Published in Retail World magazine
Corporate trade lets marketers leverage already diminished costs and pull them into alignment with wider commercial objectives.
Given digital’s ability to lower the cost of marketing, deliver highly focused messages and engage with the right people at the right time; it’s no surprise that digital advertising spend is predicted to reach $552 billion by the end of 2017*. What may raise eyebrows however, is marketing’s inability to show and commercially measure how digital actually delivers. It remains a reality that brands need to spend money across all channels to connect with audiences.
Ongoing media fragmentation and audience reporting issues has fuelled scrutiny around marketing budgets. As a result marketers are often facing budget cuts year on year. In August it was reported that P&G’s global ad spend was its lowest in a decade.
Brands are tightening their belts, but a few have found alternative ways of topping up their media buys.
North American food company Pinnacle, however have found a new way of funding their marketing and boost their media spend: via corporate trade.
Pinnacle originally considered the Corporate Trade solution over 12 years ago after it absorbed a bankrupt competitor. The new acquisition had plenty of excess stock that needed to be sold off, but rather than turn to a liquidator and get $.10 on the dollar, it partnered with Active International in Canada.
Pinnacle Foods sells its excess inventory to Active for three times its liquidation value. Instead of adding cash to its bottom line, the food company receives additional media spend – facilitated through Active’s media remarketing network to top up its media budget, says VP of marketing Dan Hua. In exchange, Active resells the excess inventory to liquidation retailers that Pinnacle have pre-approved.
Ultimately, Corporate Trade offers marketers a way to leverage already diminished costs and pull them into alignment with wider commercial objectives.
“That’s the crux of the partnership,” Hua says, “In exchange for our [Pinnacle’s] excess goods, Active ensure an additional 15% media top-up through its trade program. The media planning details are handled by the brand’s media agency, while the actual buying happens at Active’s end.”
Global vendors, Active International offer a way to transform excess stock into sales opportunities across the 17 countries and the regions they operate in. Their business model appeals to the marketing budgets of retailers, using the sale of excess goods, services or capital equipment as part payment for above-the-line advertising. The benefit? Marketers restore full value to their product and leverage their existing media budgets.
Traditionally, companies with existing inventory such as Pinnacle have been the bread and butter client for Active, Ongoing demand for a well-designed reverse logistics plan has grown well beyond basic retailers; and today Active provide a solid remarketing strategy for clients wanting to achieve more from marketing budgets.
Companies like Active aren’t designed to replace existing media buying relationships; instead, they are there to add value to them.
“Ultimately, we are offering the opportunity for brands to part-pay for their media with their products or services and spend less cash on their media investments or simply improve the ROI these budgets create. We work with our client’s media agency to top up their budgets or keep the budget whole if it is at risk of cuts.” explains Cameron Swan, Managing Director, Active International Australia.
“Our Canadian client received an outstanding result and the enjoyed the benefits a digital ad campaign can deliver. We do not only offer savings on digital media but we extend the opportunity across all mediums. Our global footprint also allows clients to explore any avenue with commercial value that saves dollars in business investments from business travel & conferencing to freight and logistics. The opportunities are limitless “ Mr Swan added.
Optimizing spend is more than just budgeting or getting the best price. It is about achieving the best value for every dollar spent and it’s about the effective use of resources. Corporate Trade offers clients an improvement on the existing return-on-investment media budgets are delivering.
In this fast evolving, consumer-driven environment, marketing professionals have to design new engagement strategies. Strategies are in tune not just with the decision-making processes and channels used by their potential customers, but also their behaviours within them. So, while many of Active’s clients use Corporate Trade to simply top up budgets, some get creative and use the Corporate Trade as a way of funding innovation – such as A/B testing or trying new platforms or channels.
As every marketing dollar comes under even greater scrutiny, more businesses are realising the power of Corporate Trade when it comes to maximising excess stock against procurement pressures.
“It’s all worked really well for Pinnacle Foods,” says Hua, and the Active partnership is going to continue into the foreseeable future. “Working with Active has been great. [It’s] no different from working with our traditional media agency – except we get 15% more bang for our buck!”
With retailers constantly looking for ways to create efficiencies and squeeze more out of decreasing budgets, the opportunity exists to explore Corporate Trade, and extend their marketing budgets to achieve more.
