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July 15, 2003

Written by Bob Meyer, Editor of BarterNews

Part II. . .Barter Advertising: Turning Trade Into Cash

Last week in Part I, we pointed out that at least 20% of your ad budget is variable, and that portion can almost always be replaced using barter...often times, even more.

If you handle your own advertising, your trade exchange should have a qualified advertising representative who can help work barter into your advertising plan. If you work with an advertising agency you should put them in touch with your trade exchange. But, is your agency willing to listen?

Chances are your agency sees barter as a threat to its commissions, and when you bring up bartering, they give you lame excuses like, "Your barter radio schedules will always get preempted," or "You always pay three times too much on barter," or "No really good media is available on barter."

What your rep is really saying is, "Don't bother me with barter. I really don't understand anything but cash, you shouldn't be bartering anyway, and WHAT ABOUT MY COMMISSIONS?"

It happens countless times...an uninformed advertising agency costs their clients money by ignoring barter opportunities. Shame on them? No. Shame on you. You are the client. Since you pay their commissions, tell them to use barter, and take barter opportunities seriously.

Explain to them that you'd rather buy advertising with inventory than with cash, because that makes better economic sense.

One of the strongest attractions to bartering your product or service is that by doing so, you will increase your market share. When you sell on barter to a new customer, you increase your client base and you take away that client from the competition. That increases your share of the market.

By using the barter credit to advertise your company to the cash buying public, you will continue to bring in new customers through that advertising, again increasing your market share.

By using the trade credit you earn from new customers to buy advertising that will reach new cash customers, you are effectively turning that trade credit into cash dollars. But, that's only one way advertising turns trade into cash. Just think of what you could do with available manufacturer's co-op money.

Many retail businesses have access to "co-op" advertising funds. These funds are provided by the manufacturers of the products you represent at the retail level. (At last check there were over 3,000 sources for co-op advertising funds in the United States.)

When your advertising represents a specific manufacturer's product, that manufacturer may be willing to reimburse you for all or part of that advertising. Some manufacturers reimburse at a rate of 25% of the total cost, some as much as 100%. The most common form of reimbursement is 50%.

For example, your furniture store advertises Acme dining room suites in a $1,000 newspaper ad. Acme reimburses you with $500 from their co-op advertising program. The ad really cost you $500 out of your own pocket.

Now, let's say you purchased that ad with $1,000 in barter credit. To earn that barter credit, you traded $1,000 in furniture which cost you $500 to buy at wholesale. So, from a cash flow standpoint you really bought $1,000 in advertising for $500. You then are reimbursed $500 from Acme furniture.

By trading for advertising which earned co-op reimbursement your final cost for the advertising is $0. The first customer that walks in the door as a result of that advertising represents a net profit. If your co-op reimbursement is 75% or 100% you're making money before the first customer walks in the door.

You can turn your barter credit into cash through co-op advertising. You can also turn your barter credit into cash through non co-op advertising. Trade exchanges which understand your ability to cash-convert through advertising, can make a huge contribution to the positive cash flow of your business.


Did you know that your classified ad gets one full year exposure in the
Tuesday Report archives?!

For information on The Barter Marketplace click here.

The Barter Marketplace archives click here.


ITEX Selling Two Corporate-Owned Offices

ITEX Chairman Steven White has announced that two corporate-owned offices, Toronto and New York City, will be sold. A letter of intent has been agreed to by ITEX and former VP John Castoro. He is the principal shareholder of Can Am Trade (which will purchase the assets and rights to operate the existing client base in Toronto) and NYTO Trade (which will purchase the assets and rights to operate the existing client base in New York City).

The sale is expected to be finalized early in the first quarter of fiscal 2004, which begins on August 1. The client base of both offices will continue to be owned by ITEX Corporation.


Think Barter And Grow Richer!!

That's the title and subject of a new series of reports that will outline ten action steps for better barter...ways to expand one's vision, to gain the most from one's bartering efforts, and grow richer by thinking barter! It's all in The Competitive Edge newsletter, beginning with the upcoming August issue, now available to every enterprising, industrious, trade exchange owner!

This unique series, the first of its kind, will incorporate parallel thinking from the all-time best seller, Think and Grow Rich by Napoleon Hill. Every member of a trade exchange should be aware of this information to optimize their trading efforts.

Trade exchange owners who wish to provide their members with such valuable educational information (and use this powerful marketing tool in their efforts to grow their exchange) should contact Bob Meyer immediately (phone: 949-831-0607). Start with the upcoming issue and give your members a newsletter with real value, unattainable anywhere else!


There Are Many Ways To Barter...

One Wealthy Entrepreneur Uses Celebrities To Create Product Buzz

The 39-year-old scion of one of America's wealthiest families, Matthew Mellon, plans to launch a line of high-end men's shoes (Harry's Shoes) this fall.

But even before his first collection hits the stores, he has used his celebrity connections to get prototypes of his $400 shoes onto some of the world's most famous feet—including those of Denzel Washington, John Travolta and Elton John—putting him on the radar screen of retailers as a result.

(At this year's Academy Awards he got about 30 stars to wear his shoes by giving them away, and co-sponsored an Oscar party given by singer Elton John.)

Mellon is using a form of barter by trading on his old-money family, glamorous friends, and the right tutor...him wife Tamara who co-owns Jimmy Choo, an ultra-trendy women's shoe label. These "assets" along with three publicists (one each in London, New York and Hollywood) have enabled Mellon to get outside investor Jennifer Moores (whose family owns the San Diego
Padres baseball team), who paid $1.5 million for a 30% stake in the new company.


Extraordinary Revealing Report For Business Owners - Click here.


Get New Money-Making Ideas And Valuable Contacts!

You can obtain useful, informative ideas and contacts in every available back-issue of BarterNews.


Here And There. . .
  • Technology's relentless march forward sees Wal-Mart Stores requiring its 100 biggest suppliers to apply radio-frequency ID tags to their pallet shipments by 2005. Thus giving a big boost to a nascent technology that promises to take time and costs out of the supply chain.

    Unlike bar codes, which must be scanned by hand, these chips emit radio-frequency waves that are picked up by warehouse scanners, which feed the data to a computer system...thereby cutting labor costs, human error, and theft.

  • Debbie Lombardi, President of Barter Business Unlimited, is one of sixty nationwide entrepreneurs recently chosen to participate in a four day educational program, "Birthing of Giants."

    The program is jointly hosted by MIT's Enterprise Forum, Inc. magazine, and the Young Entrepreneurs' Organization. Candidates for the program must be under 40 years of age, and the owner of a business with at least $1 million in annual revenue.

  • Have you signed up to receive a summary via e-mail of the Tuesday Report every week? If not, go to the top of this issue (right hand corner) and sign up!

  • Business confidence in the U.S. is improving. According to a study by the Conference Board consumer-research center, it is the highest since last year's second quarter. The quarterly survey covers 100 CEOs from different industries.

  • Two decades of free-market reforms have transformed China...creating new opportunities for ordinary Chinese and giving them once-unthinkable freedoms to live and work where they want. The reforms have opened up new centers of power among local governments and entrepreneurs demanding a greater say in decision-making.
We welcome your comments, questions, and observations.
Copyright BarterNews 2003. Redistribution of BarterNews content expressly prohibited without the prior written permission of BarterNews.

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