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A Vision for the 90's
by Robin Perry, NAPAA Newsletter Managing Editor
Source: 1992 Spring NAPAA Newsletter, Issue 3

Innovative approaches to using co-op marketing will separate success stories from failures during the 1990's. According to Chuck Blackmon, Manager of Marketing Communications for Xerox Corporation and Chair of the TPMA Board of Directors, organizations should set a clear agenda every year, polish it often, and be open to retailers' suggestions on how to make co-op marketing work to everyone's benefit. In the following interview, Blackmon tells how visionary organizations run their co-op advertising programs; and how to update your own programs.

Question: How did you become involved with co-op advertising?

Answer: Co-op advertising was something that was brand new for Xerox in the early 1980's. As a result, there was not any current expertise in the company. I was approached because I had done some work in the advertising and promotion field working with retail channels and distribution prior to joining Xerox. My first job was to understand what co-op was all about and how we could best use it.

Question: At NAPAA's inaugural conference you did a talk about how some manufacturers are sill offering their dealers programs that were set up in the 1930's. Can you give us some examples of new approaches in co-op advertising?

Answer: There are lots of new approaches in co-op advertising, and many of them are being developed by retailers.

One new approach is the whole concept of vendor programs. This is where a retailer will approach various manufacturers who sell what I'll call "complementing" lines of products. The retailer will actually package an advertising or promotional program [that may include print and broadcast advertising, as well as in-store displays], which bundles a group of different manufacturers's products together. Retailers look to manufacturers to provide funding through co-op and other allowances for these activities.

That represents a big change. In the past, most programs were set up in such a way that one manufacturer's products were exclusively featured. Today, there is a lot more bundling going on.

Another unique approach is one being practiced by AT&T and others. In the case of AT&T, they provide customized ads for each of their different retail sales outlets, so that the ads provide AT&T with more control over its image in the market. They will customize an ad for every retailer that offers their products, and they provide the retailers with extra incentives to allow AT&T to create the ad.

Question: How would you suggest a manufacturer update its program?

Answer: It starts by updating your own knowledge of the kind of advertising your retailers are running; not just the advertising for your own product category, but all the advertising. It's important to be sure that you are current.

A lot of times we don't take the time to look outside of our own organizations. We look inside only, and we think only about our products. The real questions are: What is the retailer doing? What does the retailer need? And what can we do as a manufacturer to support that need?

Question: How can a manufacturer use co-op as a marketing tool, rather than just a way to meet competition?

Answer: In the beginning of every year you need to look at your company's marketing plan, and then set specific objectives for your co-op advertising program to help achieve that marketing plan. Marketing plans are something that change every year in every company, with different product emphasis, potentially different target audience emphasis, and now perhaps different types of program offerings.

It is important that people involved in co-op advertising understand the marketing plan so that they can set objectives for co-op which will be complementary. Once you set the objectives, then you go through the process of reviewing all the materials and support you have in place to be sure you have the right things to support those objectives.

In summary, once you've set the objectives and you've got your materials and your programs in place to meet them, you then need to be sure that you communicate - to the headquarter's staff as well as the field sales organization - what your co-op program is and how it is helping your company meet its objectives.

Trends in Co-op: Creativity, Electronic Administration, Imaging, Channel Marketing
by Robin Perry, NAPAA Newsletter Managing Editor
Source: 1993 Winter NAPAA Newsletter, Issue 8

A new year is the traditional time to look ahead to fresh and innovative trends in the industry. The words that sum up promotional fund management in the mid-nineties are: more intelligent, more efficient, and more electronic. Smart manufacturers are working in partnership with retailers to make co-op fund usage irresistible. The competition of recent years has led to innovation in co-op fund administration. Old notions fall away as manufacturers revamp and streamline their promotional allowance programs. What's acceptable for co-op fund reimbursement has been redefined. Retailers, who know their markets intimately, have more decision-making power in determining how co-op funds are used. Visionary co-op administrators are pushing for change within, identifying waste, and championing the technology that can make co-op work better.

Creative Thinking
The origins of the term "co-op" imply a joint venture between manufacturers and retailers, a coming together in a cooperative way. Co-op in the traditional sense is giving way to retailers who look at co-op as a profit center, expecting manufacturers to foot the bill for the bulk of their promotional and advertising programs. For the manufacturer, co-op is becoming a cost of making a sale.

Rather than pass these costs along to consumers, Soft Sheen Products, a leading manufacturer of ethnic hair care products headquartered in Chicago, looks for innovative and flexible approaches to co-op advertising and administration. "We have to think of creative ways to maintain the bottom line," says Raymond Smith, Director of Sales.

That was the idea behind the Advanced Allowance Payment Program, created by Mr. Smith, and implemented in January 1992. Instead of having retailers spend money up front for Soft Sheen promotions to be reimbursed by the manufacturer, Soft Sheen gives the retailer money in advance. Accounts fill out a Business Development Worksheet which outlines their promotional expenditures for a full year. Quarterly reconciliations verify that the money is spent as planned. Accounts that fail to spend the co-op allowance must reimburse the manufacturer.

