Beginning with vehicles purchased in April, the automaker's new Tier 3 cooperative advertising program gives Ford, Lincoln and Mercury dealerships an extra half of a percentage point of each vehicle's wholesale price.
The new co-op money will be available for dealerships to spend beginning in May, a Ford spokes-man said.
Dealers requested the subsidy, and Ford executives agreed after noticing that dealerships had cut back local advertising sharply.
"So many dealers just weren't in the paper. They weren't doing basic radio advertising. They just weren't promoting their dealerships," said Jim Farley, Ford group vice president of marketing and communications. "I was very concerned about the dealers' overall spend."
The cutbacks came as Ford's sales and market share dropped in recent years, hurting dealership profitability.
Some dealers told Ford executives they couldn't afford to maintain local advertising budgets when, in some cases, it was tough to make payroll, Farley said.
Vinje Dahl, a fourth-generation Ford dealer in Davenport, Iowa, welcomed the new program. Dahl has trimmed newspaper advertising and diverted that money to other marketing efforts.
"It's a good thing," Dahl said of the co-op program. "It's Ford's money — they've kind of realized what works in Davenport, Iowa, isn't quite the same as the Castro district in San Francisco."
As a condition of receiving the extra money, dealerships must spend it on advertising that complies with Ford's standards. Those standards are meant primarily to prevent distressed messages that could damage the Ford brand, a Ford official said.
Ford executives want to see the money used to help move its vehicles higher on customers' shopping lists. That's the major objective of the automaker's new "Drive One" advertising campaign that launched this month.
Local advertising can be effective at improving favorable vehicle opinion, particularly in small towns and smaller metropolitan markets, Farley said. That will be enhanced if dealers use the money to highlight new or improved cars and crossovers not typically associated with the brand.
"Many of our dealers have been in business for 75 or 50 years — everyone knows where the local Ford dealership is," Farley said. "But everyone doesn't know in your local community that Ford is now selling an Edge."
Ford isn't disclosing how much the new co-op program will cost. But a spokesman said that all regional and local advertising make up two-thirds of the $1.5 billion spent annually on Ford brand products.
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