As economists argue about whether the UK is experiencing a double or triple dip recession, business efficiency is under the microscope and advertisers are under pressure to seek out new and creative ways of achieving cost savings. One solution they are turning to is media barter.
Barter itself is an ancient business practice which conjures up images of merchants swapping their wares in a medieval market place. Media barter is the modern day equivalent, allowing advertisers and media owners to trade without having to pay completely in cash for what they want to buy. The last decade has seen media barter shift from a minority activity to a major part of many companies’ marketing planning.
In the UK alone it is worth between £250m to £300m and it’s growing. This is reflected by the fact that many of the top 20 media agencies now have a dedicated media barter specialist. So what are the main questions still asked about media barter? And most importantly, what is in it for marketers?
1. What does a media barter deal involve?
Deals brokered by media barter companies are structured according to advertisers’ individual requirements, so each one is different.
Broadly speaking however advertisers transfer the margins on their products and services to the media they want and so pay less for their media than if they were paying for it all in cash. The media barter company distributes the advertiser’s goods and services via channels they have both agreed in advance. For their part, media owners exchange their inventory for goods and services they need making effective use of a soft currency.
2. Hasn’t barter got a somewhat shady reputation?
It’s fair to say that media barter or corporate barter as it’s sometimes known hasn’t always been carried out to the highest standards. Ten years ago barter deals in the UK revolved solely around trade credits, a model that was big on promise and often short on delivery. Many deals were never delivered because the advertiser couldn’t use the trade credits and repeat deal levels were negligible. Media agencies really disliked barter because it didn’t work and it disrupted their relationships with both advertiser and media owners.
As media barter increasingly focussed on delivery, perceptions of media barter in the UK began to change. In addition, barter began to shift away from a focus on distressed inventory and more towards bartering first line product.
Done properly, media barter is a transparent and risk free way of helping advertisers to increase their media budgets and open up new channels for brand distribution.
3. What are the benefits?
Return on Investment: where an advertiser and their agency place their media through the barter company. The barter company then buys an agreed proportion of the client’s goods/services, delivering a guaranteed and unique return on investment.
Cost savings: where an advertiser is able to buy the same media for less cash, and therefore media barter contributes towards an ultimate saving.
Budget creation: advertisers can then reinvest savings into media campaigns, therefore creating additional media budget.
4. What can be bartered?
Everything from premium alcohol brands to top of the range car marques. Energy, holidays, FMCG, luxury goods, telephony, event tickets, electronics and vouchers are other examples.
5. How do I get the most out of media barter deal?
It’s important to discuss it with colleagues in sales, finance, marketing, procurement and with your media agency to get their buy-in. The process should be more a gradual consultancy than a quick sell.