Though corporate trade and barter has been around for decades, a few companies with questionable business practices sullied the industry reputation in the 80’s and 90’s. Fast track 20 years and the industry is back and better than ever. I personally was not familiar with corporate trade and barter as a marketing tactic when I walked into the Summit session led by Kathy Kladopoulos, President of The Midas Exchange. Kathy was joined by Ann Davids, CMO at Direct General Insurance and Robert Baird, former Chief Customer Officer at Philips and together, the three of them educated me and then blew my mind.
How It Works: Let’s start with a quick summary of how corporate trade and barter work together with media buying. According to The Midas Exchange, “Midas purchases client’s under performing assets at up to full book value and reduces cash outlay on their future media and marketing expenditures.” In other words, if you’re a consumer product marketer with product that isn’t selling, you would sell your excess inventory at near market value to a corporate exchange company like Midas in exchange for future media credits with their parent company (in this case, WPP). Midas takes those under-performing assets and disposes of them through sale, donation, recycling, etc.
When Bob Baird was head of marketing at Philips Norelco, he needed to off-load $2,000,000 of underperforming product. Bob used corporate trade successfully to restore the full value of the inventory, as well as offset future media expenditures with the trade credits.
Benefits to Marketers: Corporate trade offers companies an opportunity to restore full valuation for their under-performing assets or capacity. This allows marketers to maintain their advertising budgets when the economy takes a downturn.
According to Kathy, there is also opportunity for creative partnerships between the client and the corporate trade company because each client’s media spending and asset values are examined before an agreement is made. For instance, if a company doesn’t do much advertising but relies on media analytics for market research, The Midas Exchange could make that relationship work.
Ann has learned that she is better able to protect the company brand when marketing owns the partnership rather than say, finance. But don’t forget that teamwork is the name of the game here. Many different departments are affected by and should be close to a corporate trade relationship.
Who: The Midas Exchange is not the only corporate trade company owned by a media conglomerate. In fact, nearly every major media company currently has their own corporate trade arm. To name a few: Omnicom owns Icon International, IPG owns Orion Trading and Carat operates Carat Trading. You might already have a relationship with a media company that also has a corporate trade and barter subsidiary.
Corporate trade is not for every company but it’s definitely worth exploring as a way to diversify your marketing mix.