The Evolution of Corporate Trade in Today's Marketplace

By Active International Archives
Cover image for  article: The Evolution of Corporate Trade in Today's Marketplace

Predicting the future of the media and advertising industry is an impossible task. Marketers and media planners today face challenges I couldn’t begin to imagine when I started out as a TV syndication salesperson decades ago.  No one really knows how technology will continue to affect linear and digital media in the long-term, but we can be confident that television and broadcasting are not dying. Advanced data analytics will continue to change how we buy and sell media, and of course consumers, as we know, are in full control. We will be living in an uncertain world for many more years and we all need to be able to live with that ambiguity. This isn’t necessarily bad, because it also creates opportunity.

It’s actually this market ambiguity and uncertainty that led to the creation of corporate trade and continues to keep it relevant today. My partner and I co-founded Active International, the first independent corporate trade company, more than three decades ago. Since we came out of the media industry, we were very comfortable with the acquisition, placement and sale of media and also comfortable with the agencies because we basically grew up alongside our advertising colleagues. We also recognized that there was as much interest from manufacturers in removing underperforming and undervalued assets from their books as there was in buying media to sell their products. And, at the same time, media providers had many of the same issues as brands -- they have to live within a budget and purchase programming, as well as other capital expenses.

Based on an understanding of both sides of that equation, we framed the business to be able to provide a financial solution that benefited each of these groups right from the start. Fast forward to the present: We are here more than 32 years later because the model works. As the company grew, so did our understanding of what clients and media providers needed, which led us to an evolving suite of products and services that continues today. What has remained the same is our ability to deliver a financial solution that works for the media and for advertisers.

As we observe today’s business dynamics, it’s been fascinating to follow the adoption of what most recently has been called principle-based buying. However, it’s important to note that Active’s model is very different from the holding company model from two perspectives. One is that we are working with the client’s assets. The other is that we are investing our own capital with the media providers. As a result, our focus is not on discounted media but on serving the interest of the media provider and our clients by delivering a financial benefit.

What makes Active International distinctly unique is that in our corporate trading model we have two clients in every financial transaction. On one side are the consumer products or manufacturing companies -- ranging from Fortune 500 multinationals to small and medium enterprises -- who need a better alternative to liquidate their excess assets and need to buy advertising or other services. Over the years we’ve acquired assets from companies across virtually every category. This includes everything from corporate helicopters to excess merchandise to real estate to capital equipment.

On the other side are the media providers, who have many of the same needs as brands. They purchase programming, engineering products, computers and software, benefits, travel and entertainment and other essential services. Many people are unaware of just how integrated trade truly is within the advertising community.  Media providers often use their advertising time and space as an alternative currency to acquire a myriad of products and services in the course of running their business. If you walk into a media buyer’s office in an ad agency you will see promotional items ranging from coffee mugs with logos of media companies to posters of TV shows -- most financed through the trading of advertising time and space, up to and including the content itself. Trade is hard-wired into the media industry, helping companies secure what they need and utilizing the leverage inherent in the media time we acquire to share a financial benefit with our clients.

Here’s one example of how we recently worked with a media company. As you drive Cromwell Road from Heathrow into central London you’ll see Europe’s largest digital billboard, which Active and its strategic partner Ultravision International helped construct for Clear Channel Outdoor in return for ad space on that board. Active clients have been some of the companies advertising there, having paid for the space using Active media trade credits.

From an industry perspective, it’s fascinating to watch the business evolve.  Over the past few years the agency holding companies have entered our space. One reason may be that client procurement teams have reduced agency commissions. This has forced agencies to seek other revenue streams. They are exploring ways to add margin, including through the sale of non-disclosed media. The rigid view of saving money through discounted media may abate as procurement continues to become more knowledgeable about what agencies are required to deliver.  Agencies need revenue in order to provide all the services clients require in this evolving marketplace. Clients need agencies and agencies need clients and over time, agencies and clients will likely go back to a more symbiotic partnership.

As Active international has become a global financial solutions company with offices in 16 countries, we look at the global marketplace from a broad vantage point. We certainly continue to see major brands integrating corporate trade as a financial solution as they seek ways to avoid losses, generate savings, create funding and improve their balance sheets. We also see that disruption is unsettling. As a company that has thrived on disruption to create efficiencies, we believe there is tremendous opportunity for agencies, brands, and media providers to leverage that disruption to achieve their goals.

The opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillage.com/MyersBizNet management or associated bloggers. Image at top by GraphicStock.

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