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January 1, 2013

Written by Bob Meyer, Editor of BarterNews

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From the desk of Bob Meyer... 01/01/2013

U.S. Cash Still King, Worldwide

The U.S. Bureau of Engraving & Printing reports that the fiscal year ending October 2012 had a record production run � printing 3 billion $100 notes. It�s believed that the majority of those $100 bills are being held overseas, where they�re globally recognized, widely accepted and the easiest way to store wealth.

And for those in the U.S., who are faced with bank deposit rates and yields on U.S. treasury bills at record lows, savers miss out on very little interest if they choose to hold cash rather than invest it.

BBU Trade Exchange Providing Assistance To Families of Newtown

Barter Business Unlimited (BBU), a Connecticut barter company close to the recent Newtown tragedy, is busily raising trade dollars within their exchange as well as through the barter industry�s two trade associations, NATE and IRTA. Their goal is to collect and provide $200,000 or more to the non-profit organization known as Cove Center for Grieving Children, (www.covect.org).

Reportedly, Debbie Lombardi�s BBU (www.bbubarter.com) is closing in on their six figure goal, having already raised over $150,000.

Small Merchants Disenchanted With The Online Coupons

Small businesses are souring on daily online deals. Companies such as Groupon and LivingSocial make money by selling discounts for restaurant meals, manicures and resort packages, then splitting the revenue with the business offering the coupon.

However, an October survey by online entrepreneur-hub Manta, showed that 82% of 1,087 responding small-business owners do not intend to run daily deal promotions this year. Only 3% said such campaigns have garnered them repeat business, while 11% said they either lost or made no money on the coupons.

All back issues of "From the Desk...� can be accessed by clicking here.

(Please feel free to forward our newsletter to your friends and colleagues. We have a �box� at the end of the newsletter for your convenience. See you next week. . .)

Barter Newsletter Celebrates 31st Birthday

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 bmeyer@barternews.com.



Is Your Trade Exchange Missing Out On Valuable New Business?

If 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.

Is your barter company�s listing up-to-date?

To 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:

To make changes to your listing click here.

For new listings click here.


* * ANNOUNCEMENT * *

We have packages of back issues still in print, approximately 30 issues in all.
To order: Click here


Bartering Unsold Media Inventory Now A Multi-Billion Business

(The following article was published in Ad Age, 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 trading.�

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 oversight.

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 media plan.

�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 the margins.

�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 have increased.�

While 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.

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