The weekly newsletter for everyone interested in barter--the world's most versatile business tool!
July 25, 2000
In this week's report. . .
Barter Increasingly Important In Dot.com's Marketing Efforts
Need to get brand exposure while conserving cash? The dot.com corporations are covering that base by bartering more than ever, in their efforts to lock-up advertising.
According to Jupiter Communications, 15% to 20% of all overall online ad spending is done by using some form of barter...in 1999 that was $500 million of the $3.2 billion in ad spending online.
A blockbuster trade which occurred last year between Hollywood.com and CBS reinforces the value of such bartering strategy. Cash-poor Hollywood was able to lock-up $100 million in advertising across CBS's broadcast, cable, and radio stations (over seven years) in exchange for a 30% equity stake.
The deal benefits CBS because it gives the media company access to an online entertainment content and a promotion partner. In addition CBS gets less expensive stock, which could turn into a huge upside return in the future. (CBS has similar multiyear deals with SportsLine and finance-oriented MarketWatch.)
While negotiating the barter deal with CBS, Hollywood.com also struck a joint venture effort with Florida Championship Wrestling (FCW).
That barter effort will allow FCW's expansion of BeachWrestling.com, with Hollywood.com taking a 50% stake in exchange for hosting, producing, marketing, and webcasting FCW events on Hollywood.com and its related properties.
Barter agreements such as these are only limited by the imagination of the participants. While advertising for equity is often the norm, in the latter example, for instance, FCW gets exposure while Hollywood gets content plus another brand to market.
Release and Trade. . .Another Way To Wealth
If your company has a top flight executive under contract, and another firm is desperately wanting to hire that person, the payoff could be extraordinary.
That's what General Electric found out when Conseco, the beleaguered insurer, asked GE to release Gary Wendt so he could become their new chairman and CEO.
In exchange for releasing Wendt from a non-compete contract GE received an incredible compensation in the form of a warrant for 10.5 million shares of Conseco common stock. (The exercise price was $5.75 a share, while Conseco stock sells for about $10 a share.)
Here And There. . .
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