"I can't think of anything more stupid than setting up my own media barter company,” says Frances Dickens candidly. “But it has worked.” Since 2003, the Astus co-founder and her partner Paul Jackson have grown Astus into the largest barter company in the UK, Ireland and Australia, and with it, the size of the market for this relatively niche marketing solution. “When we started, we thought the whole market was possibly worth £100m. Our turnover is now £200m.”
The bones of barter
Media barter aims to kill two birds with one stone for brand advertisers, enabling them to lower the overall cost of their advertising by effectively allowing them to partially pay for it with their own products and services.
Barter can save brands on cash outlay, help get new products onto the market, and convert old or unsold product they might otherwise have had difficulty shifting. “A car manufacturer might have a new body shape coming out, and want to clear the pipeline of old stock,” she says. “It works well for fashion retailers, which have lower cost-of-product so can do an exchange at face value.”
“We secure the media first, and pay cash for the brand’s product, ensuring the client always sees fulfilment in their media plan.” It was this risk transfer, Dickens says, which has made media barter so much more attractive to clients and has allowed it to flourish in the UK.
Having succeeded at both a media agency and a media owner, she was approached by an American barter company which was failing to gain traction here. The American model was ill-suited to the UK, which has far fewer television networks. If the likes of ITV weren’t interested in a barter deal, there were few other prospects.
Where does Astus sell the product after a deal? “A lot of our competitors will talk about buying in one country and selling in another”, says Dickens. “In reality, that doesn’t happen very often.”
First, if a product is landed in a particular market, and the import tax has been paid, it is rarely worth exporting it, she says. “And a multinational’s French arm isn’t going to be happy if a load of UK product is being sold cheaply out there. That’s paralleling. We don’t do it.”
However, it can be a useful way for a brand to dip a toe in the water of a market it is considering expanding to. “We’ve done that with beer and a biscuit. You can approach a large retailer and say: ‘it’s half price, test it out.’ But you need to do it discretely, because if a brand wants to go there permanently, it doesn’t want to have preceded the launch with too much cheap stock.”
Gutsy and risk-averse
Astus’s client roster is remarkably diverse, and includes 12 car marques, fast-moving consumer goods companies and financial services firms. “It’s all about the media opportunity, rather than the product,” Dickens explains. “If we can’t deliver the media then there is no product to buy.”
Barter is a complex business. Success is a matter of talent, rather than experience. “Though many of our hires have worked in media buying at some point, we hire personalities, not experience. We need people who are gutsy, but risk-averse.”
She sees these contrasting traits in Jackson and herself. When they set up Astus, they sold half to private investors to ensure they were profitable for the first year. “We didn’t need to do that. In fact, we were profitable by the third month.”
But caution is one of the fruits of her experience. Despite the firm’s growth, she has set a flat budget for the last four years. “I’ve seen too many companies expand fast and blow it,” she says. It took Astus eight years before venturing outside the UK to Australia and then Ireland. It is currently doing its first deals in China, where the red-tape is a source of frustration for Dickens.
“China does quite a lot of contra-dealing, where companies will swap their product for advertising directly with media owners,” but Astus’s method isn’t yet established.
Dickens now prefers client-led expansion, which informs Astus’s approach to Europe. “Europe continues to be a challenge because it’s so diverse. Everyone talks about ‘Europe’, but it’s a patchwork quilt, really.”
But Dickens is strikingly optimistic. Rare in the marketing industry, she voted for Brexit (“if an acorn hits you on the head, it doesn’t mean the sky is falling”). She champions diversity, but warns against mandatory quotas, and shrugs off the Chinese slowdown (“7 per cent growth down to 5 per cent – I mean, come on!”)
Had she done her research, Dickens admits she mightn’t have gone into barter at all. “But passion can take you a long way.”