Soft Sheen's deductions have decreased by 5 percent since starting the Advanced Allowance Payment Program. The company's accounts receivable projections are more on target, since fewer are written off in invoice deductions.

Soft Sheen is also flexible about what it qualifies as co-op, letting the retailers who know their markets determine what types of advertising or promotions to run. "the manufacturer is looking for the best vehicle to get the product to the customer. What's best for Wal-Mart may not be what's best for Woolworth," Mr. Smith said. Soft Sheen approves rather than dictates promotional activity. Retailers often opt for pint of purchase displays, like banners, shelf-talkers, and posters, or print advertising to target mailing lists.

Co-op on a brand basis is another trend noted by Mr. Smith. Soft Sheen offers greater co-op allowances on new product lines that it is trying to grow, like its Optimum Care brand, rather than spending co-op money on established lines that have saturated the market or are past their prime. Brand-specific promotions are over and above the regular co-op funds.

Electronic Administration
Electronic administration goes a step further than what is traditionally thought of as EDI (Electronic data interchange), said Ralph Sackman, Systems Specialist for Levi Strauss & Company in a joint presentation with Pat Reyes, Advertising Account Manager for West Coast retailer Carter Hawley Hale at the NAPAA fall seminar in Chicago. Instead of merely an information exchange, electronic administration of co-op funds will be based on an agency expanded real-time system that manufacturers and retailers can tap into. Retailers will enter their advertising claims on-line and fund balances will be automatically updated.

Because of the time required to process the associated paperwork, "we and other manufacturers are often in the dark about the funds remaining in a given co-op account," Mr. Sackman said. But with electronic administration of co-op funds "as soon as [the retailer] reserve something, it's gone. There's no other way for a manufacturer to know that now," he said.

Levi Strauss & Company is believed to be the first manufacturer to lead development of an electronic administration program specifically for co-op fund management. In partnership with Carter Hawley Hale, Levi Strauss expects to have the RFP (request for proposal) document ready for agency consideration early this year.

In addition to instant claim recording, advantages of electronic administration include simplified communication (there is one, complete official record), fewer aggravating settlement meetings, reduced paperwork, and faster payment. For example, "retailers will not need to submit invoices for ROP ads in most cases, and not even tearsheets if the agency obtains them directly from the newspapers," Mr. Sackman said. He added that the agency can issue a check for such ads immediately after the audit, the objective being to pay the retailer before newspaper invoices are due.

"The main advantage of electronic administration for Carter Hawley Hale will be that payment should be received much faster," Ms. Reyes said. She emphasized the value of being able, through the system, to address issues at the front end to avoid problems later.

The negatives to electronic administration are that developing the system is a complex job, and system processing and telecommunications costs will increase. It is believed that these expenses will be offset through deduction prevention and reduced administrative costs. An ROI analysis will be performed.

Ms. Reyes closed by saying, "Carter Hawley Hale and Levi Strauss & Co. are pioneering this new co-op system which they hope will become a standard for the industry."

Imaging
"I often say, it's not if you get into imaging, it's when you get into imaging," says Edward Monaghan, Assistant Director, Receivables, for The Gillette Company. Mr. Monaghan predicts that imaging systems will be to the nineties what fax machines were to the eighties. In five years, everyone will be using them. And like fax machines, the cost of technology will continue to go down so that imaging systems will be affordable for smaller companies.

Starting in January, Gillette will begin installing a document imaging system in the Accounts Receivable department with the ultimate goal of linking six departments and 63 workstations via a local area network (LAN). The system is being installed by IBM with software from IBS.

Improved customer service is one benefit Gillette expects to gain form the imaging system. An imaging system uses a scanner to take an electronic "snapshot" of a document. The document image will then be indexed and available for retrieval by a number of variables, like invoice number or customer account number, in a matter of seconds. When a customer calls to discuss a deduction, for example, Gillette's customer service representatives will be able to retrieve the customer's account file and all the documents related to it in as little as three seconds. Conflicts can be resolved while the customer is still on the telephone. Under the present system, it can take an hour and even several days to gather documentation and get back to a customer.

All documentation relating to an account will be scanned including cleared checks, tearsheets, and debit memos. Accounts receivable, adjustments, pricing, shipping, credit, and collection departments will have access to the electronic files. From users' workstations, documents can be faxed internally to other departments, or directly to customers.

Perhaps the major gains will be in efficiency. "We were making 500,000 copies a year, and most of that will go away," Mr. Monaghan said. Facts of this type were crucial in convincing management to invest in imaging systems. For a change, in this case the push to invest in technology was driven by the user side, instead of the information services department. After seeing an imaging demonstration approximately five years ago at a trade show, Mr. Monaghan quickly realized how the technology would improve his organization. But it took a while to bring the idea to fruition. "We think of it as a better way of doing business," he said.

Channel Marketing
In the last few years manufacturers have been leaning to respond to demands for more flexibility from those customers who find the manufacturer's co-op or advertising allowance programs too restrictive.

