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Part Five Developing the Integrated Marketing Communications Program
Belch: Advertising and
Promotion, Sixth Edition
V. Developing the
Integrated Marketing
Communications Program
16. Sales Promotion © The McGraw−Hill
Companies, 2003
Cooperative Advertising The final form of trade-oriented promotion we
examine is cooperative advertising, where the cost of advertising is shared by more
than one party. There are three types of cooperative advertising. Although the first two
are not trade-oriented promotion, we should recognize their objectives and purpose.
Horizontal cooperative advertising is advertising sponsored in common by a
group of retailers or other organizations providing products or services to the market.
For example, automobile dealers who are located near one another in an auto park or
along the same street often allocate some of their ad budgets to a cooperative advertising
fund. Ads are run promoting the location of the dealerships and encouraging car
buyers to take advantage of their close proximity when shopping for a new automobile.
Ingredient-sponsored cooperative advertising is supported by raw materials
manufacturers; its objective is to help establish end products that include the company’s
materials and/or ingredients. Companies that often use this type of advertising
include Du Pont, which promotes the use of its materials such as Teflon, Thinsulate,
and Kevlar in a variety of consumer and industrial products, and NutraSweet, whose
artificial sweetener is an ingredient in many food products and beverages. Perhaps the
best-known, and most successful, example of this type of cooperative advertising is
the “Intel Inside” program, sponsored by Intel Corporation, which is discussed in IMC
Perspective 16-5.
The most common form of cooperative advertising is the trade-oriented form, vertical
cooperative advertising, in which a manufacturer pays for a portion of the
advertising a retailer runs to promote the manufacturer’s product and its availability in
the retailer’s place of business. Manufacturers generally share the cost of advertising
run by the retailer on a percentage basis (usually 50/50) up to a certain limit.
The amount of cooperative advertising the manufacturer pays for is usually based
on a percentage of dollar purchases. If a retailer purchases $100,000 of product from a
manufacturer, it may receive 3 percent, or $3,000, in cooperative advertising money.
Large retail chains often combine their co-op budgets across all of their stores, which
gives them a larger sum to work with and more media options.
Cooperative advertising can take on several forms. Retailers may advertise a manufacturer’s
product in, say, a newspaper ad featuring a number of different products,
and the individual manufacturers reimburse the retailer for their portion of the ad. Or
the ad may be prepared by the manufacturer and placed in the local media by the
retailer. Exhibit 16-29 shows a cooperative ad format for New Balance athletic shoes
that retailers in various market areas can use by simply inserting their store name and
location.
Once a cooperative ad is run, the retailer requests reimbursement from the manufacturer
for its percentage of the media costs. Manufacturers usually have specific
Exhibit 16-29 This New Balance ad is an example of vertical cooperative advertising