Leveraging Co-Op Cash

In the quest to maximize your shop’s marketing initiatives, it pays to leave no stone unturned. One cost-saving option is to take advantage of tire manufacturer co-op advertising.

Co-op programs benefit both parties: manufacturers get their name pushed out at the retail level, and dealers get a price break for certain advertisements or marketing programs. Though program details vary among manufacturers, the basic premise is that dealers earn co-op credits based on the amount of qualifying tires they purchase from a manufacturer.

Credits can be used for traditional advertising – television, radio, newspaper or direct mail – as well as dozens of other items, like vehicle wraps, software, showroom displays, website design and apparel. Some programs even offer pre-designed ads or assistance in the creation of marketing materials.

Dealer Perspectives

If you’re already purchasing qualifying lines of tires, not taking advantage of manufacturer co-op programs is leaving money behind.

“Many dollars can be wasted if someone is selling a fair amount of tires and not taking advantage of these programs,” says Hornsby Tire & Service Center’s Mark Hornsby. “The dollars are there – don’t waste them.”

Hornsby explains that the shop, located in Newport News, Va., uses several co-op programs that, when combined, pay for roughly one-third of total marketing expenses.

“We use those dollars on shared mail, phone directories, our website, Google AdWords, social media and some local grass roots advertising,” Hornsby comments. “My latest out-of-the-box project was sending stadium cushions to many of the local high schools and colleges at no cost to sell as fundraisers for booster clubs.”

Jim Melvin, president of Melvin’s Tire Pros in North Kingstown, R.I., says co-op ad programs from most tiremakers have gotten easier to use in recent years. They now can be used for a greater variety of marketing.

“There has been a renaissance in both co-op approval and availability with these companies,” he notes. “For years, you got a certain percentage of your flagship purchases as co-op and followed manufacturer-supplied guidelines. A lot of these companies have gotten not only creative in the ways you can use them, but are starting to allow much more flexibility on how you can actually collect them.”

The easiest to collect and use, in his opinion, are those that do not require dealers to submit ads for approval, though this is still a requirement of most tiremakers. Co-op accruals on major brand purchases are generally between 2.5% and 5%, he states.

Dave Bucher, owner of Family Tire, with three locations in coastal North Carolina, says Bridgestone Americas is one manufacturer that recently did away with the ad submission and pre-approval process.

“In the beginning of 2013, they stopped being as rigorous,” he explains. “Before, it was very tedious because you had to submit everything and get it approved. You no longer have to submit everything you do, they just give you a discount off of your tires on your invoice. Bridgestone does reserve the right to audit your advertising to make sure you’re using the co-op dollars for their brand in your commercials.”

Family Tire, a Bridgestone affiliated retailer, uses roughly 90% of its ad budget on television commercials, Bucher says.

“Obviously we focus on Family Tire in the commercials, but we still run the Bridgestone and Firestone banners and logos at the bottom of the ads.”

Planning for Co-op Funds

Melvin recommends planning the use of co-op funds far in advance to ensure none go to waste.

“In the first quarter, I map out my marketing budget for the entire year – based on projected purchases and sales – so that I can maximize co-op funds,” he advises. “I don’t like to be in situations where I’m in the middle of the fourth quarter and I’m scrambling because I’ve got $25,000 in co-op to use by the end of the year.”

Melvin mentions he sets a marketing plan in January, the slowest time of the year for his dealership, and uses co-op amounts from the year before as an estimate for planning.

“Dealers typically know when their busiest times of the year are,” he adds. “Just plan your promotions around that, or plan your promotions around manufacturers’ rebate programs.”

Citing an example, last year Melvin took advantage of Cooper’s “Take the Money and Ride” promotion, which offered consumers an $80 rebate on a set of four tires. “I took a ton of our advertising dollars and promoted a buy three, get one free offer combined with the rebate, on network and cable TV and several different radio stations,” he says. “We cornered the market for about a six-week period covering November, a really strong time of year.”

Manufacturer Input

To help dealers sort out the different options, we talked to several manufacturers about their co-op programs. Although some declined to participate because they are currently in the process of making changes to their programs, read on for a selection of tiremaker co-op offerings.

