CHICAGO: Shell Lubricants has boosted its marketing flexibility via corporate trade – an approach that converts pre-planned media buys, products or other assets into cash and credits to spend on brand programs.
Mark Pyle, brand and communications manager at Shell Lubricants – which boasts a portfolio including Pennzoil and Quaker State motor oils – discussed this approach at IEG's 2015 Sponsorship conference in Chicago.
He outlined various initiatives the company had pursued with The Midas Exchange, a firm that buys assets – from ad inventory, sponsorships or even cars and buildings – from clients, and takes control of placing pre-planned media in return.
One way to use this strategy, he reported, is a "cash deal", whereby the client gets up to full book value for assets in the form of funds which are then directed to new marketing initiatives. (For more, including further examples, read Warc's exclusive report: Shell Lubricants: Making media the new oil.)
Exchanging assets, whether in the media space or physical objects like "old and slow products", for trade credits is another possible application of this approach.
For example, Shell Lubricants has sold $1.2m of its planned cable TV advertising to The Midas Exchange, and used the cash to support an activation at South By Southwest 2014 on behalf of Pennzoil.
Based on guidelines provided by MediaCom, a media agency network owned by WPP, The Midas Exchange then placed over $10m of ads as a component of the deal.
At this stage, The Midas Exchange makes its money by securing better rates than were anticipated in the original media plan. Media guarantees and audits are also put in place for the client, which pays no extra fees.
As these efforts can ultimately outperform the original media plan, it is possible for brands to generate even greater value from their investment through corporate trade, according to Pyle.
"I would have spent ten [dollars] anyway, but now I've got nine dollars of media, I've got the ten-dollar value and I have a dollar left that I can spend on something else," he said.
Such an approach is often seen in the same light as media bartering, a tactic that has traditionally left marketers with concerns about the quality of the inventory they are likely to receive.
But as The Midas Exchange is part of GroupM, WPP's media arm, it can access swathes of trends, costs and futures data, as well as tapping its parent's significant in-house expertise and buying power.
"Typically, barter media is confused with remnant media," said Pyle. "That's not the kind of media we're talking about."
Data sourced from Warc