Practical advice on corporate trade
Dean Wilson, UK managing director at Active International, gives some practical advice for media agencies looking to form partnerships with corporate trade companies (which allow brands to sell under-performing assets in return for trade credits)…
Despite corporate trade (or corporate barter as it’s often referred to) being a well established industry, it’s only over the last few years that it has become a more visible and popular method for brands to generate extra value from their media spend. As a result, more and more media agencies are working with these organisations when planning and buying campaigns on behalf of clients and forming partnerships with them.
But before I go any further, for those of you who have not heard of corporate trade or have, but know little about it, here is a brief description: corporate trade companies allow brands to maximise value from their under-performing assets by buying these assets in return for ‘trade credits’ (for more than they would achieve in cash in the open market), which the brand can spend on a range of services from media campaigns and printing to conference facilities and corporate hospitality. To provide an example of how much value can be unlocked from surplus stock, we were able to release over £91 million in value globally via trade credits last year.
A lack of understanding of the role of corporate trade companies has lead, wrongly, to some nervousness in the media industry amongst those who have not worked with this type of business before. Also, some in the industry have had bad experiences with this sector in its early days, which have turned some off. However, the main issue for agencies is whether working with such an organisation will impinge on their planning and buying role.
The simple answer is no. Media agencies have nothing to fear from a corporate trade business. The role of media agencies with their clients remains exactly the same. All media planned is per the agency’s media plan; the agency plans and negotiates the media; all media is paid for at the agency’s negotiated rate, and the presence of a corporate trade business won’t affect their remuneration.
But what are the key factors to bear in mind when recommending a corporate trade organisation to a client with excess or unwanted stock, or even considering one to partner with as a resource to deliver extra value to your clients?
Firstly, brands and media agencies should only deal with the largest, established operators in the marketplace. It’s these that have the financial stability that ensures they will be around in the long term. For brands it means they can safely spend their trade credits at their leisure without worry that the corporate trade partner might not be around to spend it through.
The corporate trade company should have a worldwide presence. It’s highly likely that at your agency you have various clients who want you to implement cross-border campaigns. A corporate trade company with operations around the world can help generate extra value for media spend within the countries they operate in. It’s this reach that also provides added flexibility and value.
Ask which media agencies and also brands the business currently works with. If they don’t work closely with the top media agencies, across the likes of Omnicom, Havas, WPP, for example, or blue-chip brand names, they are probably not well thought of or experienced enough, so it’s worth giving them a miss.
These corporate trade organisations are also unlikely to have strong relationships across a broad range of media owners, which they can leverage to ensure advertisers generate the best value from their trade credits.
It’s vital that brands only sell their stock via approved re-sellers. Not doing so can seriously damage their brand. To this end it’s the larger and more established corporate trade businesses that are more likely to have the contacts to sell a brand’s excess stock onto approved re-sellers. Smaller ones are often going to lack the contacts with the appropriate re-sellers.
Ensure the corporate trade business is open and honest. To find this out meet up with them, before making an appointment, to see what they can offer all parties. If they can’t deliver a deal, which includes and benefits everyone involved, move on.
In this day and age technology has progressed sufficiently for corporate trade organisations to offer 24/7 reporting on how trade credits are being spent. This knowledge can be used to easily tweak trade credit spend in real time to ensure the brand constantly generates the best results from their campaigns. Generally, it’s the larger companies that have this technology. Always ask what reporting procedures are in place before making an appointment.
Corporate trade is here to stay and set to continue its strong growth. After all, it delivers extra value to brands and allows media agencies to generate increased value for their clients at no hindrance to their operation. As a rule of thumb, both media agencies and brands should always look to partner with the biggest and most experienced corporate trade business in the marketplace. Being an industry where experience, size, volume of contacts and the provision of the latest reporting technology is key to delivering value, it’s these corporate trade businesses that need to be identified and utilised.