Mark Brown knows a deal when he sees one.
When the furniture executive read on the Net that a start-up was willing to pay big bucks in barter for a billboard in Portland, Ore., he answered opportunity's knock. Brown secured prime outdoor space, posted an interest in trading the billboard on BigVine.com and closed a deal worth $250,000.
Brown is part of a growing legion of business executives using BigVine.com to sell advertising, public relations, direct marketing, Internet advertising, market research, telemarketing services and TV air time.
Since BigVine.com's January launch, advertising has grown to be the site's No. 2 vertical industry category, second only to the $9.3 million in computers, Internet services and software posted on the site. About $7.6 million of advertising, marketing and media offerings have been posted in the company's first five months, said Bippy Siegel, BigVine CEO.
"The demand has been huge," Siegel said. "When you're running a marketplace, you have to let the market dictate what their needs are. We're ramping up our focus on the media space."
What is BigVine.com? It is a b-to-b barter club, not unlike the roughly 60 organizations in operation around the U.S. The difference is that BigVine.com uses the Internet, which gives its traders global reach.
In addition to computers and advertising, product categories include office supplies, business services, real estate and travel. Businesses trade the goods and services with other businesses in exchange for trade dollars instead of U.S. currency. When a business makes a sale, the trade dollars are held on account until spent on another product.
For example, World Exports, a site listing availability of space for banner advertising for $750 trade dollars per month, could use funds from that sale to purchase nine 20-pound boxes of letter-size copy paper offered by American Office Supply Inc. for $80 a box.
A 6% commission, split between buyer and seller, is paid to BigVine.com in real dollars. At the end of the year, BigVine sends traders an IRS Form 1099B for tax purposes.
BigVine.com is one of a handful of trading exchanges to offer b-to-b barter, including BarterTrust.com, San Francisco, and uBarter.com, Seattle. Advertising fits the Internet barter model to a "T" because it is almost always sold through a series of negotiations, rather than at a set sale price, said Lara Abrams, senior analyst at the Aberdeen Group Inc.
"For small buyers, who don't have the wherewithal to negotiate like their bigger brethren, barter holds attractive possibilities," Abrams said. "On the sales side, media and advertising service companies are far more likely to negotiate because they've always had customized offerings. They're willing to negotiate to get work that will bring revenue--and loyalty--over time."
However, Jim Nail, analyst at Forrester Research Inc., said it is unlikely that a general barter site will amount to big business in the advertising trade.
Sites that offer everything from office furniture to pest-control services are too general for the specialized needs of a major marketer, he said. Media exchanges that trade in real dollars, such as OneMediaPlace, Media Market Makers and AdExchange.com, will wind up more attractive for most, Nail said.
"B-to-b barter of advertising for goods and services is an odd little corner, but it is doubtful whether it will be a significant way of managing the media buy," he said.
Among the bugaboos of a barter system are getting buyers aboard. After all, a barter site means you don't trade dollars but goods and services. In theory, a buyer couldn't lock up a print advertisement or other purchase before he had sold something online. Yet BigVine.com has been working with American Express to help create liquidity in the market.
First-time registrants get 100 free trading dollars at the outset, and can pay for additional dollars through American Express without selling anything. In addition, the two partners are expected to announce by August a plan to extend American Express business credit lines to businesses looking to borrow to pay for BigVine.com services.