NONE: RE: ONLINE ADS>> Ad-Bytes - Barter Advertising
RE: ONLINE ADS>> Ad-Bytes - Barter Advertising
Mark J. Welch, Esq. (markwelch_at_ca-probate.com)
Sun, 23 Mar 1997 21:01:22 -0800
In response to:
>> Trading links: Barter makes a mark on Web
>> IAB to report how much ad spending is cash vs. non-cash
>> http://adage.com/interactive/articles/19970324/article1.html
At 03:11 PM 3/23/97 -0500, Michael S. DeVries wrote:
>Some of the comments in these articles show that some of media providers
>understand the benefits of barter :), while others just don't get it * * *
>
>I really don't see what the issue is and why its "[more] than the industry
>wants to admit"?
I think the issue is that a huge amount of the "paid advertising" that
we see reported and tracked by various agencies and consulting firms
are actually not paid advertisements at all. Indeed, I strongly believe
that a lot of "paid advertising" reported in the annual reports of
companies like Netscape, Lycos, and Microsoft are actually not
traditional paid advertisements -- instead, they are ads "sold" on
the (wink, wink) basis of trading purchase orders for identical
amounts to make it appear that there are "real" transactions going
on. That way, you can show your company going from $2 million
in sales to $22 million in sales, with $20 million being banner ad
sales. (Of course, there is value there -- traffic building, brand
awareness, maybe even real sales generated from the ads.)
I also agree that barter advertising is valuable and should be
counted, but I also believe that advertisers who actually pay
should understand the difference between paid and barter
advertising. For example, if I trade ads on my site with ads
on another site, and we fix a "value" of eight cents per
adview, that certainly should not be viewed by an advertiser
as a reasonable way of fixing the "true" value of advertising.
I know of local (non-internet) barter networks where you
can't use your "barter credit" on anything unless you are
willing to pay artificially inflated prices (e.g. you can not
use the credit as if it were cash at an establishment, and a
vacation package that would cost $1,800 in cash ends up
costing $2,800 in barter credit). That's not an intrinsic
problem with barter, just a problem with that particular
network and its members.
But the perception that barter transactions are a "different
world" from the "real world" of financial transactions is one
that is important to keep in mind, at a time when there is
also a perception that "cyberspace" is not part of the real
world. The worst outcome we could have is a perception
that bartered ad dollars are really nothing more than
Monopoly money.
Of course, if "barter" transactions are going to be measured,
then all the "banner exchange" networks need to be added
into the equation -- something that advertising agencies have
resisted because banner exchange networks don't pay any
commissions on exchange traffic, and even ignoring the
financial aspect, ad agencies don't want to admit that they
were wrong in claiming that banner exchanges are not a
serious or valid form of advertising. (Obviously, this does
not apply to ad agencies which encouraged client to use
banner exchanges.)
It could also make the world realize that companies which
are often perceived as "bit" players are not small at all -- for
example, at the most recent audited traffic level (28
million adviews per week) for LinkExchange, assuming
no further growth, they would generate 1.5 billion adviews
this year, which would be $15 million in value at a nominal
value of one cent per impression. With growth, I assume
that LinkExchange will handle "barter" business of $50
million or more in 1997.
Regarding the tax comment -- barter transactions are taxable,
but in the case of exchanges of banner advertising, the value of
ads received is directly offset against the "cost" of ads obtained
through barter, which is a deductible advertising expense, so I
don't perceive this as a significant tax issue unless the day
comes when I can trade my accrued banner impressions for
other products or services of value, which might not be
proper business expenses (e.g. frequent flyer miles, game
software, etc.).
-- Mark J. Welch (510) 847-2026 http://www.ca-probate.com/
-- Web Site Banner Ads (Networks, Brokers, Exchanges, Software, PSAs):
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