The growing trend toward dominant channels of distribution, each with unique needs, makes it imperative manufacturers assess the incentives they are providing to these channels as well as how they are interfacing with them.

The growth in importance of fast-growing retailers like Wal-Mart Stores and Toys 'R' Us, who are creating channels of their own, has prompted other manufacturers, distributors, retailers, and agencies to band together and focus on streamlining their unique ways of bringing their products and services to the marketplace. Companies are restructuring existing distribution channels and are moving into new channels that match up with their customers more precisely and effectively.

In the long run what will determine the success of a brand is the efficiency of the entire distribution system.

The objective of these new strategic alliances is to lower total costs and increase the vale of the channel, thereby helping them become more competitive in their appeal for consumer spending.

The key to effective channel management is executives within channel member organizations having a broad, inter-organizational perspective of distribution opportunities and problems. It is highly unlikely a channel will be successful or survive over time without this perspective.
Manufacturers have the opportunity to participate in the process, for the benefit of all, or to react to what is created by others in the channel.

Strategic Alliances
Channel strategic alliances require certain conditions in order to be effective.

Recognition of the interdependence of channel members
Close cooperation between channel members
Careful specification of the roles and functions, that is, joint rights and responsibilities each play in the marketing channel
Coordinated effort focused upon a common goal
Trust and communication between channel members

Hot Topics for Co-op Programs
by Linda Houff, Advertising Audit Service
Source: Winter 1995 NAPAA Newsletter, Issue 12

Trends in co-op marketing and administration seem to fall into the following categories:

Improved communication with sales staff, retailers, auditing departments/agencies.
Account profitability (i.e., the compilation and documentation of all expenditures to determine the value and profitability of each account).
Increased importance of reaching the end-user (i.e., the need for relationship marketing using co-op funds and programs).

These issues have been the focus of planning for the 1995 spring NAPAA conference. Most manufacturers value the opportunity to share problems and solutions that they experience as a normal part of trade promotion management. This is one of the benefits of belonging to an organization such as NAPAA. It provides the opportunity to network as well as the chance to talk with manufacturers who have worked through similar problems, allowing them to learn from another's experience.

What tactics are arising out of the issues identified above?

1. An increased utilization of remote access communication.

More and more sales reps, retailers, and manufacturers will rely on e-mail and paperless communications. Manufacturers need these paperless vehicles not only for the reduction of paper intensity common to the co-op process, but also because it enhances timeliness and responsiveness. Because many field sales staff are authorized to make special agreements with their customers and many retailers are looking for customized, localized promotion; expedient, efficient communications and authorizations are highly valued.

2. More companies are asking their co-op managers to justify the types of programs and discounts they offer clients.

In turn, co-op managers have to document the effect the various co-op programs have on actual sales. These are not easy numbers to gather. Often, the data resides in a variety of locations within a company and may not be accessible to everyone.

Requests for more specific information and account profiles are here to stay. Just as consumers are profiled, so are retailers and distributors; resulting in tightly targeted marketing programs designed to achieve the greatest response. That response must be taken a step further through analysis which documents and evaluates the quality and quantity of the response. So, if your company is not yet asking for this information, they probably will soon.

3. More targeted consumer-oriented promotions, with slight decreases in trade and media advertising.

This trend was identified in The 15th Annual Survey of Promotional Practices, published by Donnelley Marketing, Inc.

An often heard comment is, "We have all these customer names and we aren't doing anything with them. How can we direct market to these customers and involve our retailers in the process?" Database or relationship marketing is becoming more popular and is highly effective. It can deliver the message directly to the consumer at their home and direct them toward a specific retailer for purchase of your product. This is becoming a more popular usage for co-op funds with many retailers.

In summary, the trends seem to all revolve around fast, accurate, and convenient communication issues which help build positive relationships among all the players in the retail cycle - the manufacturer, the retailer, and the consumer. Any new technology or services which can enhance this relationship will be valued for the time and effort they can save.

Linda Houff is the Marketing Manager for Advertising Audit Service, Inc.

Beyond the Internet: Just Imagine...
by Eileen Carey, President, Inquery, Inc.
Source: Fall 1996 NAPAA Newsletter, Issue 19

There are tremendous changes in the wind. Interactive television and the joining of the web and broadcast media will change our future and the future of co-op advertising in unknown and exciting ways. So what is interactive television? Well, it depends on who you ask.

What a Wink will get you
You can't talk about interactive television (ITV) without talking about Wink Communications, the de facto standard for ITV. Wink developed a line of products that allows televisions, cable set-top boxes and digital TV to provide interactive applications to the viewer. These consumer electronic devices house a Wink Engine or are "Wink Ready." With Wink technology, you can watch your favorite television shows and commercials and interact with applications provided by advertisers, cable operators, networks and local community news organizations.

An interactive "application" displays text or graphics with or instead of ordinary TV broadcasts. The user interacts - makes choices or enters data - with the remote control. You can also receive web pages and e-mail and, with the proper infrastructure, participate in chat rooms or order products.

