Co-op programs have a reputation in the automotive industry — and it’s not always well-informed. Too often when we ask someone how a co-op works, they respond: A manufacturer gives a dealership free money to increase their advertising budget.
In reality, it’s not that simple. The money manufacturers supply for co-op advertising often comes with guidelines because, by definition, a co-op is a cooperative society, business, or enterprise. Basically, when a dealership opts to enter into a co-op with an OEM, all advertising efforts become a joint enterprise with benefits to both parties.
Find out how co-op programs can actually benefit your dealership when used effectively.
What Are OEM Programs and Partnerships?
In OEM co-op programs for auto dealerships, the dealerships and manufacturers work together to promote the manufacturer’s vehicles.1 The manufacturers offer financial support to dealerships advertising their vehicles, typically by reimbursing a set percentage of their advertising costs.2 Sometimes, the manufacturer may even cover the full cost of eligible marketing campaigns.2
These programs may also give dealerships access to the manufacturer’s pre-approved marketing assets, such as advertising copy, images, and designs.3 That way, the dealerships don’t have to waste time and money trying to produce all those marketing assets themselves. By partnering with OEMs in these co-op programs, dealerships have access to the tools and financing they need to upgrade their advertising efforts.
There are eligibility requirements that dealerships must abide by to receive the co-op program funds. The OEMs may set rules on factors such as:
- The content of the advertising
- Where the dealership advertises
- The percentage of the advertising fees they will reimburse or a flat reimbursement limit
Dealers need to carefully stick to these guidelines so the OEM doesn’t refuse their claims during the reimbursement process.
3 Ways Co-op Programs Help Dealerships and Manufacturers
These dealer co-op programs are a win-win for everyone involved. Here are some key ways they help vehicle dealerships and manufacturers.
1. Run Consistent, Brand-Specific Ads That Match the OEM
In the past, most vehicle advertising was done over broadcasts, posted on billboards, or written in print. Now, the internet is king. Digital marketing channels are arguably the most important in the automotive industry, and OEMs have begun to adjust their guidelines to account for this shift.
A huge benefit of co-ops for both manufacturers and dealers is that they can boost reputations and market exposure. When a dealership can align its campaigns directly with an OEM, it boosts consumer trust and increases conversions. Having reliable local dealerships can raise brand awareness and create a larger, loyal customer base for manufacturers.
2. Budget Advertising Campaigns More Effectively
Advertising budgets vary for local and individual dealerships and are sometimes completely overlooked. Co-ops can essentially provide financial services in exchange for branding and advertising cooperation. Sadly, millions of dollars in manufacturer co-op funds go unused each year.4 So why not put that money to good use?
For OEMs, partnering with dealerships allows them to increase marketing in local areas for less money than it would cost to run their own campaign. In addition, co-ops are a great option for individual dealerships with small advertising budgets. When a small-budget dealership partners with a manufacturer, the combined advertising efforts can enhance the dealership’s digital presence and create more conversions.
OEM partnerships can also be extremely beneficial for dealerships with larger budgets. With added co-op financial support, dealerships can create more focused, specialized ads to enhance their existing campaigns.
3. Gain a Competitive Edge
Because dealerships get access to exclusive funds and marketing materials in OEM co-op programs, they gain an advantage over their competitors. Other dealerships may not realize these opportunities are available or bother to take advantage of them. The dealerships that do will be better equipped to attract customers and close sales.
Beneficial OEM Partnerships Available Through ACV MAX
One of the main challenges for dealership owners interested in co-op programs is navigating all the program requirements. Luckily, co-ops through ACV MAX are easy for dealerships and optimal for OEMs. As the sole provider of OEM integration, ACV MAX has access to original VDPs and ads for an OEM’s vehicles. This way, manufacturers can maintain their brand’s value by helping a dealership advertise its inventory the way it was meant to be sold. ACV MAX integrates OEM data directly into the platform to make finding favorable co-op programs for your dealership easier.
If you’re interested in learning more about how ACV MAX can help your dealership, contact us today or schedule a free product demo.
Sources
- (November 16, 2023). A Comprehensive Guide to Understanding Auto Dealer Co-op Programs. AutoRaptor. Retrieved October 28, 2024 from, https://www.autoraptor.com/blog/a-comprehensive-guide-to-understanding-auto-dealer-co-op-programs/
- Cruickshank, I. (November 24, 2015). Here’s how to take advantage of your OEM’s co-op program. Auto Remarketing Canada. Retrieved October 28, 2024 from, https://www.autoremarketing.com/arcanada/heres-how-take-advantage-your-oems-co-op-program/
- Gilbreath, A. (January 3, 2023). What is Automotive Co-Op Advertising? Brandmuscle. Retrieved October 28, 2024 from, https://www.brandmuscle.com/blog/what-is-automotive-co-op-advertising/
- Sterling, G. (August 13, 2015). Report: Billions In Local “Co-Op Advertising” Funds Left Unspent Annually. MarTech. Retrieved October 28, 2024 from, https://martech.org/report-billions-in-co-op-advertising-funds-left-unspent-each-year/
