The weekly newsletter for everyone interested in barter--the world's most versatile business tool!

May 21, 2002

Written by Bob Meyer, Editor of BarterNews

IRTA's Advertising Paying Off...
CNBC's "Power Lunch" Provides National Exposure

Terry Brandfass of Trade Management, and a member of IRTA North America Board of Directors, years ago promulgated the notion that IRTA should conduct a worldwide advertising campaign to promote the barter industry, which would raise awareness among the business community. Her persistence paid off.

Last fall the first full page ad in a national inflight magazine ran. (Additional advertising is scheduled over the next 12 months.) In addition, IRTA's "Commercial Barter Growth Report," has garnered four interviews--the latest being CNBC's "Power Lunch." The Commercial Barter Report has been cited by The Economist, BBC and ABC.(Further details on the report appears on page 28 of the coming issue of BarterNews.)

"Power Lunch" Positive Message For Industry

At 2:15 EST on Friday, May 17, the segment on the barter industry was broadcast with an appropriate lead-in about the newly released Star Wars movie and its accompanying merchandise blitz, with an expected sales goal for the action figures of $1.2 billion. But what if those sales fall short, as many pundits believe will happen? The segue was made that they may well be traded through a corporate barter deal.

The camera then focused on Krista Vardabash, IRTA's Executive Director, who explained how corporations will trade excess merchandise for trade dollars...which then can be used to purchase a variety of goods and services.

Why would a company choose to go this route? Alan Elkin, CEO of Active International, pointed out the benefit to the national TV audience, "While liquidators will pay maybe 25% of wholesale value for merchandise, a corporate barter company will pay 100% of the wholesale value."

The show concluded by naming prominent corporations which have worked with corporate barter companies, as well as providing statistics on the industry's aggregate barter volume. Overall, it was a positive boost for the barter industry, reaching the nationwide business marketplace.

"The biggest hurdle going forward will be getting people to change their behavior."

...J. Smoke Wallin

In reading the special report, "The Future of E-business," in the recent issue of Business Week the above statement uttered by Wallin resonated with me after thinking about the recent attempts by Ubarter, BigVine, and other barter companies who felt bartering on the Internet was a can't-miss situation. It did miss, the first time around.

It looks more and more, unfortunately for them, that they were just ahead of their time. Because it does take time--many years--for people's habits to change regardless of the payoff. Yet, conditions are changing and moving rather rapidly in that direction.

Commercial Barter Industry Will Benefit
From Other Sectors Educating The Masses

So even though e-commerce today accounts for only 2% of all business sales, the internet technology is being embraced by a surprisingly large number of people, especially when it comes to the travel industry. The airlines and hoteliers are expecting online reservations to grow 44% this year, even though travel spending will be up but 4%.

We may still be early in the game, but with time and experience comes change. Which means the commercial barter industry will someday benefit immensely from this internet technology, as well as the industry's unique "toll-position"...providing the business community with a viable, alternative form of capital.

-----Advertisement-----

Golf Course Trade Credits, Hotel and Golf Equipment Wanted

Frank Postic, President of TotalGolf Store, LLC, of Minneapolis (MN), announces the creation of a new department within TotalGolf Store to purchase excess unrestricted, high end daily-fee golf course trade (barter) credits for resale through their golf specific web site, www.TotalGolfStore.com.

In addition to golf course trade credits (as well as due bills and scrip) Postic said trade credits will also be purchased for All-Suite Hotel rooms and new golf equipment as well.

(Information needed by Postic for purchase consideration: name of golf course, hotel or equipment provider, city and state, expiration date, transfer authorization contact, and total amount of credits.)

Interested parties who want to turn trade credits into cash should e-mail all information to: fpostic@totalgolfstore.com or mail to: TotalGolf Store, P.O. Box 220, Excelsior, MN. 55331-0220.

Reverse OnlineAuctions By Major Corporations
Tested To Acquire Hotel Rooms

Travel buyers at major corporations are moving aggressively to further reduce costs and are pressuring hotels to accept reverse auctions--where select hotels in a market are invited to bid prices down for a corporate account. (Unlike traditional auctions where prices are bid up.)

The technique is encountering stiff resistance from hoteliers, as they are concerned about reducing their product to a commodity. However, auctions likely will grow in number as the negotiating season for 2003 rates gets underway in the coming months.

Charles Schwab Inc. recently conducted a pilot reverse-auction for hotel rooms in two of its most frequently used cities (Indianapolis and Los Angeles) and expects to expand the approach for 2003. General Electric and Bayer Corp. have also used reverse auctions.

The auction channel reduces the bid cycle time by 50%, from an onerous four to five months down to a more manageable time frame. An additional 10% in incremental savings is the goal.