The PC as TV
You can't talk about Intercast technology without talking about the Intel Corporation and a group of manufacturers and content providers who have formed a group called Intercast Industry Group (ILG). This technology allows you to receive a broadcast directly on your PC. With Intercast, you can receive "broadcast" web pages along with the television programming relevant to the content you are viewing. To enable this option, you must buy an "Intercast Inside" Pentium processor-based machine equipped with a unique bus which allows efficient manipulation of the video signal.

Pulling information from the network
Will viewers prefer to move their TV viewing to the desktop so that they can surf the web while watching TV? Or, will viewers continue to watch TV in their family rooms interacting with applications that interest or serve them?

My thoughts run to the family room. Television's appeal is universal and it is one-to-many. Think about it - If you aren't single, how often do you watch television alone? In the US, 98% of the households own televisions, only 32% of the households own a PC. The opportunity for advertisers to interact with 98% of the households in the US is phenomenal. It is unprecedented to date.

How will the introduction of this new technology affect our lives, our businesses, even the environment? Think of the changes brought about by the microwave oven. Food products changed to accommodate the new cooking technology. Packaging and take out containers adapted to the "no metals" requirement. Cookware, dishes and dishwashers changed. Cabinet makers changed to accommodate the new "essential" in the kitchen. Prior to the advent of the microwave, if someone had told you we'd cook our food without the use of a heat coil or fire, would you have believed them?

Whichever way the industry goes, and it may go both ways, there will be profound changes to the ways in which we live and work. Imagine being in the market for a new car and, while watching "NYPD Blue", a Jeep Grand Cherokee commercial airs. You reach for the TV remote control and, with a few presses of the buttons, set up a test drive for Saturday morning. When Saturday arrives, so does a salesman at your door with a red Jeep Grand Cherokee to test drive. Is there a better qualified lead than this for the salesman?

Once this medium gets rolling, here are some ways the world might change. Point of sale is no longer in the grocery store, it is in the viewer's living room. I see retailers and grocers warehousing more products and having less on display, serving more to "package" orders for deliveries than to stock and shelf items. Order processing and fulfillment houses will have a renewed business charter. E-mail, when available via your television set, will take on all new importance. Standard post will be substantially reduced. Consider the enabling technologies to make work at home more feasible. There is no end to the imagination if this idea becomes a reality.

How will ITV affect co-op?
Naturally, the co-op industry will be completely changed. There are challenges to manufacturers to pay for different types of advertising, to enable interactivity through financial support of application development and delivery. Retailers must provide new services to the consumer in the form of delivery and order fulfillment.

Co-op service bureaus will need more computing power and finesse to keep step with these changes. The paper chase is going to end. Efficient, electronic proof of performance is going to be the name of the game. Service agencies will have to take data from fulfillment houses, warehouses, cable operators, television stations, not to mention their customers' retail channels. And, finally, everyone's method of doing business with respect to the newspaper is going to change.

The benefits are many. Manufacturers will have an open window into the viewers' households, their buying habits, their interests and motivations. They will know which ads did or did not provoke interactivity. For retailers, initially, interactivity will provide the ability to announce where the local retailer or dealer is located - a simple, yet useful bit of information if you are in the market for a new Jeep! Long term as the medium matures and infrastructures develop, retailers will need to move their marketing messages and efforts out to the buyers' living rooms.

On the up side, warehousing and delivering of products may have tremendous profit potential. It is in step with the shift to service economics and won't require expensive, localized store fronts. Service bureaus may have an opportunity to abandon low margin, high volume advertising audits and replace this service with more value-added services such as the collection of media directly, and sophisticated analysis of viewer impacts. The viewer gets tremendous service and access to information all without leaving his/her living room.

ITV and Intercast have tremendous legwork and obstacles in front of them before complete adoption. There are many issues to resolve, infrastructures to build and maintain, destroy and rebuild. There are costs. There is the great unknown - will viewers adopt and adapt?

Like any other technology, the opinions and forecasts run the gamut. There are nay-sayers and critics, there are advocates and early adopters. And, there will be the destruction of some businesses as new, more efficient businesses capable of handling the new age emerge. Which will you be?

Eileen Carey is CEO of Inquery, Inc., and was a featured speaker at NAPAA's hot topics seminar, "Co-op Goes Electronic," held in October 1996.

Keynote Gives Insight for Future
by Luanne Conley Flikkema, Ph.D., Gateway 2000
Source: Summer 1998 NAPAA Newsletter, Issue 25

At the NAPAA Spring Conference in May, keynote speaker Luanne Conley Flikkema of Gateway 2000 discussed the future of retailing. Dr. Flikkema’s Ph.D. in Social Psychology gives marketing a unique perspective. Dr. Flikkema commented on recent social shifts and trends, and from them forecasted some marketing adaptations.

Bombardment of the Individual
We are inundated with information. In the 30 years from 1966 to 1996, the scope of information has doubled from the prior 5000 years. One day’s edition of The New York Times contains as much information as one whole lifetime in the 17th century.

