How Corporate Trade Has Become an Economic Lifeline

The idea behind corporate trade could very well be a lifeline for many companies as they navigate through the COVID19 crisis An intermediary like Active International which has investments and trading arrangements across a wide range of industries purchases excess or unwanted assets for full value and turns these assets into working capital These deals can involve turning unsold retail goods into funding for future media or an unwanted sponsorship into much needed cash or any other number of permutations Even in boom times corporate trade is a vital part of the global economic engine But as industries look to adapt to unheardof economic conditions corporate trade has adapted to become a lifeline Many of Active39s prepandemic deals involved media placement that was executed within the same fiscal says Kevin Farkas pictured at top Active39s President of Sales Operations and Chief Risk OfficerClearly this time period would present a problem for many businesses today that have excess inventory but no immediate plans for advertising But Farkas says because Active takes a very longtail approach in its businesses it can take on longterm investments like buying clients assets including media commitments and acting purely as a source of funding in cashstrapped times Farkas told us more about how corporate trade has become a source of value during a socially distanced chatOriana Schwindt Is it fair to say you39re pretty busy these daysKevin Farkas Yes it is Our acquisition of slowmoving assets including marketing commitments have definitely increased But more than that just our conversations with clients and prospects about their unique challenges and need for customized solutions have increased dramaticallySchwindt What are you hearing from clientsFarkas We assumed at first that everyone who was trying to exit their media obligations was doing so because they were trying to preserve cash flow and reduce expenses But there are plenty of companies like food and beverage who simply want to divert that marketing budget back into supply and manufacturing And In addition there are plenty of companies out there that still see the value in advertising especially in the CPG and pharma sectors Itamp8217s different by industry and weamp8217re looking to get brands outofthebox ways to deal with outofthebox challengesSchwindt What39s a good example of one of the deals you might be making nowFarkas Let39s say you39re a financial service company who39s sponsored a major sporting event that is no longer happening this year Instead of everyone getting very expensive lawyers involved trying to figure out if force majeure clauses apply in this case we step in and simply put the money up front to buy the credit card company out of that sponsorship In exchange the client agrees to run some of their marketing spend through us in the future In the past we39ve even helped one brand get out of its commitment for a racing sponsorship by enabling multiple brands to divide and buy individual pieces of that sponsorship Because of our deep client base weamp8217re able to create meaningful wins for all parties in a transactionRight now we have clients who are looking to exit their national commitments and transfer that money to a large local footprint to be more targeted It makes sense for some marketers to only focus on areas of the country that are opening back up Our robust local team is scaling plans to fit their particular needs For brands looking for more coverage 80 US while delivering national efficiencies our proprietary unwired solution provides them with market and creative flexibility not available in network and cableSchwindt How important is flexibility to your business modelFarkas It39s crucial to our value proposition Especially now when brands need very customized solutions and their assets include but go beyond unsold product to media commitments and unwanted leases and buildings even aircraft weamp8217re working to find ways to deliver value And what we39re seeing now more than we have in the past is a level of receptivity to the creativity required to solve these outofthebox problemsThe corporate trade model is very flexible because we39re accustomed to taking risks to create value for our clients Whether it39s cash or a trade credit we can give them the flexibility clients need right now to improve financial resultsClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNet

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How Corporate Trade Has Become an Economic Lifeline

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Oriana Schwindt

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