BrandMuscle Survey Finds Most Co-op and MDF Investments Are Still Allocated Toward Traditional, Lower-Performing Tactics
CHICAGO - National brands that provide co-op marketing funds to small business partners (i.e., local dealers, agents, resellers, channel partners and distributors) continue to direct those dollars toward relatively expensive traditional marketing tactics while overlooking online channels that many local affiliates rate higher for satisfaction and typically find more affordable.
That’s one of the major findings from a survey conducted by BrandMuscle of over 850 local small business affiliates across the United States representing a range of industries. The survey findings are included in BrandMuscle’s second annual State of Local Marketing Report, which provides frontline perspectives of local marketing, what’s working and what’s not, and the particular challenges SMBs face as they try to grow their businesses.
Both brand marketers and their SMB affiliates know local marketing programs operate on lean budgets. 67 percent of survey respondents said they spent less than $10,000 a year on marketing. These often cash-strapped small business owners take investments in marketing and advertising seriously. For some, having access to co-op marketing funds from a national brand determines whether they can afford to advertise at all.
A recent Gleanster report on “The State of Co-op and MDF” estimates that brands allot as much as $70 billion each year for channel marketing, but nearly half (48 percent) of these funds go unused.
"Our report shows a disconnect between brands and small businesses when it comes to co-op and MDF programs," said Ian Michiels, Principal Analyst for Gleanster. "Brand marketers are still investing heavily in traditional channels while local marketers report the vast majority of their sales are influenced online and in social media. Most brands we surveyed hadn't even made changes to the program for over two years. There's a lot of complacency and opportunity for optimization."
Major reasons co-op funds aren’t used, according to BrandMuscle State of Local Marketing Report survey respondents:
- “I don’t have enough points or money” - Points aren’t accrued fast enough or there aren’t enough matching funds available.
- “It’s too complex” – The reimbursement process is too complicated, or too many approvals and sign-offs are required.
- “I don’t have enough time” – SMBs are overstretched by other responsibilities and the timeframes to use funds are often too short.
- “The tactics I use aren’t covered” – Points and funds earned can’t be spent on the most effective tactics and aren’t eligible for digital or social advertising.
"It is clear that co-op funding drives local marketing because it helps ease the financial burden for small businesses while multiplying the impact of the initial investment," said Clarke Smith, chief strategy officer for BrandMuscle. "That said, there is some misalignment between the marketing tactics brands fund and those small businesses like and use the most. Brand marketers need to take a fresh look at their co-op marketing programs and make adjustments annually to keep tabs with the changing media landscape."
Complimentary access to BrandMuscle’s State of Local Marketing Report:
About Brandmuscle Offering a comprehensive local marketing automation platform backed by 24/7 on-demand support, Brandmuscle helps national brands capitalize on opportunities and local market conditions with brand-compliant, customized marketing across all mediums and formats. Headquartered in Chicago with offices in Cleveland, Austin and New Jersey, Brandmuscle employs more than 650 talented professionals and serves nearly 200 of the world's leading brands. Brandmuscle is the only software provider ranked "Best" in all categories of Gleanster’s 2014 Local Marketing Automation Vendor Benchmark report and has appeared on Inc. Magazine's 500 | 5000 Fastest-Growing Companies in America List multiple years. For more information about Brandmuscle call (866) 464-4342 or visit www.brandmuscle.com.