Taking Advantage of Co-Op Programs
Back in 1995, Denise Hawke heard a sales pitch that sounded too good to be true.
Twenty-four years ago, Hawke, then a parts department staple at Volkswagen Santa Monica (Calif.), had a conversation with a factory rep that remains memorable to this day. The rep described a co-op program for advertising parts; in short, Volkswagen was offering to provide advertising for half price, within some reasonable restrictions for factors like total money spent.
“No one had to sell me on it,” Hawke recalls with a laugh.
The dealership’s manufacturer was even offering to handle the layout of print ads, meaning Hawke would no longer be forced to spend hundreds of dollars to provide customers with screen-printed hats around the holidays just to try to get her facility’s name out there.
For years, the dealership had tried to zero in on the best way to cast a relatively wide net to new customers. Co-op advertising offered a cost-effective way to put Hawke’s employer at the top of mind with consumers … even if it had some initial limitations.
As helpful as it was to suddenly be able to utilize group marketing in a dealership setting, co-op programs weren’t extensive back in the 1990s. Manufacturers largely refused to be flexible with regard to co-op advertising, and they didn’t allow dealerships to customize their marketing materials much.
And Hawke found another element of those early co-op programs especially troublesome: “Back in the earlier days,” she explains, “there was no wholesale co-op [advertising]. For wholesale, we had no help with marketing—whatever we did we had to pay for on our own, whether it was giveaways or mailers, or whatever.”
That left Hawke feeling rather hamstrung. She would’ve liked to have her parts department do more advertising, but the money simply wasn’t there. Every year around December, Hawke spent nearly $1,000 on gifts for the dealership’s loyal customers, but that pretty much served as the extent of the facility’s wholesale advertising efforts.
“We might have sent out mailers to wholesale customers to keep our name out there, to get new customers in the area,” Hawke says, “and we had mailing lists, but since we had to pay for [100 percent of wholesale advertising] we just chose not to.
“So, we would maybe make ourselves a flier, but it would just be paper and ink, done in-house.”
Hawke knew Volkswagen Santa Monica was missing a sizeable portion of its clientele with its ad efforts.
It wasn’t until Hawke moved on to CardinaleWay Volkswagen last decade that wholesale co-op programs became common throughout the industry.
From the second Hawke heard about the availability of wholesale co-op ad programs, she was intrigued by the possibilities. In her mind, it was a “no brainer” to participate in wholesale group marketing.
“Because the [advertising campaigns] that I wanted to do were costing me money,” she notes. “And now I had a venue to get some of that money back.”
By the end of her tenure at CardinaleWay, in 2010, Hawke saw to it that her department used its co-op advertising allowance from the manufacturer to fund for email and postcard marketing campaigns. Or, maybe the dealership’s name and address would appear in group ads in industry magazines.
While the dealership was mentioned in relatively small fonts in those ads, it made a sizable impact.
“You know,” she notes, “whether it be in a magazine, or a postcard, I think [co-op advertising] is all about keeping your name out there. Because, for some reason, everybody thinks that they have their own [business’] backyard locked up—they think, ‘Oh, this guy is right down the street; he’s going to buy from me.’ Well, that’s not true. It doesn’t work that way.”
A few years ago, Hawke landed at Santa Monica Audi. And, by that point, the parts manager had co-op advertising down pat.
In 2019, Hawke takes full advantage of Audi’s co-op program, which she notes is “50 percent co-opable,” meaning the dealership gets 50 percent back on its co-op advertising spend courtesy of its OEM. Hawke’s department boasts a co-op marketing allowance of $7,200 per year.
“It pretty much covers everything I do, so I always have money to” advertise, Hawke says of Audi’s program. “They will co-op fliers. We co-op our e-store. I do co-op in a couple magazines—we can customize, so I can put my parts people’s names on there, their direct lines, their pictures if I want; it’s like, $100 per month.
“I can buy [ad] items through Audi; they’re boutique items and put our name and address on them. They also have opt-in advertisements if I’m too busy or whatever.
“They came out with a comprehensive co-op program that gives you all kinds of information [like] smart maps on where you’re doing business, and areas of opportunity.”
The group marketing program even created enough money in Hawke’s departmental budget to fund for a wholesale parts rep position. Now, her eight-person parts department at Santa Monica Audi is rolling along rather smoothly, with $1.2 million in inventory.
And Hawke credits her OEM’s co-op advertising program for much of her department’s success.
“Dealers often leave co-op money on the table,” she says. But “there’s always something to spend money on. [For example] one thing that’s often overlooked is the fact that you can co-op accessories on a showroom vehicle.
“It’s all about keeping your name out there,” Hawke adds of co-op advertising. And OEMs “make it simple for us.”