Co-op marketing
Co-op marketing is marketing that a vendor and its channel partner pay for together. In the IT channel, the partner earns co-op funds as a share of its sales of the vendor's products, spends them on approved marketing such as events, emails and ads, then claims the money back with proof.
Also called: co-op funds, co-op advertising, cooperative advertising, cooperative marketing
How are co-op funds earned?
Co-op funds build up from what you sell. Microsoft's partner incentives are the clearest published example. Microsoft splits eligible incentive earnings by a percentage, such as 60% rebate and 40% co-op. You receive the rebate share as normal, and Microsoft holds the co-op share for marketing.
The timing has three parts. You earn co-op during a six-month earning period, spend it during the following six-month usage period, and lose anything you have not used by the end of that period. If your co-op earnings fall below the threshold, Microsoft converts them to a rebate at the end of the semester instead.
Microsoft's FY24 co-op guidebook set that threshold at $10,000 for Cloud Solution Provider partners and $1,500 for Surface resellers. It asked for claims within 45 days of the activity finishing, with final deadlines of 15 February and 15 August, and told partners to keep proof of execution for 24 months. These are FY24 rules, so check the current guidebook in Microsoft's partner portal before you plan around them.
Why is co-op tied to sales?
In the US, the Federal Trade Commission's Guides for Advertising Allowances say promotional allowances, which include cooperative advertising, should be offered to competing customers on proportionally equal terms. The guides say the easiest way to do that is to base the payments on the dollar volume or quantity of product bought in a period. This is one reason many co-op programmes are a percentage of your sales rather than a sum the vendor picks for you.
How much co-op goes unused?
A lot, on the one large estimate, which dates from 2015. That year Borrell Associates estimated that co-op programmes in North America totalled $36 billion a year and that at least 40% of it, more than $14 billion, went unused. That study covered co-op advertising in general, not the IT channel. In the IT channel, funds often go unclaimed for the same reasons: the usage period ends before anyone plans the activity, or the proof is missing when the claim is due.
How do you use co-op before it expires?
Treat co-op as part of next half-year's marketing budget, not a bonus. Put the end of the usage period and the claim deadline in the diary the day the funds arrive. Plan one or two activities early in the period that you would run anyway, such as a client webinar on a Microsoft product or a campaign to clients still on an older licence. Then build the claim pack as the activity runs: invoices, the emails you sent, screenshots of the ads and attendee lists.
Here is how that looks for a Microsoft partner with co-op landing in January. The webinar runs in March, the follow-up emails go out in April, and the claim goes in within 45 days of the last email, well before the August deadline.
How Yori helps with co-op
Yori, the AI marketing assistant for MSPs and resellers, has a Marketing Budget Service that builds a marketing budget with fields for partner funding. Co-op and MDF then sit next to your own spend, and you can see what is left to use before the period ends. When a vendor wants a plan before it approves an activity, the Campaign Proposal Service drafts it. Upload the vendor's co-op guide to the project so both follow its rules. Yori works from the documents you give it, so check the result against the guide before you submit.
The free trial has 25 one-time credits and needs no card. Pro is £49 a month with 25 monthly credits. Before your next usage period opens, start the free trial and run the Marketing Budget Service on the half-year ahead.
Often confused with
- Market development funds (MDF)
- MDF is usually granted activity by activity, at the vendor's discretion, often by invitation. Co-op is usually earned from your sales as a fixed share. Where a vendor uses both names, its programme guide says which rules apply.
- Rebates
- A rebate is paid to you as cash or credit. Co-op can only be spent on approved marketing. Microsoft splits one set of incentive earnings into both, and turns co-op below its threshold into a rebate.
- Co-marketing
- Co-marketing is two companies promoting each other or a joint offer, with no fund behind it. Co-op marketing always involves a vendor paying back part of a partner's marketing costs.
Questions
What does co-op marketing mean?
It means marketing paid for jointly by a vendor and the partner or retailer that sells its products. The partner runs and pays for the activity, then the vendor reimburses its share from co-op funds the partner has earned. In other industries, "co-op" can also mean a member-owned cooperative, which is a different thing.
Can you give an example of co-op marketing?
Microsoft's partner co-op is a well-documented one. A partner earns co-op as a share of its incentive earnings over six months, spends it on approved marketing for Microsoft products over the next six months, and claims the costs back with proof of execution. Funds not used in time are forfeited.
Is co-op the same as MDF?
Often the names are used for the same thing. Where a vendor runs both, co-op is earned from your sales and MDF is granted per activity, usually at the vendor's discretion.
What happens to co-op funds I don't use?
In most programmes you lose them. Microsoft forfeits funds not used by the end of the usage period, and its FY24 guidebook said unclaimed funds could not be reinstated or rolled over.