iProspect UK

CoOp | Why Manufacturers Need to Remember Wholesale Impact

When it comes to manufacturer clients, agencies largely tend to think of media in two parts: Brand and Performance. This is generally reflective of how the industry has evolved, as media agencies would buy campaigns in out-of-home, print and TV while retail agencies would manage shop fronts and in-store experiences. More often than not, these two functions had their own separate remit with different client side contacts and KPIs. With the rise of not only e-commerce but also local search, these traditional speciality marketing/advertising segments are beginning to collide. In the retail space, achieving the illustrious “holistic marketing funnel,” is impossible without considering how retail agnostic consumers purchase products with partners versus direct. In an increasingly digital world, there is more opportunity to market with partners in order to gain highly quantitative and qualitative data to inform direct campaigns. While Google has introduced products such as shop visits to track online-to-offline impact, this service and others like it are only for manufacturer owned and operated entities and don’t account for retail partner sales. Despite retailers diversifying their media buying relationships with suppliers and offering the ability to buy onsite audiences, there is a disconnect between upper funnel, brand activity run by manufacturers and the impact it has on sales for retail partners.

Why Co-Op Marketing between manfacturers and retailers is important

In late 2016, Tommy Hilfiger launched a capsule collection with model Gigi Hadid. Online retailer Zalando benefited from an exclusive sales and marketing period to push the collection prior to it being sold by other retailers, including Tommy Hilfiger directly.

 

Though it is unclear how much data was shared between the two parties, it nevertheless proves campaigns like this need to ensure that brands understand who is being targeted and how they can leverage and share data with retailers. A few considerations as to why this is important:

  • Data sharing: In order to understand better what motivates retail agnostic consumers, can manufacturers leverage the audience that retailers target directly? Other than product sales and potentially demographic information, are retailers open with manufacturers about how campaigns are run? Some manufacturers, particularly in the consumer electronics space, are increasingly savvy about the activity they share with partners. As a part of HP Australia’s move to target millennial consumers, they worked with retailers to share data for audiences where they had
  • Creative: When developing creative, brands consider their own audience and the message that they are trying to portray. While this might work for core consumers, retailers often have much different targeting and insist on different creative sets. In order to have more control over brand messaging through retailers, brands should use data and insights from retailers to devise creative that meets the brand guidelines for both parties.
  • Programme transparency: As digital overtakes print media spend and trade promotion efficacy is being called into question, retailers are increasingly changing their co-op marketing offer. The likes of Amazon and WalMart are far ahead of the pack with sophisticated product offering across the site, however, in Europe, brands like Zalando, Tesco and Group Auchan have set up standalone, for-profit businesses to handle the demand. These programs often dictate the terms of marketing on their platforms without necessarily taking into consideration what would be in the best interest of the manufacturers. Platforms like Hooklogic allow manufacturers to capture meta-search intent on retailer websites directly whereas connecting a platform like Hatch can mean directing consumers to their preferred retailers.

One of the biggest challenges for performance marketers is the cannibalisation across digital campaigns. Particularly within search, manufacturers run campaigns that often compete in auctions with retail partners selling the same products. Here is an example on Google shopping in which Vans is actively competing against resellers:

Because manufacturer e-com teams are often pressured with high conversion targets, many bid on their own brand terms to capture audiences that are in-market for their products. Even though this may have a higher ROI, they ultimately miss opportunities to grow their customer base, as they are unable to capture search intent on generics. Moreover, CPCs are inflated as retailer partners are often allowed to bid on brand terms. Google’s affiliate Location Extensions will help brands push consumers to physical retail locations, but it’s important for manufacturers and retailers alike to understand the overall search landscape and the implications activity have and how they can work with one another to optimise marketing spend for both parties. For manufacturers, one way to do this is to look at the overall search landscape and determine who are their most valuable retail partners:

 

The above example showcases The North Face’s search landscape and their association with retail partners in the UK. While retailers such as Tiso, Elis Brigham and Blacks associate heavily with the brand as they are outdoor clothing specialists, ASOS, JD Sports and John Lewis represent a greater opportunity to capture a wider audience. Although manufacturers may have different commercial priorities, brand association studies can provide insight into where there is an increased opportunity to capitalise on existing partnerships or expand relationships further.

Once this is exercise is done, retailers and manufacturers should work together to find out how best to manage SERP presence:

The Staples Co-Op Programme, which is run by iProspect US, actively manage search campaigns for brands like HP, which are often part funded by the manufacturer. Retailers can employ tactics such as customer match within Paid Search to target people in-market for products that also have an affinity to those specific products as well as reach wider audiences for people who might be looking for products that have an affinity. For example, HP could capture audiences who may have search for printer paper previously.

A recent Forrester survey also indicated that while many consumers start their purchase journey on brand sites, 86% will ultimately buy with a preferred retail partner. Motivation for this includes price, delivery speed and local pick-up points. Programmes between Staples & HP aren’t a new concept but rather an evolution to traditional shopper marketing and co-op tactics.

How iProspect can help:

iProspect’s Co-Op Programme has been designed to help retailers and manufacturers alike run co-branding marketing activity. iProspect run retailer Co-Op for the likes of Staples and Petco and also have experience in running programs for brands such as Intel and Cartier.


With a comprehensive start-to-finish process, iProspect can help scope, construct and manage co-op programmes for all retail clients. To learn more about Co-Op, get in touch with iProspect today.

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