Thirty-one years ago
this month BarterNews introduced a monthly newsletter service
for the commercial barter industry � trade exchanges around the
world. Titled The Competitive Edge, the 4-page newsletter was
created and written for an exchange�s marketing efforts, and is
still being produced on a monthly basis.
Michael Ames, founder of
TradeAmericanCard says, �I jumped on the service the day it was
introduced, and have been using it ever since. It�s used as a
�leave-behind� for our salespeople, stacked on our weekly table-top
displays, distributed to our members, and e-mailed to our growing
list of prospects.�
For more information on
The Competitive Edge newsletter, you can call Bob Meyer at
949-831-0607 or e-mail him at
Is Your Trade Exchange Missing Out On
Valuable New Business?
your barter company�s listing on BarterNews.com isn�t current, you
are definitely missing out on new business. The web site
BarterNews.com receives heavy traffic � with over 150,000 page-views
every month. Entrepreneurs and corporate executives check the
thousands of articles, the weekly �Tuesday
Report,� and the �Contacts
Section� of our site. They use the latter to find barter
companies with which to do business.
your barter company�s listing up-to-date?
keep your listing current is very easy. See the links below to (A)
update any changes to your company�s listing, such as new location,
phone number, web site or other information, and (B) if your company
has not been listed.
Here�s how to get on board:
make changes to your listing
article was published in
December 12, 2012.)
Media executives call it
�the dark arts.� Some refer to it as a �dirty business.� And those
who wish to avoid its name altogether use the term �corporate
But it�s one of the
fastest-growing sectors of ad buying, with one player, Interpublic�s
Orion Trading, projecting 49% growth in 2012. It�s barter, an
age-old concept through which companies exchange misfit products and
distressed assets for goods � in this case, unsold media inventory.
A stigma remains around
those companies that engage in media barter, due to times when
corporate goods have ended up in less-than-desirable locations, or
when the quality of media suffered. But industry executives report
the practice is increasing and its reputation improving, thanks to a
lagging economy, new opportunities in digital media, and better
Since the economy tanked
in 2009, media agency networks have expanded barter capabilities and
initiated deals with traditional, and now digital, media owners. And
organizations with goods to barter have become more comfortable with
the practice, since they�re dealing with agency holding-companies.
That�s leading to big business, according to barter vets, who say
such deals account for nearly $8 billion in media spending.
Horizon is among the
agencies trying to capitalize on barter. The shop�s two-year old
barter division, Eden Road Trading, has doubled in billings over the
past year or so to almost $200 million � representing about 15
barter deals. While that�s small potatoes compared with the agency�s
$4 billion in billings from clients such as United Continental and
Geico, the home-grown unit means the agency doesn�t have to cede
control of a portion of a media budget or strategy to a barter
vendor that�s not necessarily in sync with the client�s existing
�We were managing deals
to outside barter companies, and they didn�t have the clients�
interests at heart,� said Horizon CEO Bill Koenigsberg. �They would
skip corners in terms of quality, scheduling, and also amortization
of credits. Our general margins are probably lower and that�s part
of our approach. We want [our clients] to burn-off credits faster.�
As holding companies
have gotten more involved in barter, �there is more scrutiny,�
admitted Kathy Kladopoulos, president of the Midas Exchange, a unit
formed in 2010 as part of WPP�s GroupM. �And that lends legitimacy
to the space. The media is aware that this is a serious business
model that is not going away,� she said.
As with Horizon, the
GroupM fixture has doubled its client base in the past year alone.
�It was at the behest of our clients that we entered into this
business to begin with,� said Ms. Kladopoulos, who noted the group
has grown its roster to 28 clients.
What have recent barter
deals looked like? In one, Six Flags wanted to drive traffic to its
theme parks and asked Orion Trading to barter daily passes in
exchange for media discounts. Orion purchased thousands of passes at
full retail value and sold them through the internal website to the
IPG (parent of Orion Trading) friends-and-family network. Six Flags
saw around 4,000 new visitors and achieved 20% savings on its TV
buys (it also committed to purchasing a certain amount of media). It
plans to renew the program in 2013, the agency said.
