Bring Barter Back: Marketing Needs Alternative Energy

Transparent Trade Model Can Help Stabilize Economy

By Published on .

Kal Liebowitz
Kal Liebowitz
"If I had my life to live over again, I would elect to be a trader of goods rather than a student of science. I think barter is a noble thing." -- Albert Einstein

A freefalling Dow and dark clouds over 2009-2010 forebode dramatically less marketing cash when companies need it most. Too few dollars are already chasing too many marketing opportunities. Consumers are already slowing their spending, and it'll take more convincing to get them to buy. Your company depends on keeping brand awareness levels up, and you have to pay for it somehow.

Marketing needs an alternative energy source. The fuel is in the increasing stockpiles of unused assets, from products to production lines. The C-suite needs to turn its attention to these unrecognized sources of marketing capital -- products from canned goods to cars, depreciated real estate, unoccupied assembly lines, unused corporate jets and idled limousines, un-booked hotel rooms, unsold consulting time, and much, much more -- and focus on converting them into media.

Hardly a new idea
Barter is the original business model. Long before monetary systems were introduced, trade was the primary form of commerce. Now is the time to make barter a priority. All media vehicles, from prime-time TV to POP to magazines, face the same problem marketers do: Sellout levels are falling fast. Many media are entertaining cash-trade arrangements.

I know that corporate trade has primarily sought to improve financial statements on the backs of marketing and advertising. Without marketing-department and advertising-agency input, traditional barter companies have often created unilateral deals specifying media that didn't fit the plan and couldn't be changed; and the contracts were unfairly biased against the marketer.

That's changing fast. Technology is enabling a transparent barter model that delivers real value on the marketer's terms. For the first time, conventional RFPs are asking about barter -- specifically, the agency's ability to convert corporate assets into media that's consistent with brand plans.

What's more, the 4A's has issued a position paper urging "that every agency, media and marketing executive re-examine [barter] with a fresh viewpoint to determine whether it can be applied effectively to assist present clients. ... When appropriate, a recommendation from the agency to include corporate trade in the marketing plan can be an effective way to solidify client relationships, create opportunities for the client, and to generate new business."

Get the balance right
They're right. There's no reason why corporate trade can't provide media that satisfies both marketers and their agencies. All it requires is two things: that the marketing department and agency are in on the transaction from the start, and that all of the assets are valued realistically and comparably.

It can be done. This summer, KSL Media started an online trading subsidiary called eWorld Asset Trading because advertisers and agencies were bringing us unusable credits from conventional barter deals. We had done a series of successful deals over the past decade, and then this spring we started getting RFPs including barter.
Kal Liebowitz is chairman of KSL Media (one of the largest independent U.S. media services companies) and its new subsidiary eWorld Asset Trading.

The idea is to apply expertise on a transparent basis. Companies list assets online. Within 48 hours, they get a realistic estimate for the assets in terms of media that match their buying patterns (or, if provided, the planning specifications for their upcoming campaigns).

Input from all
It's important to bring all relevant players in at the beginning. Before any deal can be completed, everyone from finance and marketing to sales, distribution and the ad agency, has to sign off on the exchange. The deal gets sealed by a two-page contract in plain English, not a fine-print barter agreement. Then it's time to pull in the best resources for product redistribution and media on a client-specific basis.

Real accountability turns barter into a credible marketing instrument. Businesses get a newfound fuel from everyday assets that can pump marketing plans. How well you incorporate barter into brand plans will be a measure of marketing organizations and agencies alike.
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