Why Co-Op Advertising Is Contradictory to Your Dealership Goals
This session, originally presented by C-4 Analytics on the Digital Dealer platform, delivers a direct challenge to the longstanding tradition of co-op advertising. The core argument is that co-op programs are inherently structured to prevent you from achieving your goals of increasing sales and market share, making them a drain on your advertising budget.
Co-op has never, in the history of Earth, solved a pump-in problem.
The Conflict: Co-Op Sabotages Sales Growth
Co-op was born when early dealers pooled funds to buy expensive network TV ads, and OEMs added stipulations to defray costs. Today, those stipulations—specifically, the prohibition on targeting on-brand rivals—directly conflict with your need to grow.
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The Problem of the Pump-in: A pump-in is a vehicle sold by your on-brand competitor but registered in your market area. Every vehicle sold by your rival to a customer in your territory is a lost sale you must claw back.
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The Manufacturer’s Goal: The OEM (e.g., Chevy, Honda, Toyota) does not care which dealer sells the vehicle; they just care that it gets sold. They structure co-op so that you cannot get reimbursed for running the aggressive ads required to target and steal customers from your on-brand rival.
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The Result: Your co-op ads are non-competitive and cannot grow your market share. For example, one dealer who strictly followed co-op rules lost 391 sales to on-brand rivals in their own backyard.
The True Cost: You Are Paying for Vanilla
The math reveals that co-op is not "free money"; it is a substantial opportunity cost that throttles your sales performance.
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The Power Loss Analogy: Your hard-earned ad dollars go in with high hopes, but a dramatic power loss occurs. Roughly 40% of the co-op fund is consumed by management fees.
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The Scoop of Vanilla: The remaining 60% of the budget is spent on bland, noncompetitive advertising that only benefits the manufacturer's goal of generic brand awareness. For a dealer who contributed $11,500, the actual matched ad spend received was only $2,300—a minimal return that can't possibly fix hundreds of lost sales.
The Unflappable Truth
Digital advertising is inexpensive and allows every dealer to act in their own best interest. To gain sales and share, you must make real changes:
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Stop the Bleeding: Reduce reliance on or eliminate co-op ad spends from your budget.
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Reallocate Smartly: Reallocate those dollars to where they will have the greatest impact: running non-certified, aggressive digital campaigns aimed at your rivals' customers.
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Own Your Backyard: You have to hold your competitors upside down and shake the lunch money out of their pockets. Use data to target in-market buyers, stop the pump-ins, and start the pump-outs.
Watch the Full Webinar
For a deeper dive into these topics and to hear directly from Rob Stoesser, Vice President of OEM, watch the full webinar below.