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By Simon Spencer, Commercial & Legal Counsel
PR Week’s article concerning “payment in kind” as a remuneration mechanism to reward successful bidders for the Olympic Games PR work is a space worth watching.
Whilst non-money trading or barter is hardly something new and many billions are bartered across the globe annually, it is not often that it raises its head in the business world on such a scale and with such profile.
Nevertheless, it’s a model that London 2012 Olympics have been including in all their supplier contracts and one that appears to be working in practice as they seek to firm up working relationships, indeed they have successfully brought aboard advertising company McCann Erickson in return for tier three sponsorship, worth a reported £10 million. But is this a feasible way of doing business? Can a payment-in-kind model be used effectively for accounts of this scope and size?
A major shortcoming with barter is that you are likely to have to compromise on what you receive in return for what you offer. In short, it isn’t that likely that you will find precisely what you are looking for, whereas cash gives you the freedom to seek out that elusive ideal item.
Whilst it is a basic principle of negotiation that you should seek something of value to you at a cost of little or nothing to your trading partner, the tendency in a situation like the one now looming for the would-be Olympics PR agencies is not to treat it as a mere opportunity to splash your name across advertising hoardings or programmes, or worse still see it as glorified pro-bono work.
As any seasoned PR professional knows, it’s of ultimate importance that real value is sought out in return for PR support. Will, for example, an attempt be made by agencies to secure work for clients with the London Organising Committee for the Olympic Games (LOCOG) , in return for direct fee generative work or commission from those clients?
Time will tell. And, as we say, it’s a space worth watching.