We are overwhelmed. It is difficult for consumers to decide what to eat, what to buy, and whom to trust. And they don’t trust marketers. In 1987, only 20 percent of people were confident in advertising or statements by corporations to explain their viewpoints. By 1997, this percentage had plummeted to a mere two percent (Source: Yankelovich Monitor).

Dr. Flikkema describes “scientific voyeurism” as the invasion of privacy some marketing information represents, such as telemarketing and the sale of mailing lists. What do we as marketers do to reinstall confidence? Dr. Flikkema suggests marketing of the future may require obtaining permission or paying individuals for personal information. Marketing efforts must be customized without being intrusive. We must tone down our stridency. People are looking for an emotional “touch,” not a “charge.”

Diffusion of Technology
The rapid mass market acceptance of new technology affects our lives. The telephone and automobile needed over 30 years to become established, while the later inventions of radio and television needed only 26 and 18 years respectively. Personal computers took 14 years, while the Internet/Worldwide Web established itself in half that time—only 7 years (Source: Internet Commerce Expo 96).

This immersion in technology has led to a blurring of the lines between work and home life, with telecommuting and home-based business growth. We may feel closer to our “chat room” contacts than we are with our own next door neighbor. And what is the biggest lesson for marketers? Technology does not make bad marketing acceptable—easier, cheaper and faster, maybe. But it’s still bad marketing.

The Search for Abundant Simplicity
People are placing spiritual well-being ahead of physical and mental well-being. Satisfaction with life and knowledge has become a measure of success. This shift has been reflected in corporate positioning (See figure). Marketers should shift their message from lifestyle appeal to one reflecting savvy and contentment.

Challenge Assumptions
In 1876, Western Union declared “the telephone has too many shortcomings to be seriously considered as a means of communication.” One hundred years later the CEO of computer company, DEC, said, “There is no reason anyone would want a computer in their home.”

Nothing is carved in stone; challenge your own assumptions. In summary, marketers must learn how to personalize their message to the individual without appearing obtrusive, to connect without confronting. And how we will do that is the crux of marketing in the next wave.

Where Co-op Advertising is Going
by Andy Markend
(This article is being reproduced with permission from Marken Communication’s Web site, www.marken.com. It was written by Andy Marken, President, Marken Communications, Santa Clara, CA. )
Source: Winter 1999 NAPAA Newsletter, Issue 31

Co-op Advertising is Expected to Reflect a New Professionalism in the Years Ahead.

The increasing cost of “buying into the market” continues to rise for manufacturers and distributors alike. More than 20 presidents and heads of marketing expressed this complaint as we developed background information to forecast what changes would evolve in the years ahead for their companies. In talking with the heads of media trade associations, there was a consistent theme: it’s easy to see where these firms are heading by looking at the talent they are currently attracting. More and more organizations are drawing senior level personnel from the high-volume consumer firms. And these people are, in turn, influencing the emergence of what appears to be two separate and distinct types of advertising: corporate/product and co-op.

Corporate/product advertising is concerned with long-term image-building and product awareness. There is no doubt that manufacturers will continue to place a high priority on presenting themselves and their products favorably. Of even greater interest to dealers, however, is co-op advertising, which is becoming increasingly available through manufacturers.

Now that a more consumer-marketing mentality has stepped in, there’s an increased awareness of advertising accountability within many organizations. Accountability refers to knowing whether or not the advertising pulled inquiries and sold/moved goods immediately as opposed to having to wait six to eight months for research studies to be returned to the dealer, distributor and manufacturer. As a result of this growing awareness, changes are already occurring.

These changes will come about in an area that has previously been one of the best kept secrets of the advertising industry—co-op advertising. A number of suppliers are already making changes in their co-op plans to ensure that the programs are more easily understood and that the funds actually get used. Plans will continue to be easier to read, simpler to use and will do more to help, rather than restrict, the retailer.

Adding impetus to this change are the changes media is making to ensure that they gain a greater share of the co-op advertising pie. The media associations and their members are making a concentrated effort to ensure that all of the funds available are used by the dealers throughout the country in all industries.

The greatest reason for the change is the economic environment. The cost and waste involved in conventional television advertising is becoming almost intolerable even by major automotive, health care and food firms. Another major reason for the change is that life is becoming increasingly easier for the co-op advertising supplier because of the very product you are attempting to sell. Better computer systems and user-friendly software are now making it possible for manufacturers to get an overall picture of what they need to know, such as what markets are doing best; which kinds of stores are making the most use of co-op dollars; which stores are using the funds most effectively; what stores need assistance; what media is most effective in various areas around the country; and what media is getting most of the co-op money.

According to the editors of Business Marketing magazine, there is a new realization that simply offering a new system or software is not adequate, nor is it enough to pour excessive millions into national advertising to ensure a computer manufacturer’s success. Business Marketing stated that these two items are essential, but that there is also a new ingredient—an awareness of the manufacturer’s customer—the dealer. “The computer and the selling process are too complex to label today’s computer retail organizations as just dealers or retailers,” they commented. “They are really computer consultants or business consultants, depending upon the target markets they are pursuing.”

