The basic barter principle in media is that advertisers can utilize the value of their goods and services in exchange for media value, usually in the form of trade or barter credits processed via a company that specializes in leveraging barter value.

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This process can be managed either:

 

1. Via an advertiser’s media agency of record with the agency dealing with the barter company on behalf of the advertiser and with the relationship governed via the advertiser / agency “MSA” (Media Services Agreement); or

2. Directly between the advertiser and the barter company themselves, either transacted via the agency or managed directly by the advertiser’s marketing teams.

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Barter transactions are, themselves, not usually auditable, i.e. the advertiser will not usually get visibility into how much the barter company will earn from the value of goods and services that has been provided by the advertiser or to the cost / value that the barter company pays for the media space. However, there are number of areas in which the advertiser’s barter investment may be exposed to risks and common audit findings include:

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• Trade/barter credits that have not been utilized by advertisers. These credits often have expiry dates for which they need to be utilized otherwise they are lost. If an advertiser is exiting an agency relationship it is imperative that all barter value has been utilized.

• Volume rebates earned by agency groups from barter companies that aren’t passed back to advertisers.

• Utilisation of agency owned barter companies without advertiser’s authorization. Clients are often unaware that their agency has a financial interest in the barter company. Advertisers need to ensure that when signing off barter media that the strategy recommended in the plan is free from conflicts of interest.