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Barter is Better

By: Heidi Lamar
Posted: February 25, 2009, from the March 2009 issue of Skin Inc. magazine.

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Let’s assume that all of the marketing opportunities mentioned were perfect for your business. How would that $150,000 budget look if you had used barter? Barter is great because it provides huge mainstream brand exposure for pennies on the dollar. Simply put, this method consists of paying your advertising suppliers, such as newspapers and radio stations, with gift cards instead of cash. This makes them partners in promoting you, not only with their ads, but through the distribution of your gift cards. Your cost is limited to the gift card redemption, which is typically 50–70%, and often takes up to a year for the redemption to occur. Profit margins with this method are typically 50%. Using barter instead of cash can easily save 75% and result in the exact same ads.

This is a little-known secret: Many advertisers are happy to barter. When you get advertising sales calls, say—and train your staff to say—“All of our marketing and advertising is done on a 100% trade basis. Is that something your company would be interested in?” Knowing and using this one simple phrase will save you thousands of dollars and hundreds of wasted hours. Most reps will say that they have to check with their supervisor, which will get them off the phone quickly, saving your valuable time. The persistent ones will try to set up an appointment anyway, assuming that once their oh-so-friendly rep is in front of you with his incredible opportunity, you will be seduced away from your barter principle. Don’t fall for it. Here is another very effective phrase: “I know how valuable your time is, so once you can confirm that you are able to take 100% trade, we can take the next step.”

The results

For the following examples, let’s pretend that every $50 gift card costs you $25 in labor and overhead. If you are doing the services yourself, your margins will be better. Also consider you probably will experience a 50% redemption rate because you know that many of the gift cards will be lost, stolen or forgotten.

Radio. Have you ever wondered where radio stations get the prizes they give away to their callers? Many of them come from advertisers who know the barter secret: If you paid for your radio ads with $800 in gift cards per week, you would save approximately 75% or $33,600. Your cost would be just $200 per week.

Travel magazines. Gift cards make great perks for advertisers, concierges and incentive prizes for ad reps, so travel magazines love to hand them out. In fact, they are giving your gift cards to business owners, concierges and all of the people you want to know about you. Your savings reduces your cost to approximately $1,250 per month and saves you $45,000.