Frequently asked questions
Corporate Trade / Corporate Barter
What is the difference between barter and Corporate Trade?
Barter typically refers to an exchange or swap of goods and services between two parties, often among smaller companies or individuals. Based on availability of services within the exchange, minimal quality controls exist, and a fee or commission is usually charged for brokering the transaction.
Corporate Trade, on the other hand, is subject to qualitative and quantitative requirements and creates measurable, incremental economic value. It is generally used by larger companies, many among the Fortune 1000. In addition, large quantities of products or assets are used in combination with cash to purchase media, goods or services that otherwise would have been purchased for 100% cash. No fees or commissions are charged.
Although the terms “barter” and “Corporate Trade” are often used interchangeably, corporate trade offers a distinct and measurable advantage in the form of incremental economic benefit as well as meeting the requirements or specifications companies seek.
How does a corporate trading company obtain goods and services for its clients?
Active forms financial relationships with a wide range of service providers, investing capital and trading goods and services that these companies need to operate and grow their business.
As a result of this investment and trading approach, we develop a lower cost basis (relative to prevailing rates in the marketplace) for goods and services that our clients need.
How does Corporate Trade create incremental benefit for its clients?
When we work with clients, we begin by reviewing which media or services they intend to purchase through Active. By understanding what they would normally pay on a 100% cash basis, a benchmark has been established.
A margin exists between our clients’ benchmark price and the net cost basis we obtained through our investments and trades. We share a portion of that margin with our clients by paying a premium price for their undervalued assets, and they receive this economic benefit when they use trade credits to purchase media or other services through Active. The benchmark price forms the basis for us to develop a program that delivers measurable incremental economic value to our clients.
How does a Corporate Trade transaction work at Active?
Active buys a client’s assets at amounts in excess of the fair market value, paying for these assets with trade credits. In return, our clients agree to buy media or other services through Active based on their net planned costs, but using a combination of cash and trade credits at the benchmark price rather than the amount that would have been spent in 100% cash. Active charges no fees or commissions in the execution of our clients' media buys and bills net of agency compensation so as not to disrupt the client/advertising agency fee structure.
What is the benchmark price?
The benchmark price is what a client would normally pay to purchase media or goods and services on a 100% cash basis.
What is a Trade Credit?
A Trade Credit is the form of payment or consideration that a corporate trading company uses to purchase a client's asset. Corporate Trade is based on the fundamental principle that for every trade credit used, $1 of cash savings is created.
What is a cash/trade ratio?
The cash/trade ratio defines the relative portion of an invoice that’s paid in cash and the portion paid in Trade Credits. For example, an advertising invoice could be 15% in Trade Credits, and 85% in cash.
Can I spend my Trade Credits outside of Canada?
With Active, yes you can. You can spend your Trade Credits in any of the 14 countries where Active has an office.
What benefits does Corporate Trade provide?
Corporate Trade is a financially sound way of realizing full value for your assets. It can help you:
- Minimize or eliminate losses from perishable goods
- Reduce or eliminate storage costs for old inventory
- Reduce sales costs associated with selling low value products
- Extend distribution or enter new markets and channels
- Use excess production capacity to reduce or fund capital expenditures
- Expand marketing budgets and extend media buys and other business expenses
- Sell surplus owned or leased real estate
- Develop new business opportunities through our relationships with broadcasters and publishers
What types of assets will Active purchase?
Active will purchase almost any asset with a residual economic value although we typically purchase inventory, real estate, capital equipment, and aged receivables.
What can I spend Trade Credits on?
Trade Credits can be spent to part-pay for a wide variety of goods and services – these are the most popular:
- Printing/Retail Marketing
- Travel and Events
What happens to the asset I trade?
After Active buys an asset, it is sold into pre-approved distribution channels. We are very sensitive to the importance of protecting the product's brand, preserving current distribution channels and market share, and will not sell your assets without your involvement and written approval.
Do I pay for purchases using only Trade Credits?
Although it depends on the specifics of the program, our clients typically pay for services with a combination of cash and Trade Credits. For example, an advertising invoice could be paid for with 15% Trade Credits and 85% cash. The cash/trade credit ratio varies based on a number of factors, however clients typically see an annual average of 15% of their eligible expenses paid for with Trade Credits.
How do you determine the value of traded assets?
In many cases our clients have already made a preliminary fair market value determination. We combine this with the information that our in-house Merchandise Sales Department develops, which is based on market data, research, and experience.
What is Active’s role in placing media buys?
Together with you and your advertising agency, we review your media plan to determine where Active can make the most impact on your behalf. This media evaluation process ensures that we deliver the precise goals and objectives.
What role will my advertising agency have?
Typically your agency continues to formulate your media strategy, plan, and pricing, and oversees Active's implementation and performance.
Will I pay any commission or fee to Active for placing media? Will my agency lose any revenue from this transaction?
No, Active does not charge a commission or fee for placing media, and we strongly encourage our clients to continue compensating their agency as they normally would. All media is placed on a "net of advertising agency commission basis". Your relationship with your advertising agency remains confidential and intact.
What services do media companies purchase through Active?
It varies, but includes advertising, meeting and event planning, premiums, website development, retail marketing; the same services we provide to all our clients.
How do I make sure I’m receiving my normal cash media values?
We suggest that you bring Active into the process as early as possible, to ensure that we completely understand your goals and all elements of your marketing efforts and media planning. From there, Active will execute all or part of your advertising agency's media plan according to your qualitative and quantitative specifications. Before we place any media, we submit the schedule to you and your agency for written authorization.
After the media runs, we reconcile the invoices against the orders and attach proof of performance (i.e. affidavits or tear sheets) to the invoices. We also provide post-analysis performance reports.
Will I pay more if I spend Trade Credits?
No. Your media planning agency determines the benchmark pricing as normal.
Will I get low quality or unwanted media if I spend Trade Credits?
No. Your agency reviews and approves all media buys prior to placement by Active to ensure qualitative and quantitative aspects are met.