But corporate barter as it exists today traces its origins to the late 1950s. By the early 1970s a U.S. recession found many major companies with excess inventories and manufacturing capacity, and limited cash resources.

Ad budgets were squeezed, leaving TV, radio stations and print media with unsold advertising time and space. Ad time and space are, of course, "perishable" products ... as are airline seats, cruise ship berths, and hotel rooms. An unsold "perishable product" is revenue that s gone forever. Several early entrepreneurs made their start bartering excess goods and services for "perishable" products such as these.

Today, the corporate barter business is far more sophisticated and ubiquitous ... it has become a worldwide fact of life. Corporate barter companies are experts in acquiring billions in media and other products and services to trade to corporations with excess inventories and/or surplus capacity.

The Corporate Barter Council, Inc. estimates that, from 1975-1996, corporate barter in North America increased an average of 11.1% a year, from $850 million in 1975, to $7.7 billion in 1996.

Modern corporate barter is essentially:

• A financial solution

• A marketing tool

When the corporate barter industry emerged in the 1970s, it was primarily a financial tool: a way for companies with obsolete or excess inventories to get anywhere from cost recovery up to full wholesale value for those inventories in advertising media credits or other goods and services for which they normally would have paid cash.

Even then, corporate barter was valuable: it was - and still is - a profitable alternative to traditional costly markdowns or liquidation, in which the company gets just pennies on the dollar for its merchandise. Corporate barter enables a company to get more for its products - often providing full wholesales or book value.

But today, corporate barter has become a whole lot more than a way to dispose of distressed goods. It not only provides innovative financial solutions to corporate problems, it can expand a company's advertising and marketing clout.

Corporate barter companies today enjoy widespread acceptance in the media community because they acquire on trade millions of dollars of advertising media, and help the media offset heavy costs by providing millions of dollars of goods and services for which the media would normally have to pay cash.

The corporate barter industry today can fulfill virtually any media plan the client and its ad agency or media buying service deem appropriate.

More importantly, the leverage enjoyed by the corporate barter industry means that it's more profitable to barter than to pay all cash for one's media or other goods and services. For example, if one is manufacturing chairs for a cost of $25 and selling those chairs wholesale for $50 - by purchasing one's ad space or other goods and services with chairs, one is already paying half price. Simply put, leverage is the ratio of the value received when buying with a million dollars worth of goods compared to the value received if you spend a million dollars in cash.

Corporations and their advertising agencies increasingly see corporate barter as a way to maintain or expand advertising budgets. Often corporate barter is a way of protecting the media budget when a client's sales are not as strong as anticipated, and cuts to the ad budget are threatened. Agencies are finding that corporate barter can often solve that problem, and know that, in most cases, the agency's commission is protected.

And, they know that today's sophisticated corporate barter companies use the same state-of-the-art software systems and research (from companies like Columbine JDS, Nielsen, Arbitron, Simmons, etc.) the agencies employ to ensure measured media performance.

Corporate barter is also valuable if one wishes to operate in foreign countries that simply do not have the hard currency to pay for the goods and services they need, but have goods and services to exchange.

 What Can Corporate Barter Do?                                                                       TOP

Today, corporate barter has evolved to where it not only can solve a variety of financial problems, but is a powerful marketing tool, as well.

In addition to obtaining full value for obsolete or surplus goods, corporate barter can be the answer to:

• Minimizing losses from perishable goods;

• Reducing storage costs for old inventory;

• Extending geographic distribution;

• Entering new markets;

• Generating incremental sales;

• Decreasing negative cash flow and generating positive cash flow;

• Utilizing excess production capacity;

• Expanding marketing/advertising budgets;

• Tapping into illiquid assets;

• Reducing corporate purchasing costs;

• Obtaining equipment and capital assets;

• Acquiring or divesting owned or leased real estate;

• Increasing export business.

Corporate Barter Examples                                                                              TOP

There are many different ways in which barter deals can work, the simplest being a straight exchange of goods/services for trade credits that can be used to purchase advertising media and/or other available goods and services (such as travel, hotel rooms, airfreight, long distance telephone, etc.).

A computer company wants to reward its top salespeople with an incentive trip, but budgets are tight. Working with a corporate barter company, the computer firm is able to pay for a cruise vacation with excess computers that are piled up in its warehouses.

Or, an audiotape manufacturer has 100,000 excess tapes worth $1 .00 each wholesale. Instead of liquidating them for 10 cents on the dollar, the manufacturer is paid $100,000 in trade credits, thus receiving his full wholesale price. These credits are used to pay for his company's annual sales meeting at a resort and convention center.

A wine company has a glut of product, but doesn't want to damage its brand image with price discounts. At the same time, they’d like to run ads to boost their sales. A corporate barter company agrees to market some of the wine bottled under a private label and pay for it with trade credits. The vintner uses his trade credits to run advertising to support sales of his core brand.

 Where do Corporate Barter Companies Remarket My Goods?                        TOP

One key to making corporate barter work for your company is dear communications: be sure the barter company understands any remarketing guidelines up front. There are many ways corporate barter companies can remarket goods: there is bound to be an option that works for you. Some of the most common remarketing channels include:

• Close-out chains

• Mass merchandisers

• PX and military supply outlets

• Institutions: prisons, nursing homes

• TV shopping networks

• Direct response to consumers

• Premium and incentive houses

• Company stores

• Overseas export

• Private label