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May 15, 2001

Advertisers Continue To Embrace Incentive Compensation

A new study by the Association of National Advertisers shows the direction toward cost-based and incentive-based programs continues to be the trend in advertising agency compensation.

Traditionally, agencies have been paid a commission of as much as 15% on every ad dollar spent by a company on TV time or space in magazines and newspapers. That rule of thumb has been challenged over the years, particularly as advertisers experiment with new media such as the Internet.

Leading the charge to the cost-based and incentive compensation are the packaged goods companies, such as Procter & Gamble along with Colgate-Palmolive.


Prime Locations Traded For Desired Products

Two large department store companies, Sears and J.C. Penney, are working closely together with Avon Products in an unusual arrangement. The cosmetics and skin-care company is sharing the cost for installing "Avon Centers," special counters and lounge areas designed to convey a luxurious image.

The department stores are going beyond customary treatment of vendors, giving Avon prime locations to sell their products. The stores will also pay the salaries of salespeople, whom Avon Products will train.


Singing of National Anthem at Lakers Game Exchanged For Tickets

Sitting in the first row of a Los Angeles Laker game costs $1,350 during the regular season, and $1,450 for the playoffs. (If purchased from someone on the street, such as a broker, tickets can cost up to $3,500).

But Vince Neil of Motley Crue, who sang the national anthem prior to the second game of the Lakers-Kings (Sacramento Kings) game, received two free tickets to the game along with dinner.


Here And There. . .

  • The Canadian Association of Trade Exchanges (CATA) held a meeting over the weekend in Kingston, Ontario. Present at the meeting was Krista Vardabash, IRTA Executive Director, and Michael Caron, current IRTA Global Board member as well as Managing Director of Bartercard Canada.

    The two IRTA representatives attended the meeting with the intent of offering help in any way possible. Another subject that surfaced was that of how IRTA had represented Canada in the past, particularly on the taxing of goods and services through trade exchanges.

    Caron admitted dropping the ball on the GST issue of two years ago. But also indicated that IRTA is now much more of a global organization, representing many international interests. Therefore the Canadian barter industry (exchanges within the country) should not only be aware of the new IRTA focus, but seriously look into becoming an integral part of IRTA.

  • The business-to-business model is now undergoing some rethinking, as companies that have close confidential relationships with their buyers and sellers desire software that is focused more on private networks.

    In other words, business practices and relationships that have evolved over decades (as brick-and-mortar companies) are more complex than first anticipated.

    Many companies want to continue their confidential relationships rather than shifting to open or anonymous marketplaces. Second-generation internet entrepreneurs will not lose sight of this private networks and exchanges focus.

  • Synergy Brands' quarterly reports outlined a barter transaction with ICON, a corporate barter company. The company anticipates a $1 million operating income from the ICON effort in fiscal 2001.

    Synergy develops internet properties that partner with strategic business entities to build revenues within the b2b and b2c internet arena.

  • BarterNet's full-service marketing and public relations agency, ShapeTechnology, has received two awards from the Peninsula Press Club's Professional Journalism Competition in the public relations category.

    The agency was awarded second place in the press kit category for materials developed (design of kit and written contents) for BarterNet, a global business-to-business trade exchange.

  • The online brokerage arm of Credit Suisse First Boston plans on opening 20 branches in cities around the United States. The firm is joining a trend already begun by rival E*Trade Group, with kiosks in Target stores and Schwab, which bought U.S. Trust along with its branches. The lesson learned...consumers value the availability of a physical branch.

    A similar movement is taking place in the art dot-com world. After investing two years and untold millions into fancy web sites to hawk art to the masses, many online art dealers are now opening galleries in the real world.

    Walk-in galleries were supposed to be inefficient relics, but it turns out that the digital dealers made one big mistake...people don't buy art online. In the barter marketplace, the off-line exchanges continue in their business endeavors, while the online exchanges are now looking to form alliances with these off-line companies.

  • What's the percentage of "use" of those slick color coupons that fall out of the Sunday papers? According to a study by NCH NuWorld Marketing in Lincolnshire (IL), only 1.8% of the 248 billion coupons distributed annually are redeemed.

    It typically costs manufacturers about $7 per 1,000 inserts for a full page, or about $420,000 to reach 60 million homes which is nearly 60% of U.S. households.

 

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