Marketing your company’s products and services can constitute a large percentage of your operating budget. While letting consumers know about your business is imperative to growing a successful company, saving on advertising and marketing costs can be a big boost to your bottom line.

Entrepreneurs can use several strategies to spread the word about their company while keeping their marketing expenditures low. These tactics include increased social networking presence, email campaigns, and referrals. But another valuable resource can be cooperative, or “Co-op”, advertising.

Most business owners know about the traditional kind of co-op advertising, in which manufacturers pay part of the advertising costs for retailers who sell their products.  They may reimburse retailers for the cost of print or TV ads, or provide point-of-sale displays or promotional giveaways.  The retailer and the manufacturer both benefit by increasing sales.  For example, a grocery store featuring a particular brand-name product in its weekly newspaper ad may share the cost of advertising with the manufacturer.  Tire stores, appliance retailers, auto dealers, and stores selling cell phones or computers can all benefit from sharing costs with manufacturers.

However, another type of co-op advertising that’s not as well known may provide a low-cost marketing solution for other types of businesses, especially those that provide services.  Called “horizontal” co-op advertising, it links together small businesses in a similar field – but not competitors – that establish a mutual agreement to promote each other’s products and services. This tag-team approach can expose your business to new clients without spending thousands of dollars on newspaper and billboard advertisements.

For example, a hair salon and a day spa may agree to promote each other’s products, refer customers to the other’s business, or share the cost of print advertising or mailers.  A group of businesses that market to the same demographic may form a co-op and buy a large block of ad space or an entire page in a magazine or newspaper.  Designers then divide up the space so that each business has one block, and members of the co-op split the cost of the ad.  Businesses that serve senior citizens may purchase ad space in a retirement magazine, while health-food stores, farmers’ markets and vitamin retailers may combine to advertise in the weekly newspaper.

Horizontal co-op advertising can allow your company to either reduce its total marketing budget, or reach more potential customers with the budget you already have.  By sharing the cost of print ads with others, you may be able to afford more professional-looking ads, or move from black-and-white to color.  It may also give you a chance to advertise in media you hadn’t previously used, such as radio or television.

As a bonus, these joint initiatives may also give business owners a chance to talk about the particular strategies they use that have had effective or successful results in the past.  By forging these co-ops– which can involve little more than a conversation with another business owner – you may be able to extend your reach across multiple demographics and locations, as well as reducing your marketing costs.


The information contained herein may not represent the views and opinions of Nevada State Bank or its affiliates.  It is presented for general informational purposes only and does not constitute tax, legal or business advice.