TV Stations' Use of Barter to Finance Programs and Advertisements

W Wossen Kassaye and Joseph P Vaccaro

Barter - a form of transaction that requires the seller (eg, TV station) to make a contractual obligation to the buyer (eg, advertiser) to accept full or partial payment in goods and/or services - is one of the most interesting and least understood aspects of media planning. Because the media buyer trades goods and services to the media seller for advertising time and space, barter is also known in the industry as trade for mention.

Some in the industry feel that 'barter is bad for advertisers, bad for syndicators and bad for stations' (Ross, 1989). Often stations and advertisers have competing, rather than complementary, objectives. Station management wants shows that will secure higher ratings for the station. Advertisers, on the other hand, want guarantees in terms of reach and frequency; generally, they would like to see fewer shows offered at more realistic time slots. They may accept a clearance as low as 60% for certain time periods, especially if the cost (CPM) is relatively lower than that of the networks. By accepting barter shows, a station agrees to provide time slots for new shows, thereby taking slots from shows that may have better potential for certain time periods (Ross, 1989). Conversely, by not placing a barter show in a better time slot, a station reduces the renewal chance for the show. If a barter show does not make it one season, it is not likely to be renewed in another.