As keepers of the marketing budget, it pays to consider creative, out-of-the-box strategies to stretch your ad dollars. Media barter is a solution media buyers and planners leverage to help brands and agencies maximize their media buys.
What Is Barter?
The barter system, exchanging goods and services instead of money, has been a way of doing business since ancient times and is still commonly practiced today. Many of the top global businesses in the world utilize bartering in their business dealings. In fact, 65% of corporations listed on the New York Stock Exchange and nearly one-third of small businesses use bartering.
In today’s business environment, bartering is called corporate trade. Corporate trade firms like Active International and Carat Trade offer corporate trade as a finance option. Companies are increasingly using it to fund business services and products from hotel and travel to office supplies. Bartering for media is the business expense most widely financed in corporate trade.
So How Does Media Barter Work?
Corporate trade firms work alongside media buying agencies to negotiate placements from a media plan with vendors that can be purchased without a total cash commitment. This can come in the form of payment supplemented with credit or it can be products or service provided in exchange for discounted media.
Together media buyers, corporate trade firms and the client reach an agreement to exchange their services or surplus product inventory for ad placements. Upon approval by all parties the deal is made. Inversely, media agencies looking to rid themselves of unsold media inventory can also barter those placements in exchange for goods and services.
That service offering or unwanted inventory is assessed and given a value, for which the “seller” receives a trade credit. Trade credits are typically valued at a dollar per credit and are traded for payment on media placements and ads equal to the cost to purchase the ad in cash. Most media segments accept trade credits as a supplemental or total payment on ad space. The corporate trade firms can afford to provide this credit because in most cases, they will then flip that inventory for a profit.
Benefits and Examples:
Adding media barter as a funding option can offer a couple of financial benefits. It allows you to build in more media placements to your current ad budget. This can be quite advantageous if leveraged strategically with your current budget situation.
For example, if your budget has decreased, supplementing your budget with trade credits or barters can allow you to maintain or increase your current advertising frequency level at previous year’s ad spend. As a brand, liquidating unused product inventory can offset any possible loss from it not being sold.
Who’s Using Media Barter?
- Six Flags opted for a media barter in a campaign with Orion Trading. The theme park chain bartered free passes for media discounts, ultimately saving 20% on TV media buying and gaining 4000 visitors to their parks.
- An Ad Age article cites an unusual media barter from a restaurant chain that bartered $1 million dollars in ground beef for a TV spot. The beef was sold to a state prison.
- The same Ad Age article also references Luxury watchmakers Milus, who funded nearly 75% of their print advertising media plan via a barter arrangement they made with a jewelry reseller.
Media barter is just one way you can maximize your ad spend. Stay tuned to our blog to see how we can help you buy more media while spending less money!