Looking Fit 03/2004: o-Op Advertising Benefits Salons, Manufacturers

WORKING TOGETHER
Co-Op Advertising Benefits Salons, Manufacturers

by Matt Morgan

Salon owners want to get as much bang as possible for their business buck. Understanding their plight, many product manufacturers essentially offer salons free money. This is not fantasy. Cooperative advertising is a real-life dollar-stretching program at the disposal of every tanning salon. It puts money right in the cash box or products on the shelves—all for merely advertising, something smart salon owners do anyway.

The practice of co-op advertising in the U.S. indoor tanning industry began in the late 1990s, when manufacturers of leading lotion brands developed a way to get salons to promote products as well as their salons.

Here’s how the co-op system works: A salon owner qualifies for a manufacturer rebate first by buying that manufacturer’s products, then by promoting only those products in an advertisement. After filling out the necessary paperwork, the salon owner will be reimbursed in money or products by the manufacturer based on a percentage of the cost of advertising.

“Let’s say you carry XYZ brand in your business,” says Kimberly Stanséll, author of Bootstrapper’s Success Secrets: 151 Tactics for Building Your Business on a Shoestring Budget. “You can become a registered dealer of XYZ company, and when you feature them in your ad, you get cash rebates or credits to your account toward more product purchases. Co-op opportunities are available in every medium, from Yellow Pages listings to print ads to radio and TV spots.”

Manufacturers often require a minimum amount of products to be purchased for eligibility in their co-op programs, and some require a minimum amount be spent on advertising. But this is not asking much of salons that purchase those product brands and advertise anyway. Additionally, some companies have programs that reward more to salons that carry more of its products.

“The fact is that almost all salon professionals advertise in some way,” says Christine Dixon, director of customer relations for Designer Skin. “It is highly beneficial for them to use a program like ours to help cushion the huge costs of advertising.”

Why would the manufacturers do this? Simply put, they measure their success by the success of the salons. If lotion companies, for instance, can somehow make salons more profitable by encouraging them to advertise, then everyone wins.

“Co-op advertising works because it helps a salon by promoting a reputable brand name in conjunction with the salon,” says Sheila Bender, assistant product manager for California Tan, Inc.

“A well-known and trusted lotion manufacturer can help bring credibility to a salon. Customers recognize the California Tan name and identify that name with high-quality, premium tanning products. This co-branding between the salon and lotion manufacturer can help a salon attract and maintain customers who are looking for a salon with those same qualities.”

For example, any salon owner who purchases a minimum of $250 in products from California Tan, Inc. brands— California Tan®, Matahari®, Zoë Girl™ and Emerald Bay®—between July 1, 2003 and June 30, 2004 are eligible for co-op dollars. The invoices and qualifying forms should be faxed to the company, and co-op money is set aside.

“When salon owners are ready to receive reimbursement, they need to send us their media invoices and a Co-op Advertising Claim Form by Aug. 15, 2004, and we’ll reimburse them for the portion of the ad devoted to any of the Cal Tan, Inc. brands,” Bender explains.

The Benefits

Most indoor tanning co-op programs are offered by the industry powerhouses that have the money to give back to salons. “It’s generally the marketing leaders,” says John Keiffner, executive director of business development for ETS, Inc. “They’re the ones that can afford it. It becomes an expensive proposition.”

The benefits to salon owners and manufacturers are worth the expense. “Salon owners get the shared participation by a recognizable entity in the indoor tanning industry that helps them achieve their objectives of advertising,” he says. “And it gives manufacturers further brand identification in the marketplace.”

ETS, Inc. rewards salons in hard cash rather than product. It also matches 100 percent, where 50 percent is the norm, Keiffner says.

“Let’s say a salon buys $10,000 worth of Australian Gold and Swedish Beauty products, and it is part of our Premier Salon Partnership Program,” he says. “We would pay a total of 19 percent of that $10,000—which would be $1,900—and the salon would have to submit $1,900 worth of advertising. As you can see, the salon has earned a total of $1,900, and if it submits $1,900 worth of advertising, we’re paying 100 percent.”

Manufacturers are not picky about where salons advertise. “We encourage them to use their normal media—if they’re using fliers, use fliers; if it’s postcards, postcards; if it’s radio, tag us in the radio ads,” Keiffner says. “We don’t try to tell the salon how to advertise, we just provide the money for them to use their normal vehicle that they have used to be successful in the industry.”

Companies also offer various support programs to help salons design the most effective ad.

“We offer ideas to people in regard to how to buy media and what media works,” he continues. “We would try to tailor a program for them depending upon the depth of the market that they’re trying to attack.”

Designer Skin has a program that reimburses air time exposure up to 50 percent in product co-op. The company works with salons to develop a customized TV commercial that directly targets their desired core demographics.

John Abaté International has teamed with Valpak to produce a booklet of guidelines that includes scores of templates salons can use in their mailer ads.

“We have streamlined the process by providing templates that make it easier for tanning salon owners to know what the essential elements are that must be included in any ad submitted for cooperative advertising reimbursement,” says Richard Rubin, JA’s director of public relations and business development.

Ads eligible for JA co-op reimbursement must contain six elements: 1) the JA logo; 2) the words “we proudly carry” above the logo and “finest tanning products and skincare” below; 3) words to describe JA’s all-natural ingredients and their benefits to skin; 4) current photographs of the products being advertised; 5) photographs of JA’s spokesmodels; and 6) a value-added offer from the salon, such as a free service with the purchase of a JA product.

Salons must have their ad preapproved through JA, provide proof that the ad was paid for, and submit a record of purchase of JA products. Instead of offering cash back, JA rewards salons with up to 50 percent of their advertising dollars in product at retail value; JA-exclusive salons can receive product worth up to 100 percent.

“There really is a great deal of room for creativity as long as the ad definitely sells our products as well as the services of the tanning salon,” Rubin says. “The idea behind co-op is not just to supply salons with products that they can sell in lieu of purchasing product, but to provide them with product that they can sell or give out as samples to encourage people to buy full-size product.”

Manufacturers can turn around rebates and reimbursement quickly. Designer Skin, which began its program this year, boasts a two-week redemption rate. ETS aims to return claims in 30 to 45 days after proof of advertising and invoices of product purchases are submitted.

Knowledge Is Key

There are hardly any negative aspects to co-op advertising; however, there are several issues to consider. First and foremost, salon owners need to educate themselves on the process, because it can be intimidating.

The best advice is to talk to manufacturers and distributors of co-opeligible products. Manufacturers should be willing to guide salon owners through the process and answer looming questions such as what can and can’t be advertised.

“There is exclusivity in the ad but not at the store level,” Keiffner says. “In other words, the salon can carry many brands, but to qualify for our co-op program, they only can advertise our brands. We would not allow them to advertise a competitive brand and pay for any of that.”

Co-op advertising, once a foreign concept to indoor tanning, is gaining acceptability as more salon owners become knowledgeable about its benefits. ETS, one of the first manufacturers to offer co-op money to salons seven years ago, has as many as 5,000 salons participating in its co-op programs today.

“There’s really no reason not to participate, unless the salon just doesn’t advertise or doesn’t carry our products,” Keiffner says. “It’s just like free money. It’s a win-win situation for both the salon and the manufacturer. We both are trying to develop new customers and to take advantage of the prime time of the year to grab more than our share of the height of the tanning season, and this is a way to help you do that.”