Traditional advertising co-op programs are woefully outdated in today’s digital environment, and much too complicated for local businesses to participate in, according to a new study.

Sponsored by Netsertive, The Changing Face of Co-Op Programs also revealed at least $14 million of co-op funding is unused — almost double the amount left unused three years ago.

“If ‘Unused Co-Op’ were an ad category by itself, it would be among the Top 10, rivaling what the health care industry spends on advertising,” stated the study authors. “It’s more than hospitals, banks and restaurants spend on advertising – combined.”

Businesses, Brands Out of Sync

Diving a bit more deeply, the study provided insights into how digital marketing trends are affecting local marketing efforts.

Although brand managers believe that claims from local advertisers about co-op program complexity stem from the fact that local advertisers don’t understand digital marketing enough to participate, the study found that 61 percent of advertisers favor digital marketing over traditional means.

In contrast, 82 percent of brand managers said their offerings include newspapers, 71 percent direct mail and radio, while digital co-op is only offered by 61 percent.

co-op media offerings

Brendan Morrissey, CEO of Netsertive, told us why.

“This is an interesting finding, and we’re seeing evidence of this locally where some savvy, versatile business owners are pushing into digital fast,” he stated. “They’re practically begging brands to support them on it.”

Brendan Morrisey
He added that brands and advertisers seem to be out of sync when it comes to co-op programs.

“I think the communication paths sometimes carry mixed messages. For example, some national brands are spending millions directly on marketing their brand via digital channels while their partner co-op guidelines say, ’80 percent matching spend for newspaper insert ads, but 20 percent matching spend for online search or display ad targeting.’”

Mixed messages, indeed. While advertisers deem social media marketing, mobile advertising and digital video as important to their strategy, 83 percent of brand managers surveyed said they didn’t offer co-op support for video initiatives, while 85 percent don’t plan to increase support for mobile.

Both brands and advertisers did agree one thing when it comes to digital marketing: the importance of search and display advertising, with 83 percent of brands saying it was “very important” or “somewhat important” and 85 percent of advertisers believing it was “important.”

Mobile Adoption Still Catching Up

With so much interest in mobile on the part of advertisers, it was interesting to see that slightly less than one third of advertisers still don’t have mobile-optimized sites, according to the study.

Morrissey cites the fast-moving digital world as a major obstacle to mobile adoption.

“Local businesses are trying to keep up,” said Morrissey. “There are a lot of moving parts, especially when it comes to marketing. Often, the change is at a speed they can’t handle.”

He added that many small- and medium-size businesses are still trying to get web content for desktop right.

“Millions of businesses are being tasked with figuring our how to change the content delivery in order to optimize for mobile devices, something local business owners just don’t have the time or expertise to execute quickly.”

Morrissey concluded that, although local businesses may not be experts in digital, they’re giving it their best effort, and national brands need to pay attention.

“Local businesses are on the frontlines and learn about trends and changes they need to be making, which is why you see some trying to implement digital marketing strategies on their own without brand support. Even though these businesses might not be executing these digital strategies well, they’re at least giving it a shot.

“At the end of the day, it is incumbent upon the brands to help their channels push hard into digital so that they can keep their retail distribution humming as the world changes and buyers consume more of their information from online sources.”

Netsertive provides a digital marketing intelligence platform designed to bring local businesses and brands to work better together. The study was based on three survey sets: 1,354 local advertisers surveyed in 2012; 3,741 small and medium businesses surveyed in Q1/Q2 of 2015; and 50 brand managers and 100 local advertisers surveyed in mid-2015.