Why 80% of Co-op Advertising Funds Are Used by Only 20% of Dealers: Unveiling the Mystery
In the ever-competitive automotive industry, co-op advertising programs present a golden opportunity for dealers to amplify their marketing efforts with financial backing from manufacturers (OEMs). Yet, a staggering 80% of these co-op advertising funds are utilized by merely 20% of the dealerships. What’s causing this imbalance, and what are the dangers of letting these valuable funds expire? Let’s dive into the details.
The Complexity of Co-op Programs: A Major Barrier
One of the primary reasons why so many dealers miss out on co-op advertising funds is the complexity involved in the process. The steps to secure reimbursement often require pre-approval, detailed co-op statements, and frame-by-frame screenshots of marketing materials, which vary across different OEMs. This intricate process can be daunting, leading many dealers to feel it’s not worth the effort, especially if they believe they haven’t earned enough co-op dollars to make it worthwhile.
The Perception Problem
Many dealers don’t realize that co-op advertising is not just a form of cheap advertising. Properly leveraging these funds can lead to significant marketing benefits. However, the perception that the process is overly complicated and the funds are not substantial enough to pursue often deters many dealerships from taking full advantage.
The Advantages of Being in the Know
Interestingly, dealers who understand the value and intricacies of co-op programs can present their proposals professionally to OEMs, unlocking limitless co-op opportunities. These savvy dealers know that:
- OEMs Are Becoming More Flexible: Historically rigid, OEMs are now starting to recognize that dealers have a better understanding of local market dynamics.
- Digital Marketing is the Future: With the decline of traditional media, digital advertising is where co-op programs are growing fastest. Platforms like AutoTrader.com and Cars.com offer OEM-approved co-op programs that can save dealers time, money, and effort, while maximizing reimbursement opportunities.
Why Funds Go Unused: The Hidden Costs
Ralph Paglia highlights that much of the co-op advertising budget goes unspent each year because many dealerships are unaware that co-op reimbursements are available for digital marketing, not just traditional media. This lack of awareness leads to a significant portion of the funds remaining untapped.Letting co-op funds expire isn’t just a missed opportunity; it can have direct negative impacts on a dealership’s marketing potential and competitive edge. These unspent funds could have been used to increase local brand visibility, drive more foot traffic, and ultimately, boost sales.
The Danger of Letting Co-op Funds Expire
When dealerships fail to use their allocated co-op funds, it’s not just a loss of potential marketing dollars—it’s a strategic disadvantage. Here’s why:
- Reduced Marketing Impact: Unused co-op funds mean fewer resources for marketing campaigns, leading to less exposure and fewer opportunities to attract potential buyers. This is particularly crucial in the digital age, where visibility is key.
- Wasted Opportunities for Growth: Every unspent dollar is a lost opportunity to grow the dealership’s market presence. Effective use of co-op funds can significantly enhance a dealership’s ability to reach new customers and retain existing ones.
- Competitive Disadvantage: Dealers who don’t utilize their co-op funds effectively fall behind competitors who do. Those leveraging these funds can afford more robust and frequent advertising campaigns, gaining a competitive edge.
How to Maximize Co-op Advertising Funds
To avoid the pitfalls of unused co-op funds, here are some actionable tips:
- Educate and Train Staff: Invest in training programs to help your team understand the co-op advertising process. Knowledgeable staff can navigate the complexities and ensure that your dealership maximizes available funds.
- Partner with Advertising Agencies: Collaborate with agencies experienced in handling co-op programs. These professionals can help develop and execute campaigns that align with OEM guidelines, ensuring compliance and reimbursement.
- Maintain Thorough Documentation: Diligently document all marketing activities and ensure they meet OEM requirements. This includes keeping detailed records of expenses, obtaining pre-approvals, and submitting accurate claims.
- Utilize Digital Channels: Explore co-op programs available on digital platforms like AutoTrader.com, Cars.com, and others. Digital marketing is increasingly supported by OEMs and offers a cost-effective way to reach a broader audience.
- Advocate for Flexible Policies: Engage with OEM advisory boards to advocate for updated and flexible co-op policies. Highlight the benefits of allowing dealers to tailor their advertising strategies to local market needs.
Conclusion
The fact that 80% of co-op advertising funds are utilized by only 20% of dealers highlights a significant opportunity for the majority of dealerships. By understanding and navigating the complexities of co-op programs, dealerships can unlock substantial marketing funds and avoid the pitfalls of letting these valuable resources go to waste. Embracing digital channels, maintaining meticulous records, and advocating for flexible policies can ensure that your dealership maximizes its co-op advertising potential, driving sales and enhancing market presence.
Want to improve your sales and move cars off the lot faster? Contact COOPABLE today to see how we can help you effectively manage your co-op dollars.