Tricks of the Trade: Bartering for Ads


NEW YORK The search to stretch ad dollars in today's recessionary climate has an increasing number of marketers using a tactic once-considered a last resort: barter advertising.

The corporate trade sector has existed for decades. The process involves clients exchanging unsold goods, services and other underperforming assets -- such as real estate leases on stores they have closed -- for ads. Most deals involve a combination of cash and credit for media time and space that are swapped for unsold client inventories. But up until recently, many marketers, not wanting to tip the competition to perceived weaknesses in their sales models, considered it something akin to a dirty little secret.

Now, however, excess inventory has become a mainstream problem many marketers have to deal with. They're talking openly with their agencies about solutions, with barter taking center stage, even to the point that it's sometimes being incorporated into the RFP process.

"It really is at the forefront," said Steve Lanzano, COO at Havas' MPG. "We're seeing a lot clients who were not really involved in the barter space asking a lot of questions about it."

Some agencies, including MPG, outsource their barter assignments to third-party specialists. Lanzano said MPG works with several outside firms, but declined to name them due to nondisclosure agreements. Some shops, like independent KSL, which earlier this year launched eWorld Asset Trading to handle its barter business, have subsidiaries that do the work. Several holding companies have in-house firms including Magna Global Trading, an Interpublic firm; Icon International, owned by Omnicom; and Carat Trade, a unit of Aegis Media. Independent corporate trade specialist Active International, with offices in 15 countries, claims to be the largest company in the business today, placing more than $1 billion in such deals annually.

Agency executives say that for the first time this year they have even seen new business RFPs that specifically asked about shops' barter capabilities, as well as RFPs whose sole focus is corporate trade. "This used to be a business you had to go and aggressively seek out," said Kal Liebowitz, CEO of independent media shop KSL, who has been doing barter deals for more than a decade. "Now, clients are raising their hands" and initiating the conversations.

Alan Brown, evp, worldwide media at Active International, agreed. "With the economic downturn and growing inventories, more companies are being proactive, coming to us seeking counsel and solutions," he said. "And it's crossing all sectors." He would not name clients, but said that most of them are Fortune 500 firms.

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