The Benefits of Incorporating Trade/Barter in a Media RFP (Part 2)

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In our first installment of The Benefits of Incorporating Trade/Barter in a Media RFP, we briefly discussed why more companies are RFP-ing barter companies either while they are conducting an Agency of Record (AOR) search or immediately after. In this second installment, we'll discuss the specific objectives that can be met through barter.

Utilizing Underperforming Assets as "Currency" to Increase Return on Ad Spend

The barter model ultimately achieves a higher ROAS (Return On Ad Spend) through the use of underperforming assets (SLOB inventory, equipment, real estate) to pay for a portion of the same media that is planned by a client's media AOR. This is achieved when the barter company delivers full "book" value in the form of an unrestricted media credit for a compromised asset that otherwise would have delivered a fraction of that value.

The barter company issues the media credit to the client, the client and the agency share future media plans with the barter company, and the barter company identifies which portions of the media plan can be purchased with the media credit at the agency-set cost. This can result in a cash outlay reduction of 10-25%, depending on the media type and other factors.

Expanding Media Budgets without Increasing Cash Outlay

Marketers are intrigued by high-profile sponsorship opportunities and new media initiatives but often lack the budget. Through barter, those opportunities can become possibilities. Rather than applying the media credit against the purchase of planned media, a client can elect instead to use the value of the credit toward unplanned opportunities. It's an innovative funding solution that becomes a win-win for clients and their media agencies.

A Complementary Partner to Your AOR

Barter is a complementary solution for your media buying, not a competitive one. The media AOR sets all media strategy and specifications, and the barter company executes the purchase where trade can be applied. The result is a collaborative partnership that enables agencies to help solve clients' excess asset challenges with the power of their media buying spend.

Seems like something worth exploring? Here are some considerations as you think about incorporating barter in your next RFP or your future media buying plans:

  • Is the Corporate Trade/Barter firm affiliated or owned by an Agency? An independent barter company allows for a critical, unconflicted check and balance in your media buying, rather than a scenario where the AOR and barter partner are owned by the same holding company. Media specs and pricing set independently by an AOR ensure that the trade component delivered by the barter company is genuine and measurable.
  • Does the barter firm have trade relationships across the media landscape and in other areas? From linear TV to OTT to digital, the ideal partner will have trade leverage across the media landscape in order to expedite and unlock the most value through a trade transaction. The faster media credits are used, the faster the financial benefit is realized.
  • Does the barter company offer guarantees for media buying performance? Guaranteeing proof of performance is imperative for a barter firm. Stewardship, buy pre-approvals, post-buy delivery, and independent audits should be part of the mix to confirm value delivery.

We know there's a lot to consider, and we're here to help. Contact us directly, and we'd be happy to discuss the possibilities.

This article was written by Bob Pankuck, Executive Vice President, Client Management, Active International

Photo courtesy of Active International

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