Bridgestone & Firestone

According to Bill Ardiff, marketing and channel programs manager for Bridgestone Americas, co-op funds appear on dealers’ monthly statements as credits, “provided there are sufficient accruals, the dealer is in good standing, and the advertising complies with co-op guidelines. For most of our dealers, earnings are tied to a percent of sales without limit.”

He says that the program can be used for non-traditional programs, such as training and education, POS system software, credit card machines and showroom displays to name a few.

“We highly encourage our dealers to work with our marketing department to help create the most effective ads,” Ardiff says. “If they’re using agencies or internal teams, having their advertising pre-approved through our processing vendor also helps ensure comp- liance and maximizes usage.”

While traditional media – print, radio and TV – remain consistent, Ardiff says Bridgestone also is seeing a lot of growth in the digital space, with co-op funds being used for website development, online advertising, and SEO and marketing.

“Some of the more unique programs we’ve allowed include dasher boards at hockey arenas, truck wraps, awnings, window shades and even steak knives. We try to be as flexible as we can. Essentially, we’ll consider it for co-op if it promotes our brand to the general public in a positive way.”

Continental & General

Through Continental Tire the Americas’ Dealer Marketing Suite, dealers earn marketing funds through tire purchases, according to Travis Roffler, director of marketing.

“Our Dealer Marketing Suite is used to support local marketing efforts by offering access to in-store point-of-purchase material and showroom components in addition to logos, tire photography, commercials, newspaper templates, direct mail, etc.,” he says. “Once a location is assigned an account number and is granted access to our B2B portal, ContiLink, they also gain access to the Dealer Marketing Suite.”

Even though Conti’s co-op program is not a traditional one, Roffler adds that it still provides dealers with the opportunity to easily create marketing materials. “We encourage dealers to use the direct mail tool that will allow them to not only promote our products but other services they offer, as well. This one-two punch allows the dealer to promote their location as a one-stop shop for local customers. Additionally, dealers can use the Dealer Marketing Suite to purchase an address list of prospects in their area – this can be generated not only within a geographic area, but also by demographic.”

He said dealers have used the program to create direct mail postcards during a national consumer campaign to increase traffic during the promotional time frame.

“Additionally, locations have used our showroom components to completely outfit their store with unique and functional tire displays, menu boards, and lighted wall signs to create an effective, well-designed showroom,” Roffler added.

Goodyear, Dunlop & Kelly

According to a Goodyear spokesper- son, co-op is based on a percentage of qualifying net purchases of eligible Goodyear and Dunlop brand consumer tires from Jan. 1 to Dec. 31.

Dealers can use the program for advertising as well as Goodyear, Dunlop and Kelly approved/supplied training courses and materials. Co-op funds can be used for in-store merchandising elements. Members of Goodyear’s Tire & Service Network can use co-op to pay for their Tire & Service Network Advertising Program subscription expenses.

“Goodyear produces many turnkey assets that are made available to dealers,” the spokesperson comments. “These assets are available via the Goodyear Marketing Zone site and are legally approved and meet all Goodyear, Dunlop and Kelly brand standards. In addition, Goodyear provides a Digital Dealer Toolkit where information concerning marketing, tire information, training and promotions are housed in one convenient location.

“Once dealers have satisfied some of the more traditional advertising needs, our co-op program is flexible enough to allow dealers to engage in non-traditional store traffic and conversion initiatives.”

Yokohama

Kinnari Bhavsar, Yokohama Tire Corp.’s marketing manager for dealer programs, says Advantage Associate Dealers earn co-op dollars by attaining specified purchase objectives.

“While our co-op program has limitations, we encourage our dealers to determine what marketing activities work best for them and utilize their co-op funds for a variety of activities, such as advertising in newspaper, radio, TV, digital media and billboards, as well as apparel, specialty items and website development,” Bhavsar adds.

Yokohama dealers can maximize co-op through a partner program through which they have access to offers from a wide variety of partners, ranging from digital marketing solutions to window and service truck decals.

“The most common uses of co-op dollars are for advertising,” Bhavsar says, “but we’ve also had dealers use funds for more unique projects such as vehicle wraps, window decals and advertising on Yelp, which has recently become more popular.”