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 ago.
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. Classical old-school media and advertising barter involved a barter agency going to, say, the Acme Widget Corporation and offering to take distressed inventory (stockpiles of long-term unsold widgets) off the company's hands. The barter company would then sell these widgets in innovative and creative ways and use the money to buy, on Acme's behalf, distressed media inventory from media owners.
2. The problem with old-school barter is that the barter companies began trading not in raw media inventory but in media "credits" - effectively, guarantees of discount against future media campaigns, providing spend levels on those campaigns were high enough. Many advertisers found themselves amassing vast quantities of these coupons - and began (all too belatedly) to realise that they'd never be able to redeem them in full.
Some advertisers also began to 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 from an earlier point in the corporate accounting process. In other 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 deals.
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 marketplace.
- 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.