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What Are Marketing Development Funds (MDF) & How to Use Them

October 13, 2022
What Are Marketing Development Funds (MDF) & How to Use Them

Companies operating across multiple channels often have various initiatives they must manage at any given time. Sales and marketing programs involving agents, dealerships, and distribution partners must have access to the necessary resources to succeed. 

Businesses can use marketing development funds (MDFs) to ensure their teams have the money and knowledge to succeed in their tasks.

Working with third-party vendors is a convenient way for businesses to take their products and services to market. However, this approach comes with some challenges for businesses that operate across more than one industry. 

No matter how large your business is, MDF marketing will give you long-term resilience across all your marketing channels. With MDFs, you can support all of your initiatives without sacrificing quality.

Other channel marketing incentives lack MDFs’ flexibility to ensure teams can get the resources they need, no matter the situation.

Where Are MDFs Used?

MDF funding is used in a top-down fashion, with the larger distributors providing resources to their affiliates across marketing channels. Funds are distributed to partners across the ecosystem so that they can make better use of the entire supply chain. 

With a distributed marketing strategy in place, businesses can create incentives for their partners to follow when engaging in campaigns.

Making money and other resources available to all partners ensures sales and marketing initiatives will be carried out as efficiently as possible. Advertising, promotions, and other forms of media outreach can be buoyed by discretionary spending and assistance from marketing partners.

Steps to Maximize Returns from MDF Programs

MDF programs are designed to maximize returns for marketing campaigns. With this in mind, it’s essential to determine which vendors should be targeted and how available resources can best support them. 

Looking at each organization, its goals, and its capabilities for achieving them will ensure they’re set up to succeed.

Consider Whether MDFs Are Right for Your Organization

No two companies operate exactly the same. What works for one company won’t necessarily work for yours. Before deploying an MDF program within your organization, consider whether it will work with your existing channel partners and their long-term expectations for growth.

Design Your MDF Program

When deploying an MDF marketing program, business leaders should be aware of the specific capabilities of their organization and what they need to do to reinforce those strengths through resource allocation. 

This process can be quite intensive and can involve:

  • Co-branded items
  • Pictures and videos of events
  • Pre-deployment sign-off
  • Lots of paperwork

An MDF program is a powerful solution for companies operating across multiple channels, meaning all stakeholders should be involved in the process. MDF providers have to consider their partner’s needs when designing their MDF program to ensure maximum impact. With Marcom, partners can get preapproved for their brands before funds are even distributed.

Make Use of Technology 

MDF programs can be complicated, and many businesses aren’t equipped for simplified deployments. Having automated channel marketing tools and software can dramatically improve the capabilities of people within the organization. 

Software like MarcomCentral provide a flexible ecosystem for real-time distribution of brand assets.

Measure and Track Performance 

Understanding how well a brand strategy works is vital for making adjustments before resources are wasted. A clear picture of performance metrics allows decision-makers to maximize their returns while reducing wasteful practices within their projects.

Feedback System with Partners

Company leaders shouldn’t assume they know what’s best when working alongside partners. Communication systems will allow leaders to effectively allocate MDF funds where needed. By getting feedback from partners, decision-makers can have better control over the success of their brands.

Distributing MDFs to Partners

A clear picture of the entire marketing ecosystem is necessary when distributing MDFs to partners. Companies can collaborate on mutually beneficial projects by building a relationship with decision-makers across the industry. This approach will increase the likelihood of receiving MDFs for marketing products and services. For affiliates, the process of accessing MDFs requires outreach to partner channel management. 

When distributing MDFs to partners, companies must:

  • Create the funding structure
  • Set marketing goals
  • Determine a budget
  • Establish an approval process
  • Assess results and make improvements

Communication is the most important part of getting MDFs to and from partners across all channels. This work involves figuring out which new prospects are the most advantageous for future growth and developing a strategy for allocating assets. It’s essential to keep vendors updated on the progress of all campaigns so they have clarity over which projects they want to continue investing in.

The Importance of Brand Compliance 

Marketing across multiple channels makes it more difficult for companies to deliver consistent messaging and ensure the quality of their products and services. 

This reality means that ensuring systems are in place for brand compliance is important. MDF funds give business leaders a way to enforce their brand vision while providing valuable support and resources to their partners.

Brand compliance ensures all elements associated with marketing campaigns strictly adhere to stated guidelines and expectations.

Challenges to Consider 

Although the use of MDFs provides many benefits, it can be challenging for some companies to implement these funds within their marketing ecosystems. Successful adoption requires consideration of how much to allocate and to which partner. 

Improving the reporting process and developing better strategies over time requires a dedication to good strategic marketing. Businesses should provide training and a knowledge base so their partners have all they need to meet expectations.

MDF vs. Co-op Marketing

For many companies, allocating funds to partners is based on their desire to see those partners succeed. However, co-op marketing funds are often performance-based. This setup means that only a percentage of achieved revenues will be allocated. 

Although the difference seems subtle, co-op marketing results in a fundamentally different set of expectations for channel partners and affiliates. MDF funding is much more flexible in this regard.