The Unused $25 Billion budget
Every year, companies globally allocate roughly $50 billion of investments each year to Co-op and marketing development funds (MDF). Only $15 billion of that funding, however, is used by the year’s end, and 50% of it is never used.
Even when companies do invest their co-op and MDF, they often limit them to expensive and outdated forms of media. A recent study by Brandmuscle found that the average local affiliate spends 64% of its co-op funds on radio, newspaper, and direct mail ads — but only spend 16% on digital advertising.
The disparity is particularly pronounced with certain forms of publicity. Affiliates invest virtually none of their co-op funds on Facebook marketing, despite the fact that 84% of them use Facebook; likewise, while a majority of companies engage in content marketing, they invest only 1% of co-op marketing funds in it.
Companies frequently fail to use this money because of several reasons:
Limited opportunities. Retailers often lack the time to research and find good uses for these funds. Even when they do have time, they do not have the expertise or experience to identify good investments.
Red tape. Many companies have difficult and confusing protocols in place for distributing co-op and investment funds for specific projects. This makes partners who would be able to use that money reticent about applying for it, if they are even aware it is available in the first place.
Voice and branding issues. Many companies do not have much of a brand name or retailer voice in place; meaning, they must devote a large portion of their marketing resources to establishing them. Partners are often unwilling to venture their co-op money on such projects, fearing that they will lose it if they don’t succeed.