August 14, 2017

Full Use of MDF: How to Make the Most of Joint Marketing Funds

August 14, 2017

Full Use of MDF: How to Make the Most of Joint Marketing Funds

Technology, Marketing Strategy, Digital

Every cent your company leaves on the table is a missed opportunity, allowing your competitors to gain resources and customers that could have been yours. If you work with a vendor or manufacturer, there is a good change that you are not using potential marketing funds that are available to you.

Co-op and marketing development funds (MDF) together account for roughly $50 billion of investments each year. 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Even when companies do invest their co-op and MDF, they often limit them to expensive and outdated forms of media.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.


Want to get the most out of your MDF? Find out how we can deliver real ROI for  vendors and channel partners. Contact us today.


Though similar in their tendency to be underused, co-op and marketing development funds serve distinct goals. Marketing development funds, or MDF, are investment money, which you give to partners to use specifically for publicity activities. Co-op marketing funds are incentives, paid to partners who have successfully achieved their sales or growth objectives.

These distinct purposes explain why co-op and marketing funds are organised so differently. Marketing development programs usually track clicks, opens, and other conversions to make sure their funding is going to good use, while co-op funds are placed in partners’ bank accounts to be used without restrictions.

Companies frequently fail to use this money because of several reasons:

  1. 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.
  2. 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.
  3. 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.


How to Optimise MDF and Co-Op Funds

Given the lack of existing funding for digital marketing, companies should use excess marketing development and co-op funds to expand their web and social media presence. To do this effectively, they must: 

  1. Balance education and business. Successful digital marketing involves striking a balance between competing with other companies and educating potential customers about how your product or services can improve their lives. Consumers should see your brand as superior not because you directly tell them so, but rather because they have learned valuable information from you and, thus, trust you. You should devote your co-op and marketing development funds to creating blog posts, ebooks, instructional videos, and other informative pieces of content.
  2. Curate content. In addition to creating new content, you can also repurpose existing content related to your brand, so long as you put a unique spin on it. Known as content curation, this method offers a high return for relatively little spending or effort, allowing you to boost publicity quickly without using up too much of your MDF and co-op funds at once.
  3. Leverage local knowledge. The most effective content is hyperlocal, appealing specifically to the people who live where your product or services are available. The more you can understand and cater to your target market, the greater an advantage you will have over more distant competitors. You should thus devote some of your co-op and development funds to researching the local populace and learning how to appeal to them.
  4. Analyse and adapt. The need for information doesn’t stop with understanding local consumers. Once your marketing campaign gets going, you must be able to measure its successes and failures, or you will not be able to make improvements. You should therefore invest in the most advanced tracking and analytics technologies, as well as in the personnel to interpret the data that you gather. The focus on analytics should extend throughout your marketing department. Content marketers, for example, should include calls to action in their writings that link to tracked web pages and phone numbers.
  5. Streamline and simplify. Your IT reseller team may have trouble transitioning to a new focus on marketing. To make it easier for them, invest some of your co-op or MDF dollars in automation, subscription-based marketing strategies, and other efforts that reduce the amount of work resellers have to do.
  6. Pursue pilot programs. Instead of transitioning all at once, create pilot programs in which leading resellers and marketers try out new marketing strategies. Use reimbursements to guide your staff toward underdeveloped, high-potential activities, but leave them free to decide the specifics for themselves. When a pilot group succeeds, reward its members and apply its practices to your company as a whole.

Making the most of your marketing funds isn’t easy, but Step Change is committed to supporting you throughout the process. As an Australian channel marketing expert, we pay attention to all new opportunities for publicity and help our clients take full advantage of them. For more information on co-op funds, MDF, and digital marketing, visit our website today.



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