In another example, Sony
Electronics didn�t want an existing product line to cannibalize
sales of a newer version of the line. Orion bought and sold the old
products to appropriate vendors, and Sony was able to use the media
value it got for them to boost its holiday campaign, including TV,
online and print buys. Orion claims the buys were three times the
fair-market value of the consumer electronics.
To build the kind of
relationships that allow the barter agency access to that discounted
inventory, agencies often invest in a media seller�s business, by
supplying capital assets, such as equipment. It�s a strange and
circuitous process � but one that more agencies, holding companies
and clients are employing.
Media sellers don�t want
the prices of discounted inventory floating around, which could
drive down the prices of regularly negotiated (or non-barter)
inventory. That�s why within a holding company, a barter division is
kept separate from a regular media-buying firm.
�We�re delivering on a
non-disclosed basis in order to protect the pricing of the media
owners,� Ms. Kladopoulos said.
And unlike in a typical
media/agency relationship, in which the media shop provides a
service and acts as an agent of its client, generating revenue from
commissions or fees, a barter agency often takes ownership of a
client�s asset and, in most cases, the media asset, making money on
�We don't ever want to
be in a position where the perception is that we�re double-dipping,�
Ms. Kladopoulos said.
Brooke Goldstein, senior
VP-ad sales at children�s cable network the Hub, acknowledged the
uptick in barter, explaining that a number of marketers that
participated in this year�s upfront negotiations also initiated
separate negotiations with barter companies just weeks later. �I was
shocked to see how many deals changed to barter agreements over the
past few months,� she said. �We still do more business with agencies
than barter [groups], but the growth has been very fast.�
Much of the growth and
perceived opportunity is from barter executives forging new
opportunities with digital-media companies. Independent barter shop
Active International notes that 60% of its deals have a digital
component. �We've seen exponential growth in clients� interest and
spending in the digital arena,� said Jim Por�arelli, chief strategy
officer. CEO-Chairman Alan Elkin added: �We trade with them the same
way we trade with traditional media.�
Barter executives are
devoting chunks of time to educating digital ad-sales executives
about the process.
�There are so many media
owners, which means more work on our part and more calls to make.
It�s also more of an educational process that has to happen,� said
Brian McMahon, president-CEO of IPG�s Orion Holdings (parent of
Orion Trading), which touts more than 20 new clients over the past
year. �There are many opportunities for us to have even better
margins than traditional media. We haven�t even gotten to the full
extent for mobile advertising.�
He added that digital
barter is growing even faster in Europe.
The growth and
opportunity is helping to rehabilitate barter�s reputation, which
had been tainted by deals gone wrong. �Back then it was remnant
inventory, not the best quality. You couldn�t buy network,� said Ms.
Goldstein, who worked at WPP�s MediaCom before joining the Hub.
Now, barter agreements
can nab coveted inventory. Active International executives, for
example, said they have bought Super Bowl spots via barter. Although
the recession likely played a role, the buys speak to the ongoing
emphasis on quality.
The general concern
among barter skeptics is about where the liquidated assets go � the
worst case being to controversial vendors or regions.
�There was quite a bit
of skepticism around the idea of barter within the company,� said
Dom Zino, group VP-corporate operations at Phillips- Van Heusen (PVH),
parent company of brands such as Calvin Klein and Tommy Hilfiger.
�We were initially concerned about not knowing where the assets
would end up, but in our agreement with Active International, we
were given final approval over who purchased the products, so that
concern was eliminated.�
PVH began working with
the barter group in 1997, when the company had excess shoe
inventory. �Initially, we traded for non-media items like shoe boxes
and signage,� Mr. Zino said. �Today, with the addition of Tommy
Hilfiger and Calvin Klein brands, our needs for media advertising
most of the major media agency networks and holding companies now
have a barter offering � Omnicom has Icon, WPP has Midas and IPG has
Orion � one exception is Paris-based Publicis Groupe. Still, it�s
not out of the question.