NEW YORK (AdAge.com) -- Barter is back. As the economic downturn deepens, marketers are looking for ways to stretch their advertising dollars, and Mediabrands sees opportunity. The Interpublic Group of Cos. media agency is expanding its barter practice today, rebranding Magna Global Trading as Orion Trading and opening five new international offices in Australia, Brazil, Germany, Mexico and Spain.
Barter, the practice of finding a buyer for a marketer's impaired assets (such as office furniture from a closed outpost) and then trading those assets for media credits the marketer can use to make future media buys, has become an alternative for companies struggling with diminishing and strained advertising budgets. David Shrank, senior manager-strategy and operations at Deloitte, whose client list includes Interpublic, said barter is something he and his colleagues are recommending to clients more often.
"One of the things that a lot of clients are asking us right now is how can they extend and maintain their marketing while their budgets are getting cut?" Mr. Shrank said. "Barter is becoming a very popular answer to that question. It is an excellent way to create more value off of these impaired assets, and we do recommend it to clients. But you have to have the right oversight and the right trade partner. Marketers have to go into this with their eyes open and realize that it's something you need to understand and manage so that you don't get in trouble. It's not just free money."
Brian McMahon, CEO of Orion Trading, said the agency needed to increase its global footprint based on the "immense" demand from marketers around the globe over the past year and a half. "Clients need it because of the economic environment," he said. "They are charging the media-agency CEOs with finding ways for them to be relevant, save money and keep their voice out there while their budgets are being cut."
One of those clients is American Airlines, which has longstanding relationships with Interpublic agencies such as TM and Weber Shandwick. Rick Wilbins, managing director-global brand, advertising and corporate citizenship, American Airlines, who also works with Deloitte, said the airline has worked with Orion for five years and that the division of IPG Mediabrands has managed to generate several millions of dollars in media credits for it.
"A few years ago, when we were going through tough times and were looking at cutting budgets, ad budgets especially, our agency recommended we contact them," Mr. Wilbins said. "That led us to a relationship that has helped us extend our ad budget by several million dollars by finding distressed assets [Orion] was able to find value in at some point, and for that we got media credit." Mr. Wilbins said the airline primarily uses those credits for cable TV buys.
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Mr. Wilbins said the relationship is one that proves fruitful in both good times and bad because Orion helps American redeploy assets with limited or no value. "In this world, there's always somebody who has some need for something," Mr. Wilbins said, referring to a plane the airline no longer can use or even plastic utensils it may be looking to unburden itself of. "The problem is finding that person."
Orion and American are working on a couple of projects, but Mr. Wilbins declined to shed light on the details other than to say the projects "haven't been completed yet." American tapped Orion last summer to help it unload a plane during the unprecedented spike in oil prices.
Mr. Wilbins said the airline has gone back and re-examined the buys it has gotten with the media credits supplied by Orion to ensure the deals were worth the effort. "We were getting more than we wanted," he said.
Orion is headquartered in New York and has three satellite offices in London, Los Angeles and Toronto.