Friday, March 17, 2006

Doing My Homework # 6: Product Placement and Co-op Marketing

On the “Are You Pondering What I’m Pondering, Pinky?” thread Christine Fletcher asked:

Can you please explain how "co-op" works, where publishers get to place books in more visible or prominent areas of the store?

I don’t have a lot of familiarity with this whole process simply because the publisher never calls me and says, “Hey Bookseller Chick, we want you to put our friend here in a prominent place in your store. What do we have to do to make that happen?”

This is probably because they know that the “what” would involve publishing my destined to be a bestselling novel, Death by a Thousand Paper Cuts, a thrilling psychological tale written in iambic pentameter…and pig-latin.

No, this is a deal they make with the company or distributor (Ingram, Consortium, etc), with the buyers specifically (I would guess), long before the book ever shows up in my store, and therefore dooming DBATPC to the great slush pile in the sky. So left to the use of my own skills, I asked a few people and did some internet research.

Peter Spellman of Music Business Solutions offers up this explanation (albeit from the music perspective):

Co-op advertising is a method by which a label can effectively pay for media space with product, preserving cash flow and maximizing the use of excess inventory. For example if you want to run an ad in a local newspaper advertising your new release and promote a local performance by your artist, the retailer will purchase the ad, deduct the cost of the media buy from its account with the distributor, then the distributor will deduct this amount from its account with the label. In return, the ad features your new release and the retailer is expected to make a significant "buy-in" of the product, give it favorable placement (end racks, etc.) and put the product on sale for a specified time period. This is a great way to get more media and retail exposure for your money. However, the distributors balance with the label should be significant enough to support this expenditure.

In more general terms, Steve Strauss says:

Co-op advertising is a cost-sharing arrangement between a manufacturer or supplier and a retailer whereby the manufacturer pays for a retailer's ad. Why? Because the retailer agrees to mention the manufacturer's product in the ad.

And this pretty much is the answer I got from the publishing folks who kindly answered when I asked, so let’s work with the generalities.

Warning: from this point on I’m just guessing. If anyone out there wants to speak up and confirm or deny (anonymously if necessary) please feel free).

Front of Store (FOS) placement is achieved (most easily) through the use of cardboard dumps that can be placed at the front entrance, beside tables and in windows. The customers attention will be captured by the display sign (hopefully, I’ve seen some wonderful ones) and the mass of the book (with possible inclusion of the backlist) in one place.

A more discrete—and tree friendly—alternative would be FOS placement due to the inclusion of the book in a sale. Bookseller A comes along to Publisher B and says, “Hey, I’m having a selected title buy four get the fifth book free sale. Do you want to be included?”

In this case I would assume (which may make an ass out of you and me, yes, I know) that the Publisher B would kick in some co-op dollars to help mitigate the cost of Bookseller A giving some books away for free. Since more than one publisher may be involved in this sale, the co-op costs would be spread between them.

Another way co-op dollars can be used is the way described in the music scenario. Bookseller A has a newsletter that they put out and Publisher B grants them image rights and dollars to include their new hot title. This newsletter may be print, and therefore a FOS freebie for customers as they come in (or leave), or it may be electronic.

FOS placement does not mean that a book will be a guaranteed success. Many factors—from book cover appeal to blurbs to hand selling to regional relevance to pre-sale buzz—play a part in making a book a hit, and it always uses an extra helping of luck.

I hope that this helps answer your question a little.


Quinny said...

Just started reading your blog and wanted to give you some more info on co-op (I am a publishers' rep who has just started selling to Borders), at least what I know from my short time with Borders (which chain are you with, by the way?).

If you know all of this, forgive me--as I said, I'm a new reader of your blog.

FOS is not the only paid placement -- there are also themed pylons, tables at the front of each section, endcaps within sections, and "top shelf" promos, in which the supposedly bestselling books are all faced out next to each other either on the top or the second from the top shelf in the section. And re FOS, there are different kinds of placement here as well. I don't have access to all of them b/c I work for a mid-sized publisher, but the ones I know about at Borders are the New PB table and 3-for-2 table.

Anyway, hope this is helpful and let me know if I can answer any questions. SQ

christine fletcher said...

I'd read about co-op in other places, but I never could figure out exactly what it was. I'm much clearer on the concept now -- thanks for doing all that research!

Qwin said...

I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.