The bulk of power in the brand to retailer relationship used to belong to the brick and mortar mass retailer but as internet retailing channels mature that is changing. Unfortunately, when it comes to managing co-op marketing budgets, many brands are still operating as though nothing has changed, running tactics that originated in the old model but whose digital equivalents are recipe for failure in the online world.
For example, co-op marketing dollars are often allotted to brick-and-mortar retailers to fund premium advertising space and enable highly trafficked and highly visible product placement. These offers, however, do not always reliably bear fruit.
Brands also often end up having to invest more funds to hire third party services to stock and maintain displays.
Without data, brands have no way of knowing why initiatives are not producing results.
Finessing retailer relationships
Internet retailers looking to grab a piece of co-op marketing pie have come up with equivalent digital offerings they can sell to brands. In place of end-caps, premium store locations and eye-level shelf space, retailers are offering rotating banner ads, pay-per-click campaigns, and email blasts. The products may be equivalent but they’re also equivalently ineffective.
Even if brand marketers are aware of this, they are reluctant to push for change because they do not want to upset the balance of either brand-to retailer relationship. And so they opt to continue to invest in co-operative marketing tactics that are known to deliver sub-optimal results.
To maximize the impact of co-op marketing budgets, brands must find a way to finesse relationships with retailers and push for access to customer-related data and the ability to offer branded experiences.
Digital marketing in the dark
Without data, brands have no way of knowing why initiatives are not producing results. Is there a problem with the search terms or the digital assets? Or maybe the marketing copy or the product presentation need tweaking.
Whether or not Internet retailers are concerned, thin margins reward them for increasing volume and driving traffic to the site. Retailers know if they can get customers on the site, their mindset will be to research or buy product. And if product experiences in the category customers are researching are very similar it doesn’t matter because they know if customers don’t buy brand A snowboard, they will buy another in the category.
The first step is to open discussions with online partners. Be diplomatic — and pragmatic.
If brands were to stop selling their products to an Internet retailer, the category buyer would simply replace the brand. The online store may or may not see a drop in sales. The brand, on the other hand, would most certainly see a drop in sales and not be able to find a suitable channel replacement, especially if that retailer represented a meaningful portion of their revenues.
What Internet retailers are missing is that by improving the brand experience, the customer experience will improve and consequently their conversion rates will also improve. But without committing to this path, online retailers have no way of knowing what is not happening. And consequently, neither does the brand.
Brands must take an active role in facilitating change
Whether the Internet retailer realizes it or not, change would benefit everyone, but the onus is clearly on the brands to start the ball rolling and to guide the conversation.
The first step is to open discussions with online partners. Be diplomatic — and pragmatic. Do your homework so you have some options in terms of things to ask for in return for your co-op dollars. Here are a few questions for the list:
- Custom Search Results: If a website visitor is making branded or unbranded searches on the site, does the brand get preferential treatment or ability to influence the experience?
- Navigation: Does the brand receive preferential treatment when users navigate to products by category? By Product? Where and how is your brand featured?
- Store-Within-A-Store (SWAS): The SWAS section is essentially a microsite. Brands should be able to tailor the experience.
- Digital Assets: Static assets, such as product descriptions and images are good. But interactive content and videos are better.
Know that some internet retailers will cooperate and some will not. For those that don’t, you may need to maintain the relationship as is while cultivating more collaborative channels. Or better yet, work to build your own channel. It may take time, but at least you won’t be held hostage anymore — and the active lifestyle customers will thank you for it.