When Michael Dunlap graduated from The Ohio State University in 1958, he found himself with an all-too-common problem: he didn’t have a job. With his girlfriend — now his wife — still in school, Dunlap’s first instinct was to look around the university for an employment opportunity.
The university’s new president was dealing with his own dilemma, and Dunlap thought it might be his ticket to employment. The university had just built a new cultural arts facility, Mershon Auditorium, with money donated by Col. Ralph Mershon. The problem was that the money ran out before the building could be equipped with seating, draperies, lights and speakers.
“I was too stupid to know I couldn’t go across the country and ask big companies to donate,” Dunlap remembers. The young opportunist raised $3 million in corporate donations to fill the auditorium by selling nameplates on seats and drapes.
The 22-year-old’s success in that venture shaped the way he views business. After directing the launch of five successful start-ups, and a full-time career as chief development officer for Diebold Inc., Dunlap is still knocking on the doors of large companies.
The strategy he stumbled onto now has a name: sponsorship marketing, or co-op marketing.
Two years ago, Dunlap founded a company, Petshealth Insurance, which — as its name suggests — provides insurance policies for pets.
Dunlap prepared for the launch by conducting demographic studies that pinpointed five major target audiences:
- young professionals;
- childless couples;
- families;
- empty nesters; and
- those between 72 and 85.
He knows each group’s buying power and what percentage owns pets — what kind and how many.
For Dunlap, the next step was second nature. He identified the groups he needed to speak to, picked up the phone and called them.
“You’re going to get a lot of rejections, “ he warns. “For every one hit, you’re going to get 99 rejections.”
In the beginning, Dunlap went to his most logical ally, veterinarians. He was quick to get their approval and endorsement, but found it wasn’t enough. His acquisition cost per policy was still too high. That’s when he decided to look for sponsorship opportunities with larger corporations.
By attending trade shows and calling people, Dunlap started drumming up interest.
“I probably have 30 years of networking contacts,” he says. “They all came because I knew people who could open doors.”
From his Ohio State experience, Dunlap learned to go to the presidents of companies.
“If I don’t know him, I know somebody who knows someone to get me in,” he says.
He shows up with charts and graphs and summary information on how both sides can benefit. Petshealth now has partnerships with AAA, Chase Manhattan Bank, Iams Company and the ASPCA.
“We get to ride the coattails of the industry,” Dunlap says. “It allows us to come in as endorsed by AAA, and that means a lot to their members,” Dunlap says. “They can trust the new kid on the block.”
In the case of the ASPCA, Petshealth gets access to 260,000 pet owners or ASPCA supporters. With AAA, Petshealth gets thousands of people who know the value of preventive plans, such as a AAA membership. With Iams, it’s a 100 percent hit for his target market.
And what does the other side get? The buzz words are “value added service.”
With the ASPCA, Dunlap’s company offers members a free short-term accident policy. In exchange, when new clients are sent letters asking if they would like to pay and stay with the policy, there is a section they may check to donate $2 to the ASPCA.
With Iams, it’s a similar arrangement. Petshealth offers the free policy and Iams customers get the added value of a health insurance policy for their pets if they respond. Dunlap is betting that purchasers of high quality pet foods are the people who would be willing to pay for health insurance for their pets.
John Maggiore, executive vice president of the advertising and public relations firm Innis Maggiore Group, says these co-op arrangements follow a traditional model.
“One company offers a financial incentive to another for including them in their advertising,” he says. “Your local heating and cooling company probably takes advantage of their air conditioning manufacturer’s co-op advertising fund by featuring their product or logo in an advertisement.”
In the early ’90s, co-op advertising began morphing into co-op marketing. Maggiore says, “There’s a whole shift in the point of view that has kind of arisen from looking at target audiences more closely.”
Businesses have gone from co-op advertising, based strictly on financial incentive, to co-op marketing, based on co-operative partnering, target audience similarities and mutual gain.
Maggiore says the principle can be applied in various ways. You see Taco Bells in gas stations and ATMs in bars. Blockbuster video distributes promotional snack packs in conjunction with candy, soft drink and popcorn manufacturers.
The possibilities are endless and business people need to keep their eyes open, Maggiore says.
“The reason co-op arrangements have evolved so quickly is because people have begun to understand the synergies gained by integrating their marketing efforts with other marketers who share the same target audience,” he says. “It’s really finding ways to put your arms around the customer with other things that appeal to them.”
With the databases and demographic studies available via the Internet, it’s much easier now to find out exactly what other interests your customers have.
“You want to find all the ways you can to build relationships with your customers,” Dunlap says. “You want to thread and weave relationships and any way you can be a better service, or a value added service, will help.
“It’s all about networking and being aware of what’s going on in the world.”
Maggiore points out that Dunlap makes it sound too easy. That’s why advertising firms exist.
“In this case, he is more sophisticated,” Maggiore says of Dunlap. “He’s really understanding of all the avenues that his potential customers might come upon. What he’s done is he has identified some commonalties and he has gone out and talked to these businesses.”
Maggiore suggests a few simple steps for small businesses which want to reap the rewards of co-oping.
- Identify the lifestyle type of your customers.
- Identify other products and services that customer type uses.
- Identify manufacturers and providers of those products and services.
- Start talking to those people.
“It’s creating alliances by talking to people,” Maggiore says. “Who you talk with will help you determine the things you have in common with your product and the customer type.”