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Industry View

Why barter has media’s interest

Stephen White, Chairman EMM International

Soft gains will differentiate the media winners

Pitches are now dominated by fixed performance promises from the media agencies, but media buying performances will have improved because of deflation stimulated by the recession, not through the ‘soft gains’ that are available.

All too often the bright people at media agencies produce an ideal strategy for the brand owner many months prior to implementation. Swingeing budget cuts rarely seem to impact on it, the strategy isn’t rechecked and the final delivery bears scant relation to the original. But media strategy reviews are an important component in improving deliverables. A simple check list is needed to manage expectations in today’s ‘real time’ circumstances, as opposed to yesterday’s ‘theory time’.

The phrase ‘media planning optimisation’ has been in existence for the last 40 years and still many advertisers don’t fully understand its benefits, and the lack of practical KPIs on many media plans is apparent. Rarely do advertisers get into this level of detail. Consumer tracking and sales results should be part of the continuous role of the media planner. But all too often the brilliance of the media plan is lost in the pursuit of media costs and the influence of media agency deals. Who’s more important in the media agency hierarchy? The trading director is god, not the planner.

Of course, the largest gains to be made are where the media agencies really do provide a totally integrated communication plan. This is not the time for disparate specialists acting outside desperate media agencies’ control. And an understanding of soft gains can be hugely beneficial too.

18 M&M Q2 2010

When two of the main agency holding group’s launched barter units within the space of a couple of weeks, it suggested a big shift in media trading is afoot. Josh Colley talks to those involved

In April, GroupM launched barter network The Midas Exchange and Havas followed quickly on its heels, with an as yet unnamed division. They join a marketplace with private companies like Miroma and Archant alongside Interpublic’s dedicated arm, Orion, which expanded into Europe four years ago.

Bartering has long been considered a dark art best confined to market stalls. But clearly, the media industry is beginning to shift that perception by allowing advertisers to trade off inventory to help fund media expenditure. Now, the prospect of building better relationships with clients by offering full-book value for under-performing assets is proving hard to resist. “The industry perception of barter

has evolved from a charlatan-type practice into a leading strategic solution for advertisers,” says Orion Trading chief executive Brian McMahon.

Who benefits? Kathy Kladopoulos, ex-Carat Trade and now heading up The Midas Exchange, maintains that while the advantages for agency networks are clear, it’s been clients that have driven barter’s growth. “It helps for obvious reasons,” she

says. “We’re in unique position to offer trade in a seamless fashion and implement against the marketing objectives. Clients are able to recover full book value on the asset.” However, Kladopoulos is keen to

point out that barter is not a one- size-fits-all approach to maximising revenue but it is for those companies looking to create capacity. It requires large amounts of due diligence before a company is able to ascertain the value of what’s on offer. The biggest driver for barter is the

potential for advertisers to squeeze more out of its media activities. With this in mind, there are concerns it could aid the push towards the commoditisation of media. However, Orion believes this is avoided by providing media services

“The perception of it has evolved from a charlatan- type practice into a leading strategic solutions”

at the same set price and using assets to pay off just 20% of that price. “If a client has got excess stock that

they can’t sell and they’re looking to sell it at a loss, the first thing they usually do is cut back on their marketing budgets to balance the books,” says Paul Benson, Orion’s European managing director.

What happens next? Agency divisions have so far been the preserve of the US market, with only Orion Trading operating globally. However, for the majority of agency

networks the need for greater efficiency should see them go global in the coming 12 months. Orion Trading now operates across 13 markets and GroupM’s The Midas Exchange is planning to expand outside the US within 18 months. For Benson the benefits of going global are clear. “It means companies can work in three ways now, finding solutions against their requirements on a local market to a pan-European basis. “If you’re doing a UK only transaction the amount of inventory you can take from a global client is limited. If you are a global company you’re going to be a bigger solution for them,” he says. With the weight major players are

throwing behind it, barter in media looks certain to become mainstream practice sooner rather than later. ○

For more in depth comment go to

As efficiencies in media are chased down, barter offers another option

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