borrell Associates, half of US brand marketers said that a lack of digital marketing understanding was a key obstacle to participating in a co-op program, an agreement that combines marketing efforts between complementary companies, as well as direct competitors.

Because of this lack of digital understanding, brand marketers still heavily favored traditional media. In fact, 82% of respondents’ offerings included newspapers, and 71% offered direct mail and radio.

Media Offered in Co-Op Programs* by US Brand Marketers, July 2015 (% of respondents)

Interestingly, digital video advertising and social media marketing ranked lower than directories. While brands still offer different types of media in co-op programs, digital is just not a priority.

For brands, traditional advertising still reigns. It has no doubt been an effective marketing channel for years, yet digital is continuing to take a bigger ad spend share year over year, according to data from BIA/Kelsey. By the end of 2015, digital ad spend will make up 26.0% of total local ad spending in the US, while traditional will grab 74.0%. By 2019, digital ad spend will increase to 35.4% of total local ad dollars while traditional decreases to 64.6%.

Though digital understanding is a top hurdle for brand marketers, local advertisers face a different kind of obstacle. For instance, 38% of US local advertisers queried by Borrell said there were too many rules and restrictions or paperwork. In short, local businesses prefer a more efficient way to handle their marketing efforts.

Media for Which Co-Op Programs* Are Offered by US Brand Marketers vs. Purchased by US Local Advertisers, July 2015 (% of respondents)

Another key contrast between brand managers and local advertisers are the types of co-op offered vs. purchased. According to Borrell, there were differences in almost every media category, including cable TV, broadcast TV, magazine, outdoor, radio and, most notably, yellow pages. Almost half of brand marketers said they offered yellow pages, while only 5% of local advertisers did.

The internet was the only medium that brand marketers and local advertisers agreed on when it came to co-op offered vs. purchased. Fully 69% of brand marketers said they offered the internet co-op, as did 61% of local advertisers. While the agreement of digital and its importance is there, more of an effort needs to be made from brand marketers to revamp their co-op program media mixes and invest more on digital.

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