Investing in first-quality media versus buying cheap advertising

We are writing a soon to be published white paper focused on the marketing implications of Corporate Trade. It is no secret that many marketing professions shun the process of selling excess inventory or surplus real estate in exchange for the placement of a portion of their advertising. Often for good reason. They've experienced the advertising placed by the trading company that didn't air or aired in the wrong dayparts or in the wrong programs, etc. In the face of that, the two questions we ask are, "Is all media received through trade, by its nature, inherently flawed? To trade, must you compromise your advertising?"

In one section of the paper, we make an important and little understood distinction between trading companies who simply trade for or buy cheap media, and those of us who invest our capital with the stations, networks and publishers in order to gain first quality media. In the paper, we use an example of paying $500,000 for an updated fleet of news trucks needed by a cable network in exchange for a larger amount of airtime credit. Keep an eye on our blog, and we'll let you know when the paper is available for the free download.

Investing in first-quality media versus buying cheap advertising

A critical distinction between trading companies is the means with which they acquire their advertising time and space to meet a client’s needs. In the above news truck example, Evergreen Trading invested $500,000 in order to create a lower cost basis that allowed us to provide added value to the client’s excess inventory or surplus real estate. We made a real investment that provided the cable network with a tangible good that they needed, and in return, we received a media credit that is usable against any available time for any client.

When we make these investments, we also take risk- risk that we might not use the media credit we receive. This is a very different business model from the typical media agency that never makes investments and never takes any risks because they are simply acting as agents for client budgets. A true trading company puts its own money at risk and reaps those benefits in the form of a lower cost base and uncompromised quality.

Most trading companies, however do not make investments to acquire media, especially those trading companies that originate from the agency media buying mentality. Instead they simply buy cheaper media time and space. They are incapable or unwilling to take on the risk of investing in the needs of the media community in order to create a lower cost basis for first quality media. Rather than acting as a principal investor in the buying of quality media, they are a broker of cheap advertising.

Most often, the stories of compromised traded advertising reflect trading companies who did not put their capital at risk and who did not acquire media by making investments with the media vendors. Without media investments, those companies are forced to “beat the plan” by out-buying the client’s agency. This is typically done with cheaper, less expensive media buys. If you properly select the trade company, you won’t have to compromise on your media expectations. In any trade program, don’t confuse low cost spots with the cash-quality media you can receive from a company that actually makes media investments.

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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