How to prevent economic woes from reducing your media effectiveness

With the Dow falling ever further, GDP growth at under a measly 1%, unemployment at almost 10%, and consumer spending in decline, it's understandable why your company may be considering a cut to its advertising budget. But as 2012 budget meetings are being scheduled and you are hard at work trying to create a plan to prevent a decrease in your future ad dollars, here's a thought that should thrill you and your financial officers: There is a way to get more ad presence with the same or even fewer ad dollars.

We talk about it quite a lot in this blog, but it's still relatively unknown, and certainly misunderstood. It's the media trade market, and your participation in it can stretch your advertising budget. If your 2012 ad budget remains flat or even decreases, you can still increase your reach and frequency, media mix, brand awareness, etc.

What is the media trade market? It is an exchange whereby media vendors pay with their ad time and space for goods and services they need. They could spend cash to purchase things like news trucks, hotel rooms, airline tickets, and close captioning services, etc. but by trading their time and space for them, they greatly reduce their cost for those needed goods and services.

This benefits you because there is a way for you to acquire the media time and space you want, and do with fewer dollars. By tapping into the media trade market,

you gain the advantage of acquiring your air time and ad space at costs reflective of the trading of the media community.  But, before you pick up the phone and call your local television station to set up a trade, realize that you cannot do this without enlisting the help of a corporate trading firm like Evergreen Trading. You don't have the wide variety of goods and services desired by your media vendors sitting around ready to be shipped and then invoiced in media time. Trading requires access to the stuff your media vendors want, and a sophisticated financial process capable of calculating and billing for media time and space.

Contrast this with how you currently buy media. Your advertising agency goes into the market now with your plan, and buys the spots, pages, billboards, etc. with your cash. They disclose the costs of the various media suppliers to you on an invoice so that you can write a check for the advertising that ran. Nothing wrong. It's been this way for a very long time.

Benefiting from the media trade market is not difficult, but again, it requires a trading intermediary like Evergreen Trading. The process starts with your marketing people or advertising agency giving your plan, costs and other commercial terms to the trading company. Keep in mind that your media plan is being based upon your costs and your schedule. A common misconception about trade is that you need to compromise on quality in order to take advantage of trade. That might have been true in the past, but trading companies today will adhere to your plan and costs. The disreputable trading companies of the past have met their demise.

The trading company next goes into the trade market with your plan and places it with the various media vendors. They buy is placed, the media runs, and you then pay the invoice with either excess inventory, other undervalued asset, or cash. Unlike your normal cash invoice, the invoice you or your agency receives from the trading company will be what is called non-disclosed. In other words, the individual costs for the various media will not be itemized on your invoice. This is because the trading company paid with hotel rooms, airline tickets, printing, business services, etc. and their costs are not shared. The trading company, not the client, invested their cash to create these trades,so as with your business, costs don't get shared.

If you pay cash for your media as opposed to trading an asset, the net amount you pay for the media schedule will be less than if you had placed it through the normal cash market. There in lies the benefit to working with a trading company, and why buying media this way will save you cash. You get YOUR media schedule, but it will cost you less in the end. Use trade to do more with your existing budget, or prevent a lower budget from decreasing your media reach and frequency. As a wise man once told me, "I just refuse to participate in the bad economy!"

 

About Mike Lake

Mike is the Senior Vice President of Marketing for Evergreen Trading. When not playing jazz trombone he is probably obsessing about writing content that will capture the attention and interest of business people and fellow learning junkies everywhere.

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