Schwab informs participants upfront of hotels in the auction, but during the actual online session hotels are only identified as #1, #2, and so on, as they adjust their bids. Auction technology was provided by Procurepoint Travel Solutions.

For auctions to be successful, buyers need to be sure that the hotels participating are at roughly the same price point and service levels, which requires legwork and time to develop the request for quotes (RFQs). Buyers say the RFQs are intended to make sure the hotels are comparable to one another, to do otherwise is unethical.

Partial Ownership (Options) In Exchange
For One's Talent Still Necessary

Famed casino developer Steve Wynn's recent turnaround on a vowed statement he made just two years ago, shows the significance of how talented people today demand a piece of the action. Wynn, who sold Mirage Resorts to MGM Grand two years ago, said he would never again operate a publicly traded company.

In returning to the game he loves, he's changed his mind and now plans to sell public shares in his redevelopment of the Desert Inn, known as Le Reve. Wynn's reasoning is two-fold: Normalcy has returned to the stock market and gaming stocks after the dot-com aberration. Secondly, one really has to be able to offer a stake in the business to attract top-quality staff; a public company enables one to offer stock options.

Reinforcing the fact that American workers no longer regard themselves as simple wage earners, but also think of themselves as stakeholders in their employers, is the recent surprising news from the AFL-CIO's rank-and-file...who oppose the proposed cap on the amount of company stock that workers could hold in their own 401(k).

In short, the workers value the ability to make their own personal decisions and are opposed to Washington's Corzine-Boxer suggestion that would force a change (placing a cap on the amount of company stock they could own) in their investment decisions.

Do you know the four steps to follow toward developing a successful reciprocal purchase when vendors call on your company? Click on "What's New," then click "Trade exchanges" to find and read the article.

• A new computer ID chip, about the size of a grain of rice, is going to be sold by Applied Digital Solutions. It can be embedded beneath the skin and hold a person's personal information.

  The $200 VeriChip will emit a radio signal and prove to be invaluable in emergency situations when someone is either unconscious or can't otherwise give information. The ID code could be cross-referenced with a database to detail any kind of information. (Critics say it smacks of "Big Brother.")

• Follow-up on the past two articles regarding the ubiquity of credit cards, and why the commercial barter industry would be wise to get in step with the business marketplace at large, comes this statistic--the number of credit and debit cards in the U.S. alone is 1.67 BILLION!

• If you've missed any of our weekly Tuesday Reports the past three years we have an archive of past issues for you at the bottom of this week's letter...check it out!

• The Directorship Search Group, a Greenwich (CT)-based firm that finds board members for companies, suggests most small firms are better off tapping a mentor, a community leader, or even a retired executive who has worked for your competitor than a venture capitalist. The reason? You want people on the board whom you trust not to step in too quickly if you falter at first.

• BarterOne trade exchange of Charleston (SC) has signed an agreement with Amtrak to handle the distribution of tickets on a space available basis for all trains and classes of service. Media purchases on behalf of Amtrak will be handled by sister company, Cinnabar Media Services.

  Working hand-in-hand to expand its representation in the airline, resort, rail, and cruise industries BarterOne and Cinnabar Media exhibited at the recent Regional Airline Association convention in Nashville. RAA represents U.S. regional airlines as well as the suppliers of products and services that support the industry.

• Follow-up on May 7 Tuesday Report on the Bartercard USA and Millennium Exchange merger. Brokers from both firms are spending this week in Orange Country (CA), Bartercard's U.S. headquarters, for an intense week of training.

• A study funded by the AAAA and the James Irvine Foundation showed that California's ethnic media reach nearly 90% of the state's Latino, African American and Asian American consumers. About 40% of ethnic consumers polled said they pay more attention to advertisements in the ethnic media than in the general market media. However, 33% said they focused more on general market ads.

  Note: The share of advertising dollars going to ethnic media remains below 2% of all advertising dollars spent in the U.S.

• Issue #58 of BarterNews is at the printers... If you are interested in reaching the entire barter marketplace you'll want to place your message in the next quarterly issue. August 15 is the deadline all ads must be in for issue #59 of BarterNews. Go to "Advertising" on web page, www.barternews.com, or call Bob Meyer at (949) 831-0607 for further details.

• Ziff Davis Media is in trouble because of their reliance on technology advertising--one of the hardest hit sectors in the advertising slowdown. They've incurred a loss of $415.7 million for the nine months ended Dec. 31, 2001.
  

This Issue's Glossary of Terms:
Bait and switcher:
Someone who promises one thing and delivers something else, usually of lesser quality.

Bank the property:
Raising money by creating a loan or selling real estate obtained in an exchange.