Understanding co-op advertising programs can be a game-changer for car dealerships looking to maximize their marketing budget. These programs, often offered by manufacturers, provide funds to dealerships to cover a portion of the costs associated with approved advertising activities.
Here’s what you need to know to take full advantage of these opportunities.
What is co-op advertising for car dealers?
Co-op advertising is a cost-sharing agreement between a franchised dealership and the manufacturer. Essentially, the manufacturer reimburses the dealership for a portion of its marketing expenses, as long as the advertising meets specific requirements set by the manufacturer.
These requirements often include preferred/approved vendors, brand guidelines, approved media types, and even particular messaging standards. When used correctly, co-op programs can help dealerships stretch their marketing budget further, getting more out of every dollar spent.
How do automotive co-op programs work?
Many auto manufacturers have an approved set of tools and vendors that are eligible for co-op dollars. To participate, a request must be submitted to the OEM on behalf of the dealership. Sometimes the dealership will do this on their own, and sometimes the vendor will submit the expense request on the dealer’s behalf. For example, AutoVerify will submit co-op funding applications to Volvo Canada on behalf of dealerships who sign up for the Car Media products that Volvo has approved.
For some, these reimbursement requests could be for a digital marketing campaign, for others, this could be a subscription to a service that provides custom, OEM-compliant images to create best-in-class online listings.
Once approved, the dealership can purchase the tool or run the ads, and the manufacturer will reimburse the dealership their pre-defined contribution. Some manufacturers offer fund matching, which means the OEM will match every dollar a dealership spends, up to a certain percentage.
Others cover a percentage of the overall cost. Those percentages vary, but often range from 50% to 100%, depending on the manufacturer’s policies and the type of advertising.
For example, Hyundai Canada dealerships are eligible to receive 50% of the expense related to purchasing AutoVerify’s Car Media new vehicle merchandising solutions, but it’s key to submit claims early, as reimbursements are based on the dealer’s remaining budget.
This process ensures the manufacturer's branding remains consistent across all promotional channels while enabling dealers to access high-quality marketing materials without bearing the full cost alone.
Why should dealers use co-op programs?
Dealerships can achieve significant savings by leveraging co-op funds, allowing them to allocate more resources to other areas such as inventory or staff training. Many co-op programs also encourage best practices in marketing by providing guidelines that ensure ads are compliant with brand standards. This helps build a stronger brand presence, which can attract more customers to your dealership.
Moreover, co-op programs are a win-win: manufacturers gain increased exposure for their brand, and dealerships can use high-quality marketing materials without breaking the bank. It’s like doubling your marketing budget overnight.
Navigating the fine print
While co-op programs offer substantial benefits, dealerships should be aware of some challenges.
Compliance is key.
Manufacturers often have strict requirements regarding the content and format of the advertisements to be eligible for reimbursement. This could mean using specific logos, colours, or even specific messaging.
Additionally, the documentation process can be a bit time-consuming, requiring careful record-keeping and timely submission of claims. Deadlines for submitting proof of performance are often strict, and missing these can mean forfeiting the reimbursement.
Tips for maximizing co-op benefits
- Understand the guidelines thoroughly: Each manufacturer has different co-op guidelines. Make sure you know the requirements inside and out. This can save a lot of back-and-forth during the claim submission process.
- Plan ahead: Submit your requests early to ensure they get approved by the manufacturer. Last-minute submissions can lead to delays, and possibly missing out on funds.
- Keep detailed records: Save copies of all invoices, ad copies, and proof of performance. This will be vital when it’s time to submit your claims for reimbursement.
- Work with a vendor familiar with co-op compliance: Choose vendors who specialize in automotive marketing and understand the ins and outs of co-op programs.
- Regularly check for program updates: Manufacturers occasionally update their co-op policies, so stay informed about any changes that could affect your eligibility.
Leveraging co-op advertising can significantly boost a dealership’s marketing power.
With careful planning and adherence to guidelines, dealerships can unlock more value from their advertising efforts and drive better results without incurring excessive costs.
