Sunday, January 01, 2017

Cooperative advertising

The main sources of newspaper ad revenues are local retailers, classified ads and cooperative advertising.

Cooperative advertising is a situation in which a manufacturer offers retailers an advertising program for the latter to run. There is a financial agreement between the manufacturing and retailing echelon of a supply chain.

There are three types of cooperative advertising:
*Vertical: describe as a financial agreement, where a manufacturer offers to share a certain percentage of his retailers advertising expenditures. For example Royal Cruise pays for a downstream retailer’s ads, such as a travel agent’s ads.

*Horizontal: Local dealers in a geographical area pool money, as in automobiles or fast food chains.

*Ingredient producer cooperative: when the producer of an ingredient, such as NutraSweet pays part of an ad run by the user product, such as Diet Coke.

The intent of cooperative advertising is often to stimulate short-term sales. One reason manufacturers use cooperative advertising is the impracticality of listing all their dealers in national advertising. Also cooperative advertising encourages retailer to devote more effort to the manufacturer’s lines.
Cooperative advertising
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