Market Summary - Barter

At a Glance

The growth of Corporate Barter has continued to accelerate and is now an established part of the media landscape. The UK market is predicted to top £125m in 2009 with media accounting for over 95% of all barter deals.

Put simply, Corporate Barter allows clients to use excess product or spare capacity to increment existing media budgets.

Hot Topics

Corporate Barter delivers for clients and repeat business percentages reflect this. In 2003 the average repeat business level for the barter market was 14%, in 2008 the amount of clients coming back to do new deals with Astus was over 90%.

Barter used to be just about shipping old or devalued stock to secondary markets but not anymore! 

Over the past year there have been many exciting new developments in barter. We have developed a new product offering called the Pre-Buy Cross Purchase which is a process where we will buy goods and services for cash even before any advertising runs.

As barter becomes more innovative many new industry sectors are taking part for the first time. The second case study shows how an online insurance company benefited from a barter deal. An approach that would work equally well for any client who sells online.

Please click on the case study links below:-

1. See the sales lift before you advertise? (PDF download below)
2. Generating incremental sales online (Click on link and download PDF attachment)

Download Associated Attachment

What is it?

Corporate Barter is a function that allows manufacturers to part pay for media space using product or spare capacity. It creates incremental media and bolsters existing cash budgets.

In most cases, clients receive three times the cash value of their product in Trade Credits.

A Trade Credit is the currency for Corporate Barter. 1 Trade Credit = £1

It is also a function that allows media owners to use their own media space to buy goods and services that they would have otherwise paid cash for. This includes conferences, office costs, mobile phone contracts, even their own media.

Frequently Asked Questions

What happens to the client’s product?
This depends completely on the brief, sometimes it will be disposed of discreetly into a new market, sometimes it will be traded with a media owner or used for sampling. Whatever the solution, it should always pre-agreed and part of contractual agreements.

What about agency commission?
Barter companies work net of agency commission and it is always paid on the full campaign value, i.e. – Cash and Trade Credits

Is the price and quality of the media affected by barter?
The media is the same price and quality regardless of whether it is cash or barter. If you feel your rates or media quality are being affected then call your Barter Company immediately.

Is the blend always 80% cash / 20% trade?
This is an average cash / trade blend for a client. It can vary  depending on the product being bartered and the media being used. This should also not be confused with the cash / trade blend that we pay to a media owner. The two are completely different.

Do you always give 3 Trade Credits for every pound?
Again this is an average but barter works using the 3:1 ratio. When it gets higher it can make the deal much more difficult to deliver. Beware of Barter Companies that offer bigger multiples, they might not be as good at delivering the deal!

How Does it Work?

Corporate Barter is a function that allows manufacturers to part pay for media space using product or spare capacity. It creates incremental media and bolsters existing cash budgets.

In most cases, clients receive three times the cash value of their product in Trade Credits.

A Trade Credit is the currency for Corporate Barter. 1 Trade Credit = £1

It is also a function that allows media owners to use their own media space to buy goods and services that they would have otherwise paid cash for. This includes conferences, office costs, mobile phone contracts, even their own media.

Corporate Barter is not rocket science and the basics are explained in the two charts below.

The first chart explains how a typical barter deal would work for the client. It assumes a de-valued stock which Astus has purchased for three times the cash value. The key to success is to ensure that there are enough planned expenditures that can be bartered so that the Trade Credits can be used in as short a time as possible.

Key Features & Benefits

Delivery

Corporate Barter companies have raised the bar when it comes to delivering results. “Up-front delivery”, where a media campaign runs before product is taken is now the industry norm.   This eliminates the risk for the client and is achieved by working closely with the media agency to ensure that the deal is structured correctly.   

Transparency

Dictionary Definition no. 7 - Free from guile; candid and open

Corporate Barter is not “dark arts”; it is about creating leverage through trade. If you do barter in 2009 you can expect to know which media owners you/your client can trade with, what happens to the client’s product and how many Trade Credits will be used on the next burst. With a small amount of due diligence no-one need ever be kept in the dark.

Media Focussed

Modern Corporate Barter companies work closely with media agencies. Media agencies are the gate-keepers of any barter deal and ensure that plans are not compromised because of barter. Corporate Barter companies do not hinder media strategy or affect pricing or quality. The Barter Company sets up the deal “in principal” with the media owner before any negotiation takes place. Only when the client and agency are completely happy and have booked the media, does the barter deal apply.

Key Audience Strength

Media Focused

Modern Corporate Barter companies work closely with media agencies. Media agencies are the gatekeepers of any barter deal and ensure that plans are not compromised because of barter.

Corporate Barter companies do not hinder media strategy or affect pricing or quality. The Barter Company sets up the deal “in principal” with the media owner before any negotiation takes place.

More Information

For more information, please contact: