Barter: Radio Stations Are Aggressive Traders
June 17th, 2007 · by Bob Meyer · 3 Comments This is the sixth in a series of interviews with Jack Schacht, the founder of Illinois Trade Association, which was sold to IMS in 2006. The focus here reminds me of a session at a national convention on media two decades ago…where panelists Schacht related his experiences with radio stations and I talked about the print side of media.
Our questions to Schacht:
1.When did you make (what year of your business) the decision to go heavily into the media business? What prompted you to do so?
2. Was your location in Chicago a major factor to your success?
3. Why aren’t more exchanges in the country pursuing this avenue?
Jack Schacht: “We made a decision to create a media division about two years after we went into the barter business. A primary motivation at the time was our realization that Chicago radio stations were aggressive traders and would help us drive more sales to our members.
We also felt they would provide us with quality referrals who didn’t want to direct trade with them. We were right on both counts and saw a significant increase in members sales volume as well as an increase in the quality of our referrals. As a matter of fact, the referrals provided by the radio stations were easy to sell because we were able to really work in partnership with the stations in selling them.
The only problem with opening all the top radio stations was that we didn’t have any business for them. After a year or so, they were collectively in the hole by over a million dollars in trade. Indeed, even after we began to sell their radio time, we kept them over a million in the hole and that’s probably where they are to this day.
Though I have tried to explain the wisdom of allowing large, sustained indebtedness of big spenders to my peers, they don’t seem to really get it. Such a practice is way too flamboyant for most exchanges.
As for your next question, I never understood why all exchanges haven’t played the media card to its full potential, regardless of the size of their market. I think they are missing out on a lot of action here.
That being said, being in Chicago was a big factor in our success. Chicago is a business savvy market that tends to understand barter well. We actually stopped developing our business in both Milwaukee and Rockford long ago because they were way too conservative for us.
Still, others in the business have been successful in smaller more conservative markets. It just wasn’t my cup of tea.
As a matter of fact, the new business I hope to launch in October will also be directed to the up-scale urban market. That’s just where I tend to find my action but it’s very much a personal thing.
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June 21st, 2007 at 4:06 pm
I completely agree with Jack’s approach as long as you have his integrity and business expertise.
The reason it won’t work for most barter exchanges is their total ignorance relating to barter economics and the mis-management of their own currency. Without banking laws as they would relate to the barter industry, we continue to see ridiculous decision making by trade exchange owners. They buy what they want when they want it with little to no regard for the economic value of their currency and how that affects their membership. Like locusts, we see them pop-up all around us as anyone can start a trade exchange.
If every barter broker had to be bonded and insured, we would see a much more viable barter system in America with a currency that members could count on. Then, Jack’s media model and the correct management therein would create a dynamic reality for every barter exchange in the country.
June 26th, 2007 at 7:09 am
I am sorry Matthew, but that’s the same kind of addle headed nanny state thinking that allowed all of the worlds Stock exchanges to be melted down into a very few giant exchanges with one set of rules governing practically all of them, i.e SEC.
Yes individual trade exchanges may make idiotic or even criminal decisions from time to time and some people are going to be affected by their own bad luck or bad business practices but the overall market place will not be affected.
If you impose from above a set of universal rules then three things happen. One, the freedom of choice is narrowed. Two the opportunity for a criminal opportunist to rape the market place is actually enhanced not, as some would believe, reduced. I rest my case on Enron et al on that score, and finally Three the opportunity for fraud on a large scale induced by the supposed antifraud organisation guarded by the new “priesthood’ is also enhanced.
Talk about unintended consequences of good intentions.
I refer to the Real estate marketplace as the epitome in my last example. The Realtor system does nothing to discourage criminality. It actually makes it harder to get rid of bad agents.
I am involved in Evalues because it allows me an independant operator to make my own decisions regarding how I do business. Any more rules just becomes Restraint of Trade; illegal in many jurisdictions.
July 18th, 2007 at 9:06 am
The comparison Andrew Pludek makes to the world stock markets and the SEC as it relates to the almost non-existent barter industry in the USA is laughable. Can we all just admit the truth about our business for once?
In the USA, barter exchanges do not register much in the mainstream business marketplace because any convicted felon or derelict can pay for software support and instantly, launch a barter operation.
Lots of FREEDOM with NO RESPONSIBILITY preying on the innocent with no rules or risk to the predator.
To sell stocks, bonds and investments, you have to study an extreme amount of information, pass the difficult exam and follow the laws that govern that industry.
I’m grateful that my investments are protected at this level. Real Estate not nearly as tedious but is also governed to a level that most people are protected.
There are always thieves to watch out for but in the barter industry, it’s an epidemic problem that could be resolved with MINOR requirements.
It’s only an idea but if you disagree, at least have the intelligence to make a reasonable comparison.