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Chapter 6. The Service Delivery System a... > Supplier Cooperative Advertising

Supplier Cooperative Advertising

Supplier cooperatives are most common in branded supplies, such as Coca-Cola and Pennzoil. The agreement is usually initiated by setting up a fund account based on purchases between Coca-Cola and the branded retailer, such as McDonald’s. For example, if McDonald’s purchases a certain number of containers of syrup from Coca-Cola, then Coca-Cola will contribute a certain amount of money per container to the pool. That money can then be used to fund a certain percentage of a media purchase. Usually, there are three criteria to get supplier money: physical space in a print ad, electronic time, and brand mentions.

For example, let’s suppose that Mail Boxes, Etc. has a supplier agreement with Weyerhaeuser for corrugated packaging. Weyerhaeuser might contribute six or even seven figures to the national advertising fund. In addition, the agreement might have the supplier contribute up to 20 percent for any ad that contains the Weyerhaeuser brand. If McDonald’s places a full-page ad in the New York Times that costs $100,000, Weyerhaeuser will pay for $20,000 provided that 20 percent of the ad represents Weyerhaeuser in an acceptable form. In a 30-second ad on television, the Weyerhaeuser product would need to appear in the ad for about 6 seconds for Weyerhaeuser to contribute to the ad. There are, of course, risks in using supplier cooperative advertising. For example, you might have to give up some flexibility in your advertising decisions. The supplier’s concern is that it has to be sure that any representation of its product is consistent with the existing brand image; otherwise, brand equity could be eroded rather than built. Suppliers may want to review and potentially veto the ad before it goes public.


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