What is Marketing Development Funds (MDF)?

Summary

Marketing development funds (MDF) are funds a vendor allocates to its channel partners, such as resellers, distributors, and system integrators, to run marketing activities that build demand for the vendor’s products. The vendor sets the rules, approves each activity, and reimburses spend against proof of performance. In return, it reaches local markets and client relationships its own campaigns could not cover alone.

Why do vendors offer marketing development funds?

Partners own local relationships and market knowledge, but they often lack the budget to promote a vendor’s products at scale. MDF closes that gap: it lets a vendor scale demand generation through its partner network without building every campaign directly.

Funding partner marketing gives the vendor five advantages:

1. Partner activation: Channel partners gain the budget to market the vendor’s solutions actively
2. Demand generation: Funded campaigns build pipeline in markets the vendor would not reach through direct effort alone
3. Brand consistency: Approval steps and guidelines keep partner-run activity aligned with the vendor’s messaging and standards
4. Partner loyalty: Investing in a partner’s marketing strengthens the vendor’s claim on that partner’s attention and sales effort
5. Accountable spend: Claim and reporting requirements tie each dollar to a specific activity and its results

How do marketing development funds work?

MDF runs on a request, approval, execution, and claim cycle between the vendor and each partner:

1. Allocate funds: The vendor sets an MDF budget and assigns amounts to partners based on tier, performance, or a proposed plan
2. Request approval: The partner submits a plan for a specific activity, including audience, tactics, timing, and expected outcomes
3. Execute the activity: The partner runs the approved campaign, such as an event, digital campaign, content piece, or advertising, following brand guidelines
4. Submit a claim: The partner provides proof of performance, such as invoices, creative samples, and results, to request reimbursement
5. Reimburse and measure: The vendor validates the claim, releases the agreed funds, and records the return generated

What activities are eligible for marketing development funds?

Eligibility depends on each vendor’s agreement, but most programs fund activities that create demand or awareness for the vendor’s products:

• Digital advertising: Paid search, paid social, and display campaigns promoting the vendor’s products
• Content creation: Co-branded whitepapers, case studies, landing pages, and other assets
• Events and webcasts: Sponsorships, trade shows, and partner-hosted sessions
• Email and telemarketing: Campaigns to the partner’s database carrying vendor messaging

Most programs exclude non-marketing costs, such as general overhead and internal salaries. Partners should confirm eligibility before committing spend, and every claim needs the required proof of performance.

What is the difference between MDF and co-op funds?

MDF and cooperative (co-op) funds are both vendor-provided marketing money, but they are earned and governed differently. MDF is discretionary and planned in advance, while co-op funds accrue as a percentage of the partner’s sales.

How do you measure the return on marketing development funds?

MDF performance can be measured across utilization, activity output, and revenue impact.

Key takeaways

• Marketing development funds (MDF) are funds a vendor allocates to channel partners to run approved marketing that builds demand for the vendor’s products
• MDF lets a vendor scale demand generation through partners that own local relationships but lack the budget to market at scale
• Programs run on a cycle of allocation, approval, execution, claim, and reimbursement, with proof of performance at each claim
• Eligible activities typically include digital advertising, co-branded content, events and webcasts, and email or telemarketing campaigns
• Measure MDF through utilization, activity output, and revenue impact, including partner-sourced pipeline and return on investment

Learn more about marketing development funds

Explore strategies for orchestrating demand across channels and partners:

• 5 Steps to Orchestrate Marketing Channels for Demand Generation
• The Definitive Guide to B2B Account Based Marketing
• 6 Ways to Revolutionize Your B2B Digital Experience