As competition in online retail becomes increasingly fierce, it is often considered wise to adopt strategies to mitigate or avoid direct competition. However, an interesting phenomenon has emerged on current e-commerce platforms: Some merchants are proactively providing advertising space for competitors within their online stores. This study, focusing on two competing online retailers, incorporates advertising commissions and heterogeneous consumer purchasing behavior to construct a game model between the retailers and their consumers. Based on this, the study explores their in-store advertising partnership strategies and advertising type selection and compares the equilibrium outcomes under three strategies: No advertising, price advertising, and persuasive advertising. The results show that choosing price or persuasive advertising becomes the optimal strategy for a retailer only when it has a cost advantage. Both types of advertising may lead to natural cooperation when commission rates are moderate, with price advertising generally achieving superior traffic-attracting effects. Within the natural cooperation region, the advertiser tends to favor price advertising in most cases; persuasive advertising can only become the optimal cooperative strategy when the cost differences between the two stores are small, coupled with a low commission and a high customer cross-channel switching cost. Numerical experiments further show that consumer switching cost negatively affects the profits of both retailers, while their impact on consumer surplus may vary in either direction. In addition, an increase in the proportion of cross-store searching consumers can potentially enhance the profits of both retailers simultaneously. This study can provide theoretical guidance and practical implications for retailers in selecting advertising cooperation strategies under competitive environments.