With budget cuts occurring left, right and centre, companies should consider using corporate barter to help protect their advertising budgets.
What is corporate barter?
Corporate barter or corporate trade as it’s sometimes known, allows brand owners to enhance their advertising campaigns by part paying for media with their products or services.
Who does it involve?
For a corporate barter deal to work it must deliver value to three groups involved in negotiating a media campaign; the brand owner, the media owner and the media agency. The role of corporate barter specialists is to deliver value for all parties.
How does it work?
Take a car brand that wants to advertise more widely but has had its marketing budget cut. A corporate barter specialist suggests that the car brand uses some of its cars to part pay for their media. The corporate barter specialist works with the car brand’s media agency to identify what media the car brand can buy with their cars; this could be TV, posters, newspapers, radio or online. The car brand’s media agency remains in charge of media strategy, planning and pricing.
The car brand’s ad campaign goes ahead. Once it has run and the car brand is satisfied, they hand over the cars to the corporate barter specialist. The corporate barter specialist will then re-distribute the cars through channels that have been agreed in advance with the car brand.
How does corporate barter add value?
Because brand owners are able to transfer the margins on their goods/services to part pay for the media they want, using corporate barter to buy that media means it costs the brand owner less than if they paid for it all in cash. This allows them to protect their ad budget despite cuts to the overall marketing budget.
Done well, corporate barter should also increase the reach of media campaigns by allowing brand owners to experiment with new channels. Because the goods/services used as part of the deal are redistributed via agreed distribution channels, corporate barter can also add value to product distribution by opening up new channels.
Who uses it?
Almost all goods and services can be bartered. However those most commonly bartered in return for media space are goods and services that meet media owners’ corporate requirements. Luckily these are very wide-ranging and include:
• Travel and accommodation (flights, rail tickets, car hire, hotels)
• Conferences and client entertainment (hotels, restaurants, night clubs, sporting events)
• Staff incentives (cinema/concert/theatre tickets/gift vouchers)
• Car fleets
• Marketing (advertising, market research, promotions, events, PR)
• Legal services
• Executive coaching
Is it suitable for my business?
If you have capital tied up in unsold goods and services which could be used to part pay for advertising or you are looking for new distribution channels, then it’s worth exploring corporate barter.
How can I make sure it adds value?
Getting buy-in from everyone involved in the process is key. This means talking to colleagues in procurement and sales to decide which products or services can be used to support future media campaigns. It also means involving your media agency early on – they are integral to the process.
The process of planning and buying media remains the same as it would do without barter. Once the media plans are agreed, get the barter company to review them and explain how much of your media spend could be traded and how much value they can offer.
How do I select a reputable corporate barter company?
It’s important to choose a corporate barter specialist with a good track record who has been around a while. UK barter specialists with longevity include Miroma and Active International. A reputable corporate barter company should be able to:
• Offer brand owners additional media value without creating extra work
• Protect the brand and work within the brand owner’s restrictions
• Re-market the products and services to the brand owner’s specification so they retain full control over distribution
• Work alongside the brand owner’s media agency in a way that will complement what they are doing.
• Focus on media plans which offer a clear benefit to the brand owner
• Complement the brand owner’s media strategy and maximise value
Information provided by corporate barter specialists Miroma: For further information go to www.miroma.com.