Category: Media Costs & Trends


By Joanne Crump, Vice President, Media Services Director, Canadian Media

In today’s economic landscape client advertising budgets are coming under intense scrutiny. According to a recent report by the Canadian Marketing Association, advertising accounted for 80% of the marketing budget in the 1980’s. Today it’s at 50%, with digital being the only area of growth.

These media trends are leading to an increase in online publishers. And even with the increase in digital spend, the number of sites available to advertisers far out-weighs the demand. The result is a growing inventory of  digital advertising and greater fragmentation, particularly for display ads. .

There’s a perfect storm brewing for those responsible for delivering sales and revenue targets in digital media.

Corporate Trade is an alternative, and a complement, to ad exchanges 

So, what’s the answer for media owners who want to maximize value from their advertising inventory and leverage potential revenue streams?

Media trends indicate owners are turning to ad networks and/or ad exchanges. However, these options don’t always equate to full value for the publisher. A good alternative is Corporate Trade.

Corporate Trade (aka Corporate Barter) is a well-established industry.  Online media owners, media agencies and brands are now using this tool to realize extra value from online marketing expenditures.

Active is currently working with digital owners, across a wide variety of sectors, partnering on display, rich media, pre-rolls, sponsorships, performance based campaigns and social media. In addition, Active has secured trading relationships on emerging platforms like mobile and RTB.

How Corporate Trade benefits digital media owners

Corporate Trade generates incremental revenue for digital media owners in several ways:

  • Attracting new advertisers to digital
  • Encouraging existing brands to increase annual spend
  • Increasing expenditure with media owners that use Corporate Trade

Corporate Trade also generates incremental revenue by providing goods and services to media owners, including:

  • Marketing activities
  • Capital expenditures
  • Conference expenses
  • Prizing
  • Other cash investments

In return, digital media owners pay with advertising inventory.  The Corporate Barter company then leverages the inventory to execute digital marketing campaigns.

What to look for when sourcing a Corporate Trade organization

  1. Digital media owners should only consider established organizations with longevity in the Canadian marketplace. Size, volume and depth of relationships are key to delivering value.  It’s these qualities that contribute to financial stability, ensuring the Corporate Trade organization is around for the long term.
  2. Ask your Corporate Trade partner whether they have a dedicated digital team in Canada.  You want to ensure there are dedicated digital resources in-house who understand the media. Visit their office and get a feel for their expertise.  Connect with their employees on LinkedIn.
  3. Ensure the Corporate Trade relationship is open, transparent and honest.  Ask for references.  Look for client and media owner testimonials. The Corporate Trade partner should be able to demonstrate a solid track record with both clients and media providers.

Growth in Corporate Trade is expected to continue as media companies face increasing inventory management pressures.  Given the turbulent economy those who don’t consider Corporate Trade are missing valuable revenue generating opportunities.

Kimberly ArmstrongIn 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.

Your Turn:

What are your unanswered questions about Corporate Trade?  We will address it personally and post the answer in an upcoming blog.

Cheers,

Kimberly Armstrong

Active International

Kimberly Armstrong

Kimberly Armstrong, Active International

Despite an uncertain global economy, one thing has remained on a steady incline –advertising investment. Zenith Optimedia’s ad spend forecast predicts a jump of $24 million in North America and almost $100 million around the world from 2010 to 2014.

Meanwhile, CXOs across North America are seeking ways to improve their cash flow and reduce operating expenditures. More than ever before, marketers are put under the microscope each month to produce results and deliver a positive ROI.

How does an advertiser effectively protect the integrity of their media strategy while being tasked with slashing their budgets to support corporate cash management initiatives?

Many are turning to Corporate Trade (or Corporate Barter, depending on your semantic preferences). Here are 7 reasons why they’re making a smart decision.

1. Trade Credits are a proven way to lower the cash outlay on your Advertising expense.

The Corporate Trade industry has established a 28-year old track record , growing currency of Trade Credits. Once you’ve obtained Trade Credits, you can use those credits to pay a portion of your invoice across a variety of business expenses, media being the most popular. .

2. There are many things your business can trade in exchange for Trade Credits.

Companies often think that they only reason to use corporate trade is to address a problem, however, in the normal course of business, many things happen. Packaging gets redesigned, weather is unpredictable, fashions change. As a result, the types of inventory that can be traded in exchange for Trade Credits is virtually unlimited. And it’s not just limited to inventory. Here are a few examples:

  • Re-branded product
  • Last season’s clothing or accessories
  • Perishables e.g. groceries
  • Product labeled with expired promotions
  • Outdated electronics or technology such as mobile phones and personal computers
  • Obsolete capital equipment including old machinery or furniture
  • Excess or problem real estate
  • Unwanted, costly, sponsorship commitments
  • Debt owed

3. By reducing your cash costs, you can redirect the “savings” towards other programs you’ve wanted to launch.

Let’s face it – as marketers, we never have a big enough budget.  All too often that really big, really innovative  idea is trimmed back because of budget concerns.  Whether you’re a client side marketer or leading an agency, bringing a strategy to the table that puts more dollars behind those big ideas is a good thing.  And with Corporate Trade, you’re not just limited to traditional media.  Advertisers can use Trade Credits across virtually any medium available in the market thanks to the strong relationships with media providers.

4. You can start turning those tough agency conversations around.

How many tough conversations have you had with your agency around resources and budget?  How many times has your agency been sent back to the drawing board? With agencies being marginalized every day, it can be challenging to maintain the level of true partnership you want (and need).  Corporate Trade puts money back in your pocket, empowering your agency to execute your brand to its fullest potential.

5. You don’t need to sacrifice your need for flexibility.

As a Corporate Trade / Barter partner, it is understood that many businesses require adjustment to schedules with limited advance notice. For example, at Active International the process is customized to the needs of our clients and has been designed to accommodate changes to specs/schedule.

One of Active’s clients, a leading home & garden retailer, makes many media buying decisions based on the upcoming weekend’s weather. They rely on Active to be flexible and accommodate schedule changes with very little notice. It’s no wonder they’ve been a client of ours for over 20 years.

6. You’re a Global business? No problem.

At least not if you count on an established, global Corporate Trade partner. You’ll find that good Corporate Barter firms also allow the flexibility to transfer trade credits from country to country.  Companies like Active International have presence in 14  countries around the world. This means that inventories can be distributed outside your local market, avoiding channel conflict and expanding your distribution channels. It also means you can use your Trade Credits globally.  Give your international sister company a call; they may already have Trade Credits available to transfer to you.

7. Your CFO will love you.

Trade Credits help to improve business-wide cash flow while avoiding loss on significant assets.  In fact, your Trade Credits can also be used and transferred to other areas of the business.  At leading firms such as Active International, count on the widest depth and breadth of fulfillment areas where Trade currency is accepted – including business expenses such as travel, freight, and retail merchandising.

Your Turn:

How are you balancing business cash flow requirements with the integrity and scope of your advertising plan?

Cheers,

Kimberly Armstrong

Active International

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