Fans of barter will almost always, at some stage, attempt to convince you that everything you ever thought you knew about barter is completely wrong.
And let’s face it, that fan club is starting to look more than a
little impressive and - dare we say it - credible. Take
Graham Duff. The former ITV sales boss joined one of the
UK’s higher-profile barter specialists, Miroma, two weeks
Another heavy-hitter, Steve Huddleston, formerly BT’s media
director, was lured to Astus in May last year. And the past
few months have seen many mainstream media agencies
appointing trading executives to advise clients on the pros
and cons of barter.
If this goes on, we might have to concede that this is a
respectable business. And the barter fan club will be more
than willing to help us achieve this epistemological transition
- even though their arguments tend to have a subtle finesse
that often borders on the paradoxical.
Interestingly, movers and shakers in the barter market are
more than willing to concede that, a decade ago, this was
indeed a somewhat dodgy business run by Del Boys and
Arfur Daleys. But so changed is this sector, they argue, that
it is actually no longer appropriate to call it barter at all. They
prefer “corporate trade”.
They also have a bone to pick with those who believe that
barter is in some way a recession thing - though they will
admit, when pushed, that the value of UK media inventory
traded via barter has doubled to £200 million since the credit
crunch began to bite in 2008.
1. During previous recessions, barter often achieved a rather
fashionable status - followed in short order by notoriety.
believe that barter agencies had not been totally straight with
them about the true saleable value of their distressed
inventory - especially in relation to the nominal value of the
media opportunities they were being offered. In other words,
this market did not always aspire to transparency.
3. These suspicions were compounded by the collapse into
bankruptcy, in 2002, of one of the market’s leading players,
MRI International. MRI had come into the UK market
promising to make barter a more respectable business.
4. Since then, a new trading model has evolved. Barter
agencies argue, for instance, that, these days, neither client
nor media owner inventory is “distressed” per se. Second,
barter agencies don’t tend to do quite so much wheeling and
dealing in widget markets. Sometimes, they don’t actually
touch a client’s inventory - instead, they act as intermediaries
to derive a media budget not from the bottom line but fromer
words, as a more direct cost of sales.
And many deals these days involve no “fourth party” buyer
- instead, Acme’s widgets will be consumed by the media
owner itself. A media owner may, for instance, agree to
change its telephony supplier on favourable terms in
exchange for media inventory.
Or take tickets for shows that it can offer as incentives to
employees. Or structure its sales conference around a
package of hotel rooms and airline tickets. In this mode,
barter agencies are effectively clearance houses for contra
5. The leading barter agencies include three independents:
Astus (which traded £100 million in inventory last year),
Active International (£60 million), Miroma (£40 million); plus
the Interpublic-owned Orion Trading (billings unknown but
believed to be considerably lower than £40 million).
WHAT IT MEANS FOR ...
- £200 million isn’t exactly to be sniffed at - but it’s a tiny spit
in the ocean compared with the £10 billion of display
advertising inventory traded across the whole media
- It’s clearly of most importance to smaller sectors such as
outdoor and to smaller media owners generally.
- If the bigger players have any niggling worries, they’re
perhaps related to image and reputation issues. In particular,
some worry that we’ll see the emergence of new forms of
the old credit scandals. They also wonder if barter agencies
harbour ambitions to be “media brokers” on a modest scale.
Media broking isn’t exactly illegal but it has always been
frowned upon in the UK.
- Barter companies counter this sort of insinuation vehemently
- and point out that the arrival of the likes of Graham
Duff in this marketplace tends to underline the sector’s new
respectability. At Miroma, Duff will be working with none other
than the chairman, Bernhard Glock, a former global media
director of Procter & Gamble - and, as such, a media
operator of unimpeachable reputation.
- Most media agencies are more than happy to embrace
any mechanism that helps the market to tick over - and most
have become fans of barter, arguing that it has genuinely
grown-up as a respectable business practice. Mindshare,
for instance, has appointed its first barter director, the former
Channel 4 salesman Niall Callan.
- Barter isn’t for everyone, clearly. But it suits some clients
and certainly seems to appeal to the imagination of
procurement people, for instance - and again, this is an
endorsement of its new more respectable status.