Media Bartering Is Growing
Media bartering is not something new, but it’s becoming more popular among businesses using it to save money and reduce debt. Media bartering is a win-win for both sides. Cash strapped companies can use their excess goods and services to secure media deals to help promote and grow their business.
The British advertising executive Frances Dickens, a well-known face in Britain for her appearances on the BBC’s reality series The Apprentice: You’re Fired, says the practice is alive and well and serving an important function in a disrupted modern media economy.
Traditional Advertising Is Stuck
Total consumer and advertiser spending will rise at a compound annual growth rate of 4.4 per cent over the next five years, according to a report out last week from PwC, but with sharp differences among industry segments and sectors within them.
With traditional advertising revenue growth stuck in the low single-digit range and marketing budgets tight, Dickens says a growing number of businesses are resorting to bartering as a “way to secure goods and services, shift excess ad inventory and attract new customers” without spending precious cash.
In theory, media bartering looks tailor-made for cashstrapped companies trying to reduce debt and save money.
However, the industry had suffered from a “tarnished repu- tation”, Dickens explains. “In the past companies would exchange their products for credits to buy media space, but all too often they could not be redeemed. The system wasn’t transparent and people felt they were taking a risk,” Dickens told The Weekend Australian on a recent visit to Sydney.
Traditionally, barter agencies traded media credits rather than actual ad inventory, which effectively guaranteed a discount against future marketing campaigns, providing that ad spend levels on the campaign remained high. The problem that plagued the industry was that advertisers often amassed vast quantities of coupons they would struggle to redeem in full.
Why Media Bartering Works
All that has changed, says Dickens, the founder and chairman of Astus, Britain’s largest barter company. With her business partner Paul Jackson, Dickens launched Astus in 2003 with £300,000 from private investors and an equal amount of savings.
The pair pioneered a new “fair and transparent way to help customers swap merchandise for ad inventory” that removed the uncertainty and did not leave buyers short-changed. Under the Astus model, companies only hand over their goods once a campaign is finished, and they have received the ad inventory they were seeking.
Today, Astus has billings of more than £200 million, including local operations as part of a 50/50 joint venture partnership with GroupM, the media-buying arm of British ad giant WPP.
“GroupM were keen to get on board as they believe that bartering is about to grow much faster,” Dickens said. “We also share a similar approach in terms of how we operate.”
Astus has 50 clients in Australia, including Mitsubishi Motors.
“We’ve been working with them out here since 2013 and have bought well over 100 cars from them,” she said.
Dickens, who has a 16 per cent stake in the group, reels off a long list of blue-chip clients in Britain — “Diageo, Mandarin Oriental Hotel Group, Mazda, Sky” — as evidence that big advertisers have a new respect for the once-disdained industry.
Dickens has no immediate plans to sell her stake. “I can’t imagine why I would sell out when we have so much more room to grow.”