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Barter: The Name of the New E-Media Game

  |  February 10, 2000   |  Comments

The name of the new e-media game is barter - the exchange of unsold inventory for exposure through another media vehicle. If you are an Internet site with limited or no money for advertising, you'd better learn how to barter pretty quickly. Because anytime there's unsold anything, those looking for additional exposure can benefit.

The name of the new e-media game is barter - the exchange of unsold inventory for exposure through another media vehicle.

I'm not saying that barter has been around only since media buying; barter has been around for ages. But it's recently been perfected by negotiating-savvy media buyers.

If you are an Internet site with limited or no money for advertising, you'd better learn how to barter pretty quickly. In the online world you can build your presence in the marketplace through barter. Iconocast predicts that VC firms will now start to push online firms to do more barter to build brand.

About a year ago, there was a rumor that Yahoo sells only five percent of its inventory. Don't know if there was any validity to that or not. But even if Yahoo sells 50 percent of its inventory, that still poses a great opportunity. Anytime there is unsold anything, those looking for additional exposure can benefit.

The inventory will go unsold if someone doesn't come around and pay dirt-cheap rates or exchange the use of the inventory for, say, 10,000 sets of Ginsu knives. The recipient of the Ginsu knives (Yahoo, in this case) can then use the knives in a promotion, or Yahoo can barter with Macy's online, which, in turn, can list the knives in its bridal registry. So you get your exposure, Yahoo gets their exposure, and Macy's gets an additional item for their registry. And everybody is happy.

Rule #1: You have to play fair. Think about why you are stuck with 10,000 sets of Ginsu knives in the first place. Not the hottest-selling item on the market, eh? Not everything can be the Palm VII (or is it Palm VIII)? But there is a good use for them. (I got a couple of sets when I got married.)

Rule #2: In barter, SRP (suggested retail price) is a good thing. Remember the last time you went shopping, and you read the SRP? Who suggests the retail price, anyway?

The auto industry has something similar to this - MSRP (manufacturer's suggested retail price). And everyone knows that no one pays that price, right?

We run into the same thing in barter. Use the retail price if you are the one selling the knives. The SRP allows you to get paid for the cost of making the knives and to make a profit. Be aware that the buyer will be negotiating too, and will tell you something like: "Those knives are 10 years old, and there is newer technology out there, so they aren't worth as much." Or "Your mark-up is too high; I can buy those knives down the street for 15 percent less."

Rule #3: Target properly. What site will want knives? Any site that sells cooking items like Cooking.com or A Cook's Gallery. Maybe gift sites, sites that sell in bulk, sites that sell to retail chains, or infomercial sites.

Rule #4: Sell the sizzle. You may not be a born salesperson, but now is the time to hit the streets. Get creative. Before you approach a site, think about what they do and whom they reach. If they sell cooking items, you have a wonderful product that they can add to their selection. When you approach Macy's, you have the most sought-after knife that will last the newlyweds their entire marriage.

Rule #5: Always question the value you are getting in return. If you are negotiating with another site, they typically have a rate card posted on their site. These rates, just like your knives, are negotiable.

Rule #6: Look at traditional media. Most media outlets have done barter deals at some point in their history. There are no rules that say you have to exchange a banner ad for a banner ad. You can just as easily get radio spots in exchange for giving the radio station some online coverage.

Rule #7: Find out how much unsold inventory there is. As in any deal where money or goods are exchanged, the more unsold inventory, the better your deal will be. It's often difficult to find out this information, but it is in your best interest to investigate. If Yahoo sells only five percent of its inventory, remember the "cost" of that unsold inventory will be different than if Yahoo sells 50 percent or 90 percent of its inventory.

Barter is just like negotiation except that no money is exchanged. Price is determined by the market - the buyer and the seller. There are no hard and fast guidelines. Success is determined by who can demonstrate the most value for his product, so that both parties will go away getting what they want.

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Michelle Ellis

Michelle Ellis is Director of Account Planning at M2K, a top-100 interactive agency. She started her career over a decade ago focusing on the retail and business-to-business industries. M2K specializes in interactive marketing solutions for clients, including strategic positioning, media planning and buying, offline and online creative, web site design, intranets, and extranets.

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