Campaign India Team
Jan 16, 2009

All About Media Barters

The age old concept of barter is defined as trade by exchange of commodities rather than by the use of money. The business concept applies well to the media companies which have been leveraging the system to their maximum advantage by using each other’s brand values at various occasions and saving cash. Campaign India speaks to the people in the industry to get you information on what media barters entail, their advantages and the things one should be careful about while entering into a barter agreement. 

All About Media Barters

The age old concept of barter is defined as trade by exchange of commodities rather than by the use of money. The business concept applies well to the media companies which have been leveraging the system to their maximum advantage by using each other’s brand values at various occasions and saving cash. Campaign India speaks to the people in the industry to get you information on what media barters entail, their advantages and the things one should be careful about while entering into a barter agreement. 

The three situations, according to Saket Saurabh, brand head, CNBC, where barters work well are: a) Synergy exploitation - two media brands may have audience, content, medium or market synergies which barter can exploit economically for both parties. It’s a symbiotic relationship which involves a cross leverage of respective brand strengths. b) Creating media multipliers- another motivation for media barters, is to expand the brand’s circle of influence by creating additional touch points of engagement, thus improving the effectiveness of the brand message. c) Opportunity/appointment marketing - The currency of “media partnerships” today is a by-product of the ad space media barter principle. Here, particular events or shows are promoted by “partners” for a limited time frame. “The idea is to deliver higher value for the event, through a well coordinated, unified promotional push by all partners. Naturally, this reduces operating expenses considerably as well,” he adds.

Rahul Kansal, CMO, Bennett, Coleman & Co. feels that barter works well if each party has a need for the other’s media brand; and also when the ‘conversion rate’ (that is, the tariff at which the barter takes place) is considered fair by both. “To illustrate, if brand A tends to stick to its official rate card and brand B does a lot of discounting, a card rate-to-card rate barter would not be found acceptable by the former. They will need to agree to a conversion rate,” he adds. 

The two biggest advantages are cross leveraging brand strengths and cost savings. Kansal says, “Needless to add, the objective of reducing marketing cash outs, maximising returns and creating expense efficiencies is fundamental to any barter arrangement, irrespective of the brand benefit factors that may apply.”He explains, “If an ad campaign in bought-out media would have cost x, it would cost a fraction if paid through space in one’s own newspaper/ channel.”

Be careful when you enter a barter, say the experts. While there are advantages attached to it, a barter deal is not that easy to clinch. A lot of factors need to be kept in mind while entering into the deal. Says Saurabh, “Most importantly, there has to be a clear “raison d’etre” which underlies barter. Is it an audience fit, an opportunity to exploit respective market strengths or beef up each other’s content plans or some other compelling logic for striking the barter? That proposition has to be well understood. Also, one needs to carefully manage partner expectations right at the outset, so deliveries are not affected and channel priorities are not compromised as well.”

Barters haven’t really picked up in India, particularly in outdoor media feels Indrajit Sen, president-projects, Laqshya Media. “We haven’t come across major offers directly though we have learnt about some one-off deals in the industry.  Lack of transparency in deals has been one of the reasons, as well as failure to see equivalent value in the bartered goods.”Sen also says that barters would perhaps work better if goods being bartered were commodities and not brands which makes establishing equivalence in values a difficult negotiation - which then comes down to list prices as the basis of equivalence - which is not the ideal condition. “As such, barters one comes across are to make up for lack of liquidity by excess of inventories.  Since this is then initiated by one party, the other party recognizes an opportunity to get a branded product at a discount and approaches the transaction from that point of view only. If faced with resistance, the deals easily fall through,” he adds.

What it means for...

Brands

  • Brands can cross leverage each other's brand values
  • Barters can help expand the brand's circle of influence by creating additional touch points of engagement, thus improving the effectiveness of the brand message
  • Barter works well if each party has a need for the other's media brand; and also when the 'conversion rate' (the tariff at which the barter takes place) is considered fair by both
  • Barter reduces marketing cash outs, maximises returns and creates expense efficiencies
  • There has to be a clear "raison d'etre" which underlies barter

 

Source:
Campaign India