GETTING STARTED
Most dealers avoid using co-op advertising (it is estimated that 80 percent of the money is used by 20 percent of the dealers) because they either don’t know how or because they feel it is too complicated. Or, they don’t feel they have enough dollars accrued to make the effort worthwhile. Consider the following recommendations:

• Assume that co-op funds exist for all of the products you carry. Even if the company doesn’t have a formal plan, it may still provide co-op dollars if you convince them your advertising will sell their products (if it doesn’t, both of you will be wasting money).

• Keep a file of all available co-op programs. Post a calendar that shows purchase periods and expiration dates of the program. Jot down seasonal promotions during which a manufacturer may double or add more co-op contributions.

• Don’t be fooled into thinking that just because you make only small purchases, little co-op help is available. Remember, some manufacturers will share ad expenditures regardless of how much you purchase. They view such expenditures as good for you and them. If you’d like to get more information on co-op advertising, there are a number of sources. The Radio, Television and Newspaper Advertising Bureaus all have excellent literature on the subject. Contact your local media representative and have them obtain a copy for you.

MEDIA ASSOCIATIONS
The head of the Advertising Checking Bureau (ACB); the Television Bureau of Advertising (TvB); the Radio Advertising Bureau (RAB); and the Newspaper Advertising Bureau (NAB), as well as others involved in helping to force and formulate change, predict that manufacturers will pay more attention to what the retailer needs rather than simply attempting to force products through the distribution channels. One change which is already taking place is the broadening of media eligibility for co-op. This includes weeklies, regional business publications, pre-prints, outdoor, statement enclosures, free circulation papers, shoppers, exhibits, direct mail, seminars, computer clubs and similar activities. Many dealers, even those who don’t already use advertising agencies to help them develop and execute their advertising plans, have stated that if they present their programs and rationale to manufacturers in a professional manner, the opportunities are limitless. One dealer stated that manufacturers used to be rigid, but there’s a new awareness that the retailer who must reach and influence prospects in a specific market area has a better idea of where and how to reach these prospects than does the manufacturer.

This new awareness is illustrated by another trend in their ongoing effort to be of real assistance—the manufacturer’s and distributors’ sales people are helping dealers decide where and how to spend and use their co-op dollars. According to industry trade association spokespeople, the move toward increased use of co-op advertising is inevitable because of the changes that have occurred in the level of responsibility and authority for co-op advertising. Historically, co-op advertising was the responsibility of the assistant advertising manager or—worse yet, a marketing clerk.

Today, the vice president of advertising, marketing and sales (and at times even the president) is becoming involved in the programs because they realize that no firm in the industry can hope to win simply by out-spending their competition. Instead, they have to gain a greater share of the dealer’s attention and make the dealer more effective in his specific market area.

COMPANY AWARENESS
Officials at Apple, DEC, Altos, Compaq and other system firms agreed with one company official who said, “I know it sounds a little pretentious for an industry that is still so young, but in the old days co-op was something we used to buy our way into a retailer’s location. National advertising was what we used to pull the products out of the store.”

Here again, changes in responsibility affected the evolution. Advertising and marketing management are now the driving forces in the industry rather than designers and engineers. These people, especially those with solid backgrounds, realize that the marketing and sales success of the company requires both push and pull—pushing the product into the retail outlets and pulling it out the other side. And to help maximize this push/pull effect, several corporations will soon be presenting both standard co-op programs as well as customized programs which will actually place the advertising in target local and regional media rather than having the retailer make the selections.

A major push in this area is being developed by national consumer and business publications such as Sports Illustrated, People, Time, BusinessWeek, Fortune, and others. They’re working with manufacturers to develop advertising programs that “localize” the ads. The publishers of these publications have found that the programs have been so successful in other business and consumer segments that in a very short time the more progressive and aggressive system and software producers will also be carrying out similar programs.

According to a different type of publisher—a software publisher—firms such as his are clearly showing developers and “writers” that they can each do what they do best to benefit all parties. “We are packagers and promoters,” he stated. “Across the board, industry allocates over $10 billion annually to co-op funds; and less than half of it is ever used. We encourage our retailers to use all, or nearly all, of these funds because we understand it is cheap advertising for both parties. And it moves the product by building immediate demand and sales at the level where it counts—the local level.”

Similarly, some manufacturers not only give lip service to co-op advertising, but are even hiring two advertising agencies. One is responsible for corporate, product and image advertising while the other is responsible for co-op advertising. By amortizing the production of quality print, radio and TV advertising over a broad number of retail organizations, both the manufacturer and dealer are left with ads that are customized to the specific dealer, but are far more professional than the dealer could ever hope to get from his or her local TV, radio, or newspaper salesperson.

One agency head, who specializes in co-op advertising almost exclusively, said that few retailers—except for major chains—would spend $200,000 to $300,000 for a series of radio and TV spots and local gravure ads that would run for three months or less and then be retired. However, by doing the ads for 50 to 100 dealers across the country, and providing them exclusivity in specific market areas, everyone has advertising which is economical and something they can be proud of. But more importantly, the advertising gets results.

