About 40 percent of small retailers appear to be ignoring their chances of connecting with on-the-go consumers, according to a report today from digital marketing company Netsertive and local-business researcher Borrell Associates. And because merchandisers haven't adjusted to the mobile age, they are leaving massive amounts of money on the table when it comes to cooperative advertising.
"We were stunned to discover that advertisers are leaving $14 billion in 'free advertising' on the table—about twice as much as three years ago," Gordon Borrell, CEO of Borrell Associates, said in a statement. "This is because co-op programs are out of sync with local advertisers' changing needs, particularly in the digital realm."
If you are unfamiliar with the term "cooperative advertising," you're probably not alone. Here's a quick explainer:
Players from the three tiers of retail—manufacturers, distributors and store owners—have for decades pooled their resources in order to boost product sales. If you've ever seen a spirits outlet run local TV ads for a new Anheuser-Busch beer and gone into the location only to see product displays that are clearly part of the same campaign, that's an example of co-op advertising/marketing. The beer-maker, distributor and retailer all pitched in on the effort.
Borrell surveyed 50 big brands and 100 local retailers to see where co-op advertising stood in the mobile-marketing era. The local-mobile ad options via Google or a local newspaper's website seem obvious, but the Netsertive-Borrell stats tell a tale of huge missed opportunities.
"With a few adjustments and the help of new technologies to grease the skids," Borrell said, "brands have a big opportunity to tweak these co-op programs in a way that transforms local business partners into an incredibly sophisticated and powerful sales force."
In addition to the $14 billion whopper, here are five other eyebrow-raising findings from Netsertive and Borrell's research:
- Only 12 percent of major brands said mobile was important to their co-op marketing strategy.
- As the rest of the marketing world ramps up on digital, co-op ad players seem stuck in neutral. Forty-one percent of big brands weren't sure if they would maintain their mobile-advertising commitments with local partners in the next six months, 44 percent said they would maintain their current levels, and only 15 percent planned to increase their investments in this area.
- 39 percent of the major marketers wished their retail partners would spend more of the co-op ad dollars on mobile search, while just 17 percent said the same about mobile video.
- The big brands seem to have a point about search. A surprisingly low number of local merchants—22 percent—said they use co-op money for mobile search. In this smartphone-based day and age, that's unacceptable.
- Sixty-one percent of the small-business respondents said their websites were optimized for mobile usage, while 29 percent said "no," and 10 percent weren't sure. So, roughly 40 percent of small businesses are not thinking about mobile in a serious way going into fall 2015. Yikes.