Media Management

Is corporate trade, often called barter, too good to be true or a no brainer”?

Leverage Your Media Buying Budgets

Corporate trade is a business solution that allows an advertiser to part-fund media with cash alternatives, like its own products, services, or assets.

As procurement departments are pressured to optimise marketing efforts, prove effectiveness, and enhance the organisation’s overall performance, looking for innovative ways to increase the efficiency of every pound of marketing spend and drive holistic value for the business becomes paramount.

Procurement is faced with one of the most challenging assignments in the industry: finding the best agency partners and the highest quality of service, whilst reducing costs.

But how can we move away from the traditional view of marketing procurement (cost-saving targeting) and become value architects who drive continuous improvement, marketing investment efficiency, and high-level business benefits?

An increasing number of procurement executives involve a corporate trade (aka barter) company alongside their chosen media agency as an efficient and cost-beneficial way of achieving wider business benefits while not impacting the normal client-agency relationship or metrics. Procurement executives tasked with driving innovation and value are reaping the benefits of bringing a corporate trade partner to the table.

As such, corporate trade companies are now being sought by both agencies and clients alike as a tool to drive positive outcomes, with barter specific requests being commonplace in client RFP’s. Most major media agencies and large independents have specific in-house experts that work with the client’s corporate trade partner to ensure optimum delivery in both value and time required for a client.

Corporate trade is a business solution that allows an advertiser to part-fund media with cash alternatives, like its own products, services, or assets. The inventory or services are purchased by a corporate trade company and paid for in Trade Credits. The advertiser uses those credits over time to part-pay for media – a powerful way to drive efficiency.

The type of assets with potential to be traded typically include, but are not limited to: unsold inventory, product returns that are eligible for resale, capital equipment, seasonal merchandise, first-line product or services.

Incorporating corporate trade deals into your procurement strategy can offer several advantages when conducting agency search and selection. Compelling reasons include:

Cost Savings

• Corporate trade allows you to acquire media, goods or services without using cash. By exchanging your own product, excess inventory, or services, you can reduce direct expenses.
• Companies in the travel, automotive, utilities and retail sector can see up to 50% of their above the line media cost being fundable in this way.

Utilisation of Excess Inventory

• If your business has surplus inventory or idle assets, corporate trade is an opportunity to restore value to them and avoid a write down in value.
• Instead of letting excess stock sit unused, you can trade it for something your business needs.

Enhanced Cash Flow

• Corporate trade transactions reduce the cash cost of media and improve your cash flow.
• This allows you to allocate cash resources to other critical areas of your business, such as headcount, marketing, expansion, or research & development.

Access to New Markets and Customers

• Corporate trade often involves other businesses or partners. By collaborating with them, you gain access to their customer base and market reach. It is a way to expand your network and attract new clients.

Infrastructure funding

• Corporate trade can be used as a means of funding larger infrastructure projects such as digitization of in store experience or purchasing of new greener car fleet.
• This allows costs to be mitigated in initial investment, with the corporate trade company providing finance in exchange for a mix of product and media commitment.

Drive sales

• Corporate trade companies will often purchase products and services in advance of trading any marketing for a client.
• This allows businesses to see instant results from the corporate trade relationship and mitigate any concerns about collaborating with another company alongside your media agency.

Nevertheless, a pressing challenge faced by Heads of Marketing Procurement and marketing teams in major brands is a lack of resources. Put simply, there are not enough people in the team, and they are stretched. Additionally, how can they keep up to date with trends, innovation, and AI in the marketing category?

A significant benefit of corporate trade is that agency relationships and processes remain the same. Brands can secure their desired media, planned and purchased to the precise specifications of their agency, with no extra work. Relationships with existing media partners remain the same, as does the quality and price of your media plan and your access to additional agency resources – such as thought leadership, industry trends, and innovation.

This is why over 450 major UK brands are working with a corporate trade partner alongside their media agency and why these clients’ feedback has moved from “this sounds too good to be true” to “this is a no-brainer!”

I firmly believe there is no business out there that couldn’t achieve more from its marketing investment by engaging with corporate trade to drive efficiency, sales or solve wider business problems.

activeinternational.co.uk

About the author

John Charlesworth is Active International’s Director of Client Relations. Active International is a corporate trade business with over 30 years of experience driving value and connecting global businesses.

This article is also available as a digital magazine edition