In addition, these agencies will be responsible for developing the “selling packages” for the manufacturer’s and distributor’s salespeople. One manufacturer felt that the day of the salesperson who simply called or stopped by to find out how many more systems, how many more cases, or whatever was needed would soon come to a dramatic and welcome end. According to this individual, in the near future, the agency will be developing the selling packages and the manufacturers’ or distributors’ salespeople will be working as consultants to the dealers. After going over the program with the retailer and finalizing the program that is best for that store, that location and that period of time, they would present the program to the store’s sales force, explaining how it can and will help them sell/move product. Finally, the manufacturers’ or distributors’ salesperson will help put together the tie-in, in-store promotion to make certain the entire package works as a singular unit.

Industry and trade officials emphasized that about 20 percent of today’s dealers already know that co-op advertising is not just cheap advertising for them (probably because they come from other consumer-oriented retail backgrounds). They’re well aware that by complementing the co-op programs with their own programs, they can build not only short-term volume sales, but also a level of long-range company identity.

PROFESSIONALISM AT ALL LEVELS
Several manufacturers see the upgrading of dealer co-op advertising as the next generation of professionalism. The entire industry (manufacturers and distributors alike) is no longer so myopic that they believe they can simply sell product to the dealer and walk away. The new co-op programs will increase the synergy that both parties want and need. Manufacturers and distributors will provide product/marketing expertise and guidance as well as planning and execution assistance at the senior level. Dealers will provide the customer feedback and research, market understanding, and daily sales. More money will be spent by all parties—much to the satisfaction of all media. But that money will be more effectively spent to benefit all parties.

The Future of Advertising
by Jim Taylor, Ph.D.
(First printed in Advertising Age’s Special Issue for 1999 on The Next Century. Reprinted with permission from Jim Taylor and Advertising Age magazine.)
Source: May/June 2000 NAPAA Newsletter, Issue 33

The Tribe of 2099

I have been asked to look a hundred years out and predict the future of advertising. I was asked to do this because I have been tagged with the label of futurist. The assignment has been more daunting than I expected.

Surely, a forecaster could have foreseen the evolution of radio waves into an entertainment medium and, perhaps, could have predicted TV. But I find it hard to believe that anyone would have predicted the growth of a global, mediated consumer society that would be pushing $25 trillion with advertising at the core of the intersection of media and consumers.

The problem of forecasting the future is that successful advertising leads not just to consumption but to the invention of whole systems that arise to sustain consumption. And it is in this area that the future proves particularly obscure. If we look to the present, we see the same kind of entrepreneurial zeal of 100 years ago, but now its focus is electronic and biological.

In the midst of the dissemination of computer technology, we have seen the evolution of a whole new system of predominately interpersonal communication called the Internet. Advertisers seek to exploit the eyeballs within this environment, but for those of us who advertise through the environment, it feels different than TV or radio or magazines.

The users demand a new system of rules. They don’t want to be enter-tained as much as to be informed. They don’t want product advertising as much as they want advertising in the context of an elaborated, enriched experience. And Websters aren’t very far from the day when they will call Mercedes and ask for a direct subsidy for their private Web site in exchange for purchase loyalty. So, in forecasting the next 100 years, I have tried to look at how new ideas create systems of human behavior and advertising opportunity.

The first system of human behavior within which advertising will play a critical role is the privatization (at the most private possible level) of distributed communication. Advertising will be challenged to find ways to subsidize the broadcast of my as-yet-unborn grandson’s soccer game to the home of his grandparents.

In the next hundred years, we will see the deconstruction of the concept of collective, so-called mass society. We will see the growth of small, highly ethnocentric “tribal” societies. These small communities will be linked electronically on a more or less global basis. Geography will play little part in the depths of their relationships, but a collective interest in brands and products will mark their sense of tribe.

I have been working on the technological side of the creation of Internet communities and it is obvious now that we will soon be able to have two-way multimedia (or as Martha Stewart is calling it, omnimedia) links between members of these communities. They will be highly cohesive in the sense that, while they participate in society, their perspectives will be focused by a shared preference for information and experience associated with the rituals of their community.

The power of electronics will grow in its capacity to allow an individual to determine what the nature of his or her social specialty will be. A person will know what they choose to know, and will not know what they choose not to know. It is an irony that as the information available to the average desktop grows (and over the next 10 years that availability will increase by more than 100,000 times), choices will be more refined, personally predictable, secular and idiosyncratic.

If demassification is the product of the evolution of electronics, what of advertising? We will see smaller audiences, automated creativity, participatory advertising and reception with the paid permission of the receiver. We have already seen the emergence of the targeted agency, and some of those are doing quite well. What we have yet to see is the creation of imagery whose literate content can be adjusted to the specific expectations of tribal members.

