Share Ad Expenses, Boost Profits
Co-Op approach to marketing helps
Small Businesses cut costs
The
challenges of the small business owner are well
documented. They must battle for market share against
larger competitors, run all aspects of their business,
and even pay higher rates for advertising and other
marketing related expenses. Small businesses generally
do not qualify for volume discounts when it comes to
buying advertising space or marketing materials, and
thus they end up paying higher rates for the same ad
space or marketing materials purchased by their
corporate counterparts.
In
recent years, there have been some changes in the
marketplace that are of benefit to small business
owners. For example, Internet procurement sites have
emerged offering discount rates on everyday office
supplies such as toner or paper. However, the high cost
of advertising has not been formally addressed. That’s
why many small businesses are taking matters into their
own hands and joining forces in marketing “co-ops”.
Here’s
an example of how it works. Andy’s Accounting Firm and
Larry’s Legal Firm are both small businesses operating
in the business-to-business sector. Andy services small
businesses with their accounting needs, and Larry is a
lawyer specializing in small business issues. Andy and
Larry both wish to purchase advertising space in a
popular small business magazine. The rate they are
quoted individually is $5000 for the back page of the
magazine. Since they are not repeat advertisers, neither
Andy nor Larry receives any kind of discount. So how do
they save money on this advertising venture? A co-op
approach on one of two fronts will cut their advertising
costs significantly:
Share
the ad:
Since they are not direct competitors, Andy and
Larry could split the ad space 50/50, acting almost as
if they were partners although their businesses are
distinct. This drops the cost to $2500 for each business
and they still receive broad exposure in their chosen
publication. In fact, by putting their heads together
they should be able promote their collective business
expertise as “Total Solutions for Small Business”.
Purchase
separately at a discount
– There may be some occasions where a business does
not wish to share its ad space. Even in these cases a
co-op approach can offer a lower cost. Andy could call
the publication and ask for a quote on the back page for
next month. Once the price of $5000 is quoted, he then
offers the publication a deal “What if I bring on
another advertiser for you. Would I get a small
discount?” Most publications live or die on the sales
of their advertising space, and are usually willing to
offer someone like Andy a 10% discount for bringing
someone like Larry in to purchase an ad elsewhere in the
publication. Andy and Larry split the savings and Andy
ends up paying $4750 for a $5000 ad. Although the
savings were smaller in this case than the shared ad
example, remember that Andy now has the entire back page
to himself and saves $250.
Advertising
is not the only example of co-ops at work. Web Designers
would jump at the chance to line up two clients in one
shot, and would likely offer a discount to do so. The
same applies to a printing company that prints brochures
or business cards. The possibilities are endless,
including the size of the co-op you choose to join.
When
faced with a major advertising buying decision or the
need for new marketing materials, find out how much you
will have to pay as a small business. Then form
alliances with similar small business, and negotiate a
better deal for all parties involved.
