In discussions with executives that are not familiar with the new best practices around the Corporate Trade business model (also referred to as Corporate Barter), I occasionally find myself addressing incorrect or 28-year legacy perceptions about how a Corporate Trade transaction works. So today’s blog focuses on educating around some of the most common myths around Corporate Trade.
Whether you’re a CXO, Procurement VP, Agency or Marketing Executive, don’t let any of the following myths prevent you from exploring Corporate Trade. You may be missing out on a strategic solution to unlock untapped value from your business.
Myth 1: You need a ton of excess inventory to enter a Corporate Trade deal.
Truth 1: No. You can fund your Corporate Trade transaction with first line inventory, real estate, and almost any asset imaginable too. Also, if you have no inventory now, Corporate Trade firms like Active International can fund and trade your media while you provide the inventory at a later date.
Myth 2: The media will not be the same. It’s remnant inventory.
Truth 2: It depends on the Corporate Trade partner. Some Barter firms employ a practice of “real time trading,” a technique used to create trading positions only after the client has identified its qualitative and quantitative media specifications. This trading practice can result in undesirable media or force a client to alter the integrity of their media plan to accommodate their media inventory. It’s important to select a reputable Corporate Trade partner who has a wide array of trade relationships already in place with sought after media providers. Active International acquires unrestricted future purchase options from the media providers–we don’t invest our capital to acquire “remnant” positions. If the media planned is available in the cash market, it is available to a reputable Corporate Trade organization.
Myth 3: Corporate Trade companies are trying to replace your media agency.
Truth 3: Corporate Trade companies absolutely do not replace your agency. Your agency should play a critically important role in the transaction and remains a partner throughout the relationship. In fact, your agency is the mastermind of your media plan. Nothing is booked until you and/or your agency have the opportunity to review and approve the proposed media buys.
Myth 4: You pay more for your media through a Corporate Trade company.
Truth 4: With independent Corporate Trade firms, all media is based on your existing net planned benchmark costs. The Corporate Trade Company simply enables you to pay for your existing advertising costs differently using a combination of cash and Trade Credits. The key is being transparent about your benchmark costs and selecting a Corporate Barter partner who is independent from large media agency ownership. Two independent firms are an added check and balance to maintain the integrity of your media rates when they collaborate with one another. Not every company that calls itself a Corporate Trade or Barter Company has the extensive trades in place to deliver the value on a long-term and consistent basis.
Myth 5: Inventory ends up in places where it can compromise your business and your brand.
Truth 5: Any inventory is only sold subject to your approval and sign off. Many organizations ship to the approved buyer so they know exactly where the goods are going. At Active International, we understand the sensitive nature of inventory liquidation and our client’s brand integrity is at the forefront of everything we do. In fact, for added peace of mind, we recommend and support our clients selling the inventory themselves to the approved buyer, therefore having full control and responsibility for it. Delivery to a buyer is door-to-door.
Myth 6: It creates too much extra work.
Truth 6: A reputable Corporate Trade organization’s role is similar to your agency’s buying arm. While there are a couple of extra steps, companies like Active International have designed a seamless process to collaborate with you and your agency of record, and charge no service fees. Happy Corporate Trade clients will advocate that the financial benefit is worth the extra step or two.
What are your unanswered questions about Corporate Trade? We will address it personally and post the answer in an upcoming blog.