A Marketer’s Guide to Partner Funds 

Gina Ghamo | June 20, 2023

As much influence as your brand has over its own success, you don’t have much control on the local level — that’s your partners’ territory. Which means your ability to connect with consumers and drive sales at the local level is completely in their hands. And who’s to say your affiliates will actually take action?

This dependence can be a little frightening, but there’s a way you can motivate your local partners to market on your brand’s behalf.

The solution: partner funds.

Consider this blog your guide to selecting the right partner funds. You’ll learn what partner funds are, the different types, and how incorporating them into your local marketing strategy will drive results for your brand.

What Are Partner Funds?

Let’s start at the beginning. Partner funds are corporate-provided dollars given to local affiliates to incentivize partner marketing. Brands supply their partners with these funds within the framework of an established marketing program. These fund programs vary from organization to organization, each with their own unique rules and requirements regarding:

  • Fund amounts.
  • Approved marketing activities.
  • Accruals.
  • Compliance.
  • Fund expirations.
  • Claims submissions and approvals.
  • Reimbursements.

All program rules are established by the brands that create them. Affiliates who don’t adhere to these guidelines can be denied funds or reimbursements for their marketing activities.

The 4 Types of Fund Programs

The key to maximizing your partner marketing outcomes is choosing the fund program that best suits your affiliates’ needs.

If you’re a brand looking to set up a partner fund program or optimize an existing program, consider the four main fund types.

1. Co-Op Funds

Co-op funds are the most popular type of partner marketing funds. Through these always-on marketing programs, brands allocate dollars to their affiliates based on their prior sales performance — the more sales a partner generates, the more co-op funds become available to them. Co-op funds accrue annually, monthly, or daily, depending on the cadence set by the brand, and reimbursement occurs after marketing activities have occurred.

The general co-op flow looks like this:

It’s important to note that in a co-op program, corporate establishes pre-defined rules and guidelines for what marketing activities are eligible for reimbursement. For example, a digital ad campaign might be fully reimbursable, while buying a promotional blimp probably wouldn’t. Because the terms of these programs are solidified in partner agreements, the rules can be difficult to modify once initiated.

2. Marketing Development Funds (MDF)

MDF programs are usually campaign-based, which means they’re launched at the start of a new marketing campaign and end when the campaign is over.

MDF programs are typically used for:

  • Grand openings.
  • Market expansions.
  • Competitive campaigns.
  • Partner education.
  • Sales and share-of-voice growth initiatives.

Rather than giving partners funds based on their performance, MDF is allocated based on affiliate asks (“Hey, can we have funds to use for our store opening?”) or corporate priorities (“Hey, we’ll give you funds if you run a paid ad campaign to promote our new product.”).

You can see how MDF programs are broken down here:

These funds do not accrue, and program guidelines vary by marketing plan. Unlike co-op funds, affiliates receive funding approval before initiating their marketing efforts.

3. Compliance Funds

Compliance funds differ vastly from MDF and co-op funds. Rather than giving affiliates funds to use for their local marketing, compliance programs penalize partners who employ noncompliant marketing activities.

These programs don’t require affiliates to submit claims for funding approval — rather, the brand conducts random reviews of their partners’ websites and marketing campaigns (think flipping through local newspaper ads) to determine whether they comply with brand guidelines.

Compliance programs are most commonly utilized in the automotive industry.

4. Incentives

Brands create opt-in incentives programs to encourage affiliates to push the sale of specific products in exchange for, well, an incentive (sometimes this is also referred to as a SPIFF). While the compensation for generating these sales can be funds, they can also be other rewards like gift cards, merchandise, or even vacations.

Incentives programs can help brands accomplish various goals, such as:

  • Boosting sales volume.
  • Meeting short-term sales objectives.
  • Upselling or cross-selling products and services.
  • Selling outdated products/clearing old inventory.
  • Building customer brand preferences.

See the program breakdown below:

Benefits of Partner Marketing Funds

If you don’t already give your affiliates marketing funds, consider establishing a program. Providing your partners with a fund program of any kind comes with many advantages for your brand, such as:

  • Driving more revenue: When you encourage affiliates to promote your brand through advertising funds, you can expect an increase in sales.
  • Increasing brand awareness: Partner funds drive brand visibility on the local level.
  • Ensuring compliance: Because fund programs have rules partners must follow to secure funding, they ensure that all local marketing is compliant.
  • Reducing advertising costs: By sharing marketing assets with your partners through your fund management program, you reduce your brand’s overall creative expenses.
  • Improving affiliate loyalty: Giving your affiliates marketing dollars makes them more likely to sell your products over your competitors’.
  • Strengthening partnerships: Partners who are given co-op funds feel that corporate is more committed to them.

Achieve Unmatched Fund Management With BrandMuscle

The key to getting the most out of your partners’ marketing dollars is securing a platform that empowers them to easily participate in your local marketing campaigns.

At BrandMuscle, our fund management solution does just that. Designed to streamline the channel partner experience, our solution makes co-op and MDF allocation, spending, and reimbursement seamless.

Book a demo of our best-in-class platform today.

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