As the number of older people grows, we can expect another kind of systematic shift in the way advertising interacts with social change. We can anticipate a new fault line in society: It will arise as conflict over the massive assets of older people and the desire of younger people to command those assets. The lion’s share of the world’s wealth will be owned by people with very low ambition to spend it. What a scenario for antagonism; what an opportunity for communication.

The evolution of investment from control by institution to control by individual has taken place over the past 20 years at an astonishing pace. I remember a study we did only 10 years ago in which we told major institutional investment analysts that by the end of the century most assets would be controlled and purchased by individuals. So loudly did they laugh that it took us 14 months to collect the bill.

What, then, will “they” say if 4% or 5% of the population over the age of 120 controlled 50% to 60% of the assets? I think they would say a great deal of time and money is going to be invested in getting the aging to spend it.

Another issue facing the global future is the localization problem — local packaging, adaptation to local electric currents and plug forms and the like. The cost to the consumer of these variations has been justified by the protection localization has offered manufacturers for jobs and income. Similarly, localizing the language of packaging and communications is defended for its recognition of cultural values.

But the strong ethnocentric languages are in decline. As the importance of government and nationalism decline in the face of privatization, bio-engineering and the physical concentration of older people and their assets, I believe we will see the simplification of the language of commerce even as the language of ordinary speech is enriched by the interweaving of the remaining major languages. The advertiser of 100 years from now will share a common global grammar—an amalgam of useful words from every language, with English grammar dominant. But our capacity to communicate to a specific microsegment will depend on our ability to know the arcane “Erin go bragh” phrases that reflect deeply held historic language remnants that give tribalism its meaning.

And there are things that will be invented that are beyond imagination. Will physics succeed in finding a new class of stable elements beyond atomic weight 130; elements, theoretically at least, of astonishing hardness and physical formidability? Will we be able to clone ourselves and inject our life experience into our own little Mini Me’s? Will we be able to simulate the physical structure of the art and artifice in our houses so that we can dial our décor? Will we be able to experience life outside our planet?

Any one of these ideas, if realized, changes the context of human experience and calls for communication, education and promotion.

So I am bullish on advertising in the next century. Whatever is invented, we can be sure there will be a need for enriched communication. We will still need to galvanize product interest. And human beings will still seek hope, happiness, relief from hunger, self-assurance, empathy and membership.

The desire to acquire will remain strong. A hundred years from now, the world’s production of goods and services will have passed $100 trillion. I suspect the world will gladly pay our industry $3 trillion in the year 2099 to create brands, educate consumers, build product meaning and inspire enthusiasm for the things people buy.

No matter the social structure within which we operate, no matter the political or moral reluctance to accept the material ambitions of human beings, 100 years from now advertising will remain at the core of the process by which human beings discover who they are through what they own.

The Visionary's Handbook
Nine Paradoxes That Will Shape the Future of Your Business
by Watts Wacker and Jim Taylor with Howard Means
Source: May/June 2000 NAPAA Newsletter, Issue 33

The Visionary’s Handbook captures the interlocking web of paradoxes that abound in everyday business life, and provides a map to help make the future work for every individual and every company in the challenging and uncertain times ahead.

Building upon the “Age of Possibility” first espoused in their provocative book, The 500-Year Delta, Watts Wacker and Jim Taylor welcome readers in this new book to the “Age of Uncertainty,” where, because life has never been easier, it has never been more difficult.

Wacker and Taylor present a vision of the present and future that goes beyond all the chaos and complexity of our times, and chart a method for readers to create a personal course for the future.

This navigational route is premised upon the authors’ understanding of nine mind-boggling paradoxes that capture the imponderables of modern life, and define the business and social climates of the world as we move forward into the new millennium:

The Paradox of the Visionary
The closer your vision gets to a provable truth, the more you are simply describing the present. In the same way, the more certain you are of a future outcome, the more likely you will be wrong.

The Paradox of Value
The value of any product becomes inseparable from a buyer’s perception of worth. Instead of intrinsic value, we have relative value only — the products that a business makes bear diminished relations to the physical content of the offering.

The Paradox of Size
The bigger you are, the smaller you need to be.

The Paradox of Time
To succeed in the short term, you need to think in the long term. Yet the greater your vision and the longer the time interval over which you predict results, the greater the risk that you will be unable to take the necessary steps in the short term to achieve the long-term goals. The tension between short- and long-term planning has never been more tormented.

The Paradox of Competition
Your biggest competitor is your own view of your future; competition comes from everywhere and nowhere at the same time.

The Paradox of Action
You’ve got to go for what you can’t expect to get; nothing will turn out exactly as it’s supposed to. You must act intuitively and be equally ready to take resolute counter-intuitive action.

The Paradox of Leadership
To lead from the front, you have to stay inside the story. In an inherently inconsistent world, consistency is not the virtue it once was in our leaders.

The Paradox of Leisure
Play is hard work; play and work are blending and becoming indistinguishable.

The Paradox of Reality
Every person on planet Earth today has the potential to be connected to every other person, and every single one of us inhabits a world of our own and is a marketing segment of absolutely one. As our links become stronger, our individuation becomes starker.

Updated as of 09/01/2006