Co-Opportunities In Advertising Here's where to find extra money to stretch your advertising budget.

Each year, a substantial amount of advertising funds are made available to businesses throughout the country. As much as one-third of that money often goes unclaimed. Free advertising funds going unclaimed? Why?

The problem is three-fold:

1) Many small businesses aren't aware the advertising dollars are available.

2) Some businesses know about the funds, but don't know what they need to do in order to get their share.

3) Other businesses know about the funds and how to get them, but don't want to invest the time and effort required to collect the money.

What is this windfall? It's co-op advertising funds, money offered by manufacturers and other business entities to businesses who market those companies' products or services.

How Co-op Advertising Works

Suppose you operate a small appliance store. The manufacturersof certain brands you sell may offer co-op funds when you run adspromoting those products. You may even be able to obtain funds fromlocal utility companies that want you to promote energy-efficientappliances. Electric and gas companies are also frequent providersof co-op dollars to contractors who promote energy-efficientproducts and services, such as "tune and clean" centralair conditioning services and annual furnace inspections.

"In the beauty industry, particularly in retailingprofessional hair products in salons, there are dozens of co-opprograms," says Patti Ferraro, owner of Paul Ferraro SalonInc., in Boca Raton, Florida.

"The one we take advantage of in my salon is from Redken.For any and all advertising I do, whether it be direct mail, printor TV ads, birthday cards to my clients or balloons to decorate myshop, Redken gives me a kick-back in product. The amount of co-op Iqualify for is directly related to the dollar amount of product Ipurchase in a calendar year."

If you're not already receiving your share of this veritablegold mine, you should be! Co-op advertising dollars can helpstretch your advertising budget. And in addition to giving youmoney, these sources often offer help with advertising andmarketing, such as supplying pre-printed advertisements or preparedradio and television spots.

You can take advantage not only of funding, but of the expertiseand creative buying power of companies much larger than yours. Theresult is an association between your business and the prestige ofa national brand. All it takes is a little knowledge and a lot oforganization.

Getting Your Share

The first step in taking advantage of co-op funding is findingwhere the money is. There are three good sources ofinformation:

1. Your suppliers. Suppliers and manufacturers'representatives will often volunteer information about their co-opfunding programs, but not always. Ask each of the reps you dealwith about any co-op funding that may be available and the stepsyou need to take to apply for it.

2. Advertising representatives. The sales reps at the newspapersand radio and television stations you advertise with may befamiliar with sources of funding used by other clients, and may beable to point you in the right direction. Be alert, as well, to theads you see and hear. Whenever a manufacturer's name ismentioned in a store's ad, you can be sure the store owner tookadvantage of co-op money.

3. Your business colleagues. What co-op programs are otherbusinesspeople using? Find out from colleagues who operate similarbusinesses or from trade associations for your industry.

The second step is applying for the funds you qualify for.Vendors who offer co-op funding establish rules you must complywith in order to be eligible for co-op reimbursement.

For example, many co-op programs forbid putting competingmerchandise in a co-op ad. Others require approval of youradvertisement before it's run. Most co-op requirements includestipulations on the types of media that are eligible (i.e.newspaper advertising may be eligible, but not Yellow Pagesads).

After your advertisement runs and you've provided proof ofyour compliance with the program, you'll be reimbursed,typically in cash or credit toward future invoices, for a portionof the total advertising cost, up to a preapproved dollar value.For example, a vendor may offer to repay you for 50 percent of thecost of any advertisement run that meets the co-op requirements ofthe manufacturer.

There are many variations on this reimbursement scheme, soit's critical that you understand each program before youpurchase your advertising. Also keep in mind that reimbursementfrom the vendor usually takes between 30 and 60 days from the timeyou submit your invoice and proof of compliance.

Making It Work

As you may begin to see, the more sources of funding you employ,the more complex it becomes to track, report and collect your shareof the co-op pool.

Steve Fales, owner of AdServices, an advertising firm inHollywood, Florida, says, "I've spent millions of dollarsin co-op. It's pretty simple. You run the advertising accordingto the co-op guidelines and submit the claim, the proof ofperformance and a copy of the media invoice. Then the vendor paystheir share. Some vendors send a check, others send a credit memo,others deduct from an invoice and some credit another part of therelationship."

It's the variations Fales refers to that can createrecord-keeping nightmares for small-business owners who want tomake use of co-op funding.

How can you ease the frustration? First, be sure the value ofany funds you apply for will exceed the time and effort necessaryto qualify for them. Never apply for funds simply becausethey're available. If you would not advertise a particularproduct without the co-op funding, carefully consider whether itmakes sense to spend even 50 percent of the advertising cost justto get "free money."

Second, carefully read and be sure you understand all therequirements of each co-op program you participate in. Set up asimple filing system for each program and consider developing aform that will let you "see at a glance" what theregulations are for each account.

Some of the items you may want to include on the form are thefunding percentage offered, the total allocation, the method ofreimbursement, which media qualify for reimbursement, any elementsthat must be included in the ad (e.g. manufacturer's logo,specific wording, etc.), and whether preapproval or proof of yourcompliance are required.

Third, put a reliable individual, such as yourself or a trustedemployee, in charge of your participation in co-op programs.

Fourth, be meticulous in maintaining your records. Keep track ofall correspondence, approvals, copies of ads, invoices, and so on.The time you spend here will save you frustration later.

Finally, know when the job has gotten too big for you. Manycompanies turn to outside agencies or service bureaus to coordinatetheir co-op advertising. That may be cost-effective for you, aswell.

Lin Grensing-Pophal is a writer in Chippewa Falls,Wisconsin.

Pertinent Points

Once you've obtained information on various co-op programs,read the guidelines and regulations thoroughly. A completeunderstanding of the requirements of each manufacturer ordistributor can help you avoid problems later. The pertinent pointsto look for are:

1. Qualification criteria

2. The type of media that can be used

3. The time period during which ads can be run (co-op fundingrequests are often turned down because ads were run at times otherthan those indicated by the manufacturer)

4. The size and length requirements for the ads (including theamount of space that must be devoted to the product and any specialwording required by the manufacturer)

5. Regulations regarding the inclusion of competing products inthe ad

6. Requirements regarding how the product should be described(some companies have strict wordage requirements)

7. Requirements related to pre-approval of the ad by themanufacturer

8. Whether reimbursement will be made for production or agencycharges"I've spent millions of dollars in co-op. It'spretty simple. You run the advertising according to the co-opguidelines and you submit the claim, the proof of performance and acopy of the media invoice. Then the vendor pays theirshare."

"I've spent millions of dollars in co-op. It'spretty simple. You run the advertising according to the co-opguidelines and you submit the claim, the proof of performance and acopy of the media invoice. Then the vendor pays their share."- Steve Fales