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For Retailers Sitting On Q4 Co-Op Budgets, Time Is Running Out

Promoboxx wants to be considered the ‘un-co-op’ marketing platform, as it looks to smooth the path between national brands and local retailers’ ad programs.

Promoboxx's Ben Carcio
Promoboxx’s Ben Carcio

With stats about Cyber Monday and Black Friday battling it out to “prove” whether digital or physical retail channels dominate — a false dichotomy if there ever was one — national-to-local automated ad platform Promoboxx has been making the case that the brick-and-mortar store’s role is ultimately central to brands across all verticals.

Although the company sounds like a standard co-op marketing manager, where national manufacturers and brands disperse ad dollars to local shops to promote their wares, Promoboxx CEO Ben Carcio has been working to position the company as something patently different.

And as the holiday season shifts into full gear this week, he has a warning for local shops still deciding how to allocate the national brands’ in-store marketing dollars: You may be too late to be fully effective.

“Q4 is an incredibly important time for all our verticals,” Carcio says. “But if you look at what tends to happen in the co-op marketplace, it’s a bit different. Retailers in a co-op program essentially get an ‘allowance.’ And in many programs, if the retailer doesn’t spend that allowance, it goes away. Sometimes you get a sense of panic at the retail level, where there is an urgent rush to spend that co-op budget.”

That’s not good for anyone, Carcio says, because retailers are likely to make poor decisions about precisely where and when to spend that money. “Instead of the mad dash, it’s better to be more proactive, and strategic far in advance of the holiday shopping season as opposed to a last minute burst,” he advises.

Separately, Carcio is adamant in his focus on brick-and-mortar and digital channels working seamlessly together, as opposed to competing in an internecine war that dilutes all marketing efforts.

“Independent retailers in brick and mortar stores still matter, despite the surge in online holiday shopping this year,” Carcio says, pointing to recent NFIB and American Express data indicating that American consumers spent an estimated $16.2 billion on last week’s Amex-sponsored Small Business Saturday. That’s a 14 percent jump from 2014 and a record-breaker since the program began in 2010.

More than 95 million consumers shopped at small businesses on Small Business Saturday this year, spurred by more than 4,100 “Neighborhood Champions”— as the participating supporters are called — for an increase of 48 percent over last year.

In the month of November alone, there were 85 million social media engagements in pointing shoppers to Small Business Saturday.

“Small Business Saturday gives all independent retailers something to rally around, and when these retailers unify together, they are larger and more powerful than any big box,” Carcio says.

As for Promoboxx, in addition to managing holiday season initiatives for clients such as GE Appliances, Nissan, Timberland, Trek, Reebok, and other global and national brands, the company has doubled down on the categories it currently represents, particularly auto, while expanding into new ones, including jewelry and beauty supplies.

GeoMarketing: As a specialist in marketing support to independent retailers, what’s Promoboxx’s appeal to major brands?

Ben Carcio: If you’re a physical business, the best thing you can do for your marketing program is turn back to the brands you serve and ask them to help you. A lot of time, businesses are on their own when it comes to populating their Facebook pages or Twitter channel, their website. In a lot of cases, it’s like building a radio station: You’ve got the broadcast tools, but then you have to ask, “What do I broadcast?”

Our premise is that the brands have great content, great marketing, great promotions. Since these are products both physical retailers and the brands themselves have a mutual interest in promoting, the idea is to collaborate on creating an original marketing message and to make sure it reaches the widest, but most desirable, audience.

How do you get the brands involved?

These are global or national brands, they don’t have a direct presence on the local level, in most cases. And as mobile has become more mainstream, the act of looking for content and where to buy things on the web has gotten more local as well. As more brands and retailers focus on that mobile screen, the need for the message to be more localized becomes more important for the brands as well as the physical businesses in a particular area.

Where do Promoboxx’s services come into play in this context?

In the past, brands have supported those functions through displays, point-of-sale purchase materials. But they need to do things in an entirely new fashion. And that’s what our platform supports: We updated the old process of brands offering neon signs for a store window, except we do it for digital marketing.

We’re in auto, appliances, home improvement, farm supply, consumer packaged goods. All the brands in those categories share the same fundamental need for managing the global or national marketing message on down to the physical store.

We work exclusively with the brands on tools that allow them to customize their message in an omnichannel program across Facebook, email, and other channels, for one thing, because the retailers tend not to have a lot of time to work with each individual marketer. In most cases, it’s a five-minute process to create a fully executed campaign using our platform.

In essence, you’re helping brands craft a co-op strategy. A lot of brands say that process is broken, in large part because knowledge and relationships at the local level are hard to manage. How does Promoboxx see that problem?

Co-op programs emerged as a solution to a big problem; namely, that it was hard to verify if a national campaign was working at the local level. If you’re buying traditional Yellow Pages or billboard advertising, the idea was to put all the work on the local retailer. The local business had to submit something that resembled an expense report for promotional work they did on behalf of the brand.

As a lot of manufacturing brands tried to add digital to that same process, it didn’t work very well. As I explained in a blog post last year, co-op advertising is “walking dead.”

For retailers, the co-op advertising system is too time consuming, reduces cash flow, and often goes unspent. For brands, the co-op advertising system negatively impacts marketing budgets, reduces profit margins, inhibits retailers’ ability to buy more products, and hurts sales relationships with retailers.

Our approach is not to partner with co-op programs; instead, we argue that you don’t need a co-op platform for digital marketing.

How is Promoboxx’s approach “non-co-op?”

Instead of a major brand giving retailers an allowance and then asking those merchants to submit proof of their work, they put that money into our platform and make it available to retailers who want to use it. By plugging into our platform, retailers can use the program in a way that makes sense for their customers, and ultimately create a stronger connection with the brand’s overall marketing message. The end result is a professionally crafted campaign at the national level that is then localized by the individual retailers.

Promoboxx works with a lot of auto dealerships. Is there any difference in the way the company operates in the auto space versus other categories?

It’s all pretty much the same treatment. We treat the appliance makers the same way we treat the local Nissan or Chevrolet dealer. One difference that you sometimes see is that auto suppliers are often gauging the auto dealers because the latter can afford to spend hundreds of thousands of dollars on marketing. The auto dealer is seen as a golden goose. A lot of times, dealers are spending 30-40 percent of ad budgets on these extra costs associated with the different vendors they work with.

We have something called the Transparent Fee Model, which no one in auto has. Under that program, we say we’ll take 10 percent of any dollar that you or the brand contributes as a fee for using our platform. As a result of this transparency, the dealer is going to get a better understanding of how their marketing dollars are being used and how well it’s performing. In most cases, dealers have to choose between different tiers of packages. A basic package might cost $500, the next one after that $1,000 and up. In those cases, the fees aren’t disclosed, so they don’t know how much is going for software costs, ad management, and how much is paying for the actually going to the ads.

How does the use of location factor into the marketing programs Promoboxx offers?

Retailers have invested most of their funds in promoting their location and what it means in terms of the demographics they attract to discovery to targeting. And compared to those other marketing concepts, retailers naturally understand the value of location the best.

Location is the connecting principle between the brand and the local retailer. At the end of a campaign, we allow the retailer to list their locations on a map. We provide them with virtual pins that they can move depending on where they want to buy ads. For example, they may want to buy ads closer to a competitor or they might want to reach consumers one town over. It’s not anything complicated, but it works.