Although there are literally hundreds of ways and places to spend within your exchange, one of the top ways to spend your trade dollars is on advertising. Through effective barter advertising you can attract new cash customers, turning trade dollars into additional cash sales.

The best part of all is that your advertising dollar costs you less on trade.

Why? Because you are purchasing the advertising at your “barter cost.” (Also known as variable cost.) If you are operating at a 50% barter cost, a $1,000 ad (normally $1,000 cash) costs you $500 cash (based on your “barter cost”).

Here’s the bottom-line savings to you:
• You didn’t write a check for $1,000 cash for the ad.
• The $1,000 ad at your barter cost is $500 cash (a $500 savings).

And, if you’re a retailer working with a brand name manufacturer there’s even more possibilities for profit.

Co-op Advertising

More than $12 billion a year worth of advertising is available to small retailers through programs offered by virtually every brand-name manufacturer.

Under these co-op advertising programs manufacturers pay you for using their products in your store ads.


Some manufacturers reimburse at a rate of 25% of the ad cost, others up to 100%. The most common amount is 50%, and most manufacturers have pre-designed ads you can use.

In some cases, the money you receive for the ads is based on a percentage of the merchandise you buy from them, i.e. for every $100 worth of product you purchase, the manufacturer will make up to $15 available to you to advertise the product.
Industries differ as to the amount of money, or percentage of sales, that’s available for co-op advertising.
Ad allowances range from 5% to 15%, typically, for mail order catalogs. This allowance, from a vendor, is taken off a purchase order or deducted from the unit price of a product.


While you must pay for the advertising, manufacturers normally reimburse within 30 days of receiving a claim form and a “tear sheet” of your ad.

If your store is working on a 50% co-op advertising budget and you purchase a $1,000 ad, after the manufacturer reimburses you 50% your cost is $500.

When that $1,000 ad is purchased with 1,000 trade dollars, you really bought the ad for $500 from a cash-flow standpoint. (You traded $1,000 of your product at retail, which cost you $500 wholesale.) So when the manufacturer reimburses you the $500 (your co-op funds) your net cost for the ad is zero!


And the first time a customer walks in the door, as a result of your advertising, you’ll realize an immediate profit. Because your cost to get that customer in the door has already been recovered.

Just think of the potential reward you’ll receive if your co-op reimbursement is 75% to 100%—you’ll make money before your first customer ever appears!


The Co-Op Advertising Programs Sourcebook, lists 4,000 cooperative programs in 52 different product locations by manufacturers (indexed by company name, trademark and industry) is published by National Register Publishing. For more information see:
COOP

Looking for information on television advertising, see “Television Bureau of Advertising:
TV

Suggestion: Make it a plan on advertising more this year. (Plan an advertising program for an entire year.) Then you will know the amount of additional trade dollars you’ll need to earn to fund the program.

Also, do some brainstorming with other members. Look for ways to cooperate and help one another through “co-marketing” efforts.

BarterNews.com has an extensive “Media” section for you…
MEDIA

Want to get off to a fast start with your bartering efforts? Get the Fast Start Barter Program: FS

This entry was posted on Saturday, May 17th, 2008 at 9:04 am and is filed under Media. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.