Question
What are some recent industry trends in Trade-Funds, specifically, co-marketing?
Answer
I should qualify my answer by saying that I've never heard the term "Trade Funds" and know nothing about the operating details of this sort of marketing arrangement with channel partners. I am basing this answer off the question details, and answering because I am going through a credits-and-upvotes grubbing phase.
Anyway, yes, the naive expectation would be that brands should be getting better at marketing directly to consumers. After all, targeting analytics are improving all the time, and some industries are already seeing restructuring due to erosion of power for bigger channels. Food service is an example. I suspect if someone digs into the numbers, we'd find that Yelp and Groupon are helping small retail brands take away some of the market from the big chains.
I think the difference in retail for most products is that the volume power and the deep POS analytics (which is also improving) still makes players like Walmart far more powerful. If you have Walmart distribution, a small change in shelving and a little POS discount scheme is likely to do more for your sales than all the Twitter marketing and mining you could do on your own. It is a case of relatively higher sensitivity of earnings to internal variables defining a large-volume channel than to external variables defining direct marketing impact.
I suspect this is the sort of reasoning that leads to companies like Colgate Palmolive acquiring long-tail brands like Tom's of Maine. The volume and channel-level leverage beats all the social media and direct marketing you can do. Especially in a category like toothpaste where there is only so much room for premium pricing. Once you've made the toothpaste as expensive as toothpaste can get, you can only grow by increasing (product velocity X margins).
This will change, but not by much, and mostly in the premium sector. Volume aggregation for relatively inelastically priced near-commodities with a fairly narrow no-name-to-premium range is still the key to the game. No amount of long-tail direct marketing will beat that equation. At best, you'll end up giving your Trade Fund dollars to Amazon instead of Walmart.
Anyway, yes, the naive expectation would be that brands should be getting better at marketing directly to consumers. After all, targeting analytics are improving all the time, and some industries are already seeing restructuring due to erosion of power for bigger channels. Food service is an example. I suspect if someone digs into the numbers, we'd find that Yelp and Groupon are helping small retail brands take away some of the market from the big chains.
I think the difference in retail for most products is that the volume power and the deep POS analytics (which is also improving) still makes players like Walmart far more powerful. If you have Walmart distribution, a small change in shelving and a little POS discount scheme is likely to do more for your sales than all the Twitter marketing and mining you could do on your own. It is a case of relatively higher sensitivity of earnings to internal variables defining a large-volume channel than to external variables defining direct marketing impact.
I suspect this is the sort of reasoning that leads to companies like Colgate Palmolive acquiring long-tail brands like Tom's of Maine. The volume and channel-level leverage beats all the social media and direct marketing you can do. Especially in a category like toothpaste where there is only so much room for premium pricing. Once you've made the toothpaste as expensive as toothpaste can get, you can only grow by increasing (product velocity X margins).
This will change, but not by much, and mostly in the premium sector. Volume aggregation for relatively inelastically priced near-commodities with a fairly narrow no-name-to-premium range is still the key to the game. No amount of long-tail direct marketing will beat that equation. At best, you'll end up giving your Trade Fund dollars to Amazon instead of Walmart.