Even though retailers already spend the majority of their advertising budget in digital, 80 percent of their co-op funds have traditionally gone into non-digital channels. However, with players like Amazon and Google effectively moving the co-op game to digital, the modern terrain is shifting. Increasingly, we’re going to see retailers and brands evolving their co-op marketing strategies to encompass paid search and product listing ads (PLA).
At present, companies are investing about $70 billion in co-op marketing, but only 20 percent of that is digital. Moving more co-op dollars into digital channels—and specifically paid search and PLA—makes strategic sense for brands and retailers. For one, about 75 percent of all ad-induced sales today come from paid search and PLA, and an infusion of co-op dollars into this space represents a huge opportunity. In addition, unlike offline co-op marketing via print circulars and other similar tactics, digital co-op marketing provides brands a keener understanding of where their budgets go.
Benefits of collaboration
Cooperation between retailers and brands will unlock even greater results within the paid search realm for both parties through the strength of their shared budgets. Paid search, after all, is highly competitive, and many solo retailers just can’t afford the top positions. For brands that sell through retailers, this often means that their products don’t occupy prominent real estate or simply don’t show up at all. If brands and retailers join forces, they can bid more aggressively and expand their profiles where it matters.
The savviest marketers are realizing the scale and impact that a more collaborative approach to paid search and PLA can unlock. At the same time, however, these marketers must be thoughtful in how they approach data sharing and attribution within this cooperative framework.