Co-op 101: Make the Most of OEM Funding
Co-op. COOP. CO-OP.
There doesn’t even seem to be a consensus about how to spell co-op, let alone use it.
This program is a major point of confusion for auto dealers and auto marketers alike, but we’re here to explain how the program works — and why it’s such a valuable asset for dealerships advertising online.
What Is Co-op?
Co-op programs connect original equipment manufacturers (OEMs) and individual car dealerships. The idea behind co-op is to create cohesive marketing campaigns among all national, regional, and local advertising efforts.
Some people see co-op dollars as “free money,” but let’s be honest: there’s no such thing as free money. The advertising dollars from co-op require considerable work on behalf of the dealership (or its marketing agency) to comply with OEM rules. But once those guidelines are met, the program does reimburse for advertising spends.
And if done successfully, a dealership could get 100% of its marketing reimbursed.
A recent study found that OEMs have $6.5 billion set aside for franchise dealership marketing this year — but of those funds, about 80% is used by just 20% of dealerships.
Are you in the majority of dealerships leaving co-op money on the table? Many dealership marketing managers, general managers, and owners believe the guidelines associated with co-op funds are too overwhelming. Others think their dealership isn’t big enough to cash in on the benefits.
We’re here to tell you that those are misconceptions (well, maybe not the first one; co-op can be tedious). Our team at 9 Clouds works hard to understand co-op guidelines and secure funds for our dealerships, both big and small.
How Should You Use Co-op Funding?
Most co-op programs began pushing digital spending back in 2013, with a primary focus on Google AdWords.
We agree with the OEMs’ motivation. Dealerships not using AdWords are missing a key piece of a full marketing strategy. But by pushing all of their franchises to the same vendors, OEMs ended up stunting that strategy.
Through our experience, we’ve found co-op dollars to be more successful when used on full inbound campaigns. Landing pages are linked to email campaigns and blog posts. These pieces work together to increase AdWords quality scores, lower cost per click (CPC), and encourage conversions.
With more than 90 percent of car purchases starting online, digital marketing isn’t an optional expense anymore. There’s no reason your dealership shouldn’t let the OEM help fund this expense through co-op programming.
If you need help with your co-op spending, reach out to our team.
We work with dealerships across the United States (and a couple in neighboring Canada) on their digital marketing strategy — including the nuances of co-op.
Our team will take a look at your current marketing and take a digital audit, identifying areas where your digital marketing could improve.
We’d love to hear from you!