Gold nuggets

It is a good source of revenue, but it requires a little extra effort.”

C. Lee Smith, SalesFuel

Digital co-op advertising is a growing source of revenue for newspapers, but sales staffs have to do some digging.

"Co-op is not a gold mine," said C. Lee Smith, president and CEO of SalesFuel, parent company of the AdMall sales intelligence system. "If you're selling local advertising in a local market, it's more like you have these gold nuggets scattered all over town. You have to know where to look for them. Then you have to be able to mine them."

SalesFuel, based in Ohio, provides training and research information for sales teams. Smith made a presentation to the recent Driving Digital Revenue Conference sponsored by Inland Press Association and co-sponsored by SNPA.

Co-op advertising is generally defined as when manufacturers reimburse dealers for advertising products locally. Automobiles are one example of how co-op money can be used. Manufacturers provide pots of money to dealers for local advertising to, ideally, generate revenue for everyone.

Co-op, Lee said, has gone in and out of fashion as a form of traditional advertising.

"Why does it never stick? Because there's work involved," he said. "It is a good source of revenue, but it requires a little extra effort."

Sales representatives have to be sure both the manufacturer and the local advertiser they deal with are happy with their ads. National manufacturers may have strict rules about how the money can be used and require specific documentation. One of Smith's strongest recommendations is that sales reps make sure manufacturers give prior approval, in writing, of proofs and any other plans, in addition to local dealers.

"It definitely makes sense to allow more planning time so you can make sure that everything is set up properly and will run properly, and that there are no mistakes and no problems afterward. Co-op is definitely not an area for shortcuts," Smith said.

(For a white paper by Smith on the basics of co-op advertising sales, go to www.salesfuel.com/co-op101/.)

At the time of conference, Smith said, 20 percent of all co-op programs included digital advertising or digital marketing services. He predicts that percentage could grow to one-third this year. If newspaper companies don't try to tap that revenue, someone else will, he said.

But co-op should be incorporated into the existing advertising strategy, not set apart. Sell the ad first, and make sure the local advertiser's goals are met, Smith said. Then introduce the co-op concept as a means of financing the buy.

Don't let the advertiser make the mistake of simply slapping a local dealer logo on a national manufacturer's ad, Smith said. The national ad meets the manufacturer's goals, but it may not fit in the local advertising strategy. The ad should brand the local advertiser.

Insist that whatever is being advertised is new merchandise, and make sure that the local budget is worth the time a sales rep will have to spend on a co-op ad, Smith said.

"The small business owner always thinks they have more co-op than they do, because they forget that they spent it on the golf outing with the manufacturer, or the new hats and new uniforms that the staff's wearing, or the new signage that they have outside," he said.

And from your own revenue standpoint, only count new advertising as new co-op revenue, not what was already planned anyway. "Only count money that wouldn't have been spent with you otherwise that you got in the paper or got online."

Smith said that about one-third of all co-op funding is never spent. To get at that money left on the table, the sales staff should be educated about how co-op works and how the local advertiser can spend it effectively.

Most newspapers can't afford to hire a co-op specialist, and even if one can, that person might not be around when a question comes up that a sales rep can't answer.

Part of the "more work" involved in successful co-op advertising is making the process easy on the buyer, Smith said.

"Focus on the money that is being spent, and make sure it's being spent with you first. Make sure that you're the easiest place in the market to spend co-op dollars. That's the No. 1 thing you can do."

For more information, contact C. Lee Smith at leesmith@salesfuel.com.

Jane Nicholes

Jane Nicholes, a regular contributor to the eBulletin, is a freelance writer and editor based in coastal Alabama. She is an award-winning veteran of more than 30 years in the newspaper business. Reach her at jbnicholes@att.net. Suggestions for future stories and comments on this piece are welcomed.