Making Sense of Cofunded Marketing

Co-operative marketing is nothing new: manufacturers and retailers agreeing to share the cost of an ad to either increase exposure to the manufacturer’s product or to run extra promotions. Whenever Apple promotes the latest iPhone with a TV ad referencing a phone network, or Samsung highlights the stores that stock their products, or when Vans launched their Harry Potter shoe collection; these are all examples of co-operative marketing in action.

Beyond offline channels, we should also note that you can run co-operative campaigns through digital channels. Here, you get all the benefits of co-operative marketing as well as the additional advantages of easily tracking and adjusting campaigns based on performance, and giving both parties a clear view of the return on investment. In the challenging economic climate we find ourselves in, co-operative marketing offers a great opportunity to retailers with tight budgets to source additional budget from elsewhere.

Amazon is the biggest example here, with a well-established model of cofunded activity. Manufacturers are able to promote their products directly within the Amazon ecosystem and directly track product views and sales associated with the marketing spend. With a 40% YoY increase in spend of Amazon advertising in 2019, brands are clearly seeing success with this model and so it’s no wonder that Google and Facebook are making a play for this portion of marketing budgets.

In this piece, we’ll be exploring the offerings for both Google and Facebook to highlight how cofunded marketing can benefit both retailers and brands.

Google: Shopping Campaigns with Partners

Google’s offering is “Shopping Campaigns with Partners”: a Shopping campaign that has a “cost-share” element between brands and retailers. There are benefits to both parties with this set-up, as it gives brands visibility over sales through the campaigns and retailers gain additional spend to drive more traffic and sales through their website.

Brands and retailers agree on the cost-share in advance, as well as the specific product SKUs to promote. The retailer’s Google Merchant Center is linked to the brand’s Manufacturer Center, and each side sets up the relevant campaign structure according to the agreement. Once the campaign is live, the retailer is able to see information like orders and revenue as standard, alongside their own cost input into the campaign. On the brand side, they can see traffic and sales data for each individual product within the campaign.

We should note that when either side runs out of spend, the campaign will stop serving the ads. So in terms of your budgeting, you should be sure to consider the appropriate pacing ahead of time.

Google recommends assigning all of the brand SKUs within the cofounded campaigns a “high” priority setting to maximize their visibility in the Shopping search results. This will also help to avoid competition from existing Google Shopping campaigns for the same products.

Facebook: Collaborative Ads

Facebook’s equivalent ad format is called Collaborative Ads, which doesn’t have the “cost-share” element involved in the campaign set-up. Instead, the retailer shares a segment of their Facebook catalog with the brand’s Business Manager, which can then be used to create ads that direct to the retailer’s site. Similarly to Google’s approach, sharing this segment gives the brand visibility of the sales and return driven through these campaigns to the retailer.

If you’re looking to set up collaborative ads, be aware that brands have full control over the ads they are running in this format. Retailers will need to make sure that they have an input into the way these are set up, in order to maintain consistency with their tone of voice or so that they feature any key callouts.

With the cofunded offerings from Google, Facebook, and Amazon, retailers can more easily partner with the brands that they sell through; opening up huge opportunities for retailers and manufacturers alike. With the current complexities in overall trading conditions, it gives a welcome break for retailers who are looking to source external budgets, and a place for manufacturers to push their budgets to see a clear return. We expect the take up of these opportunities to significantly increase over the next year, so ensure you reach out to Google and Facebook soon to avoid being left behind.