Barter is one innovation whose time is long past. Or so you might think. But Frances Dickens, 47, has shown that modern-day bartering isn't just possible it's highly profitable too. Her barter company, Astus, should make £2m profit on £60m of turnover by June this year, as the London-based business turns a "grubby, dodgy process" into one that is not just sought-after, but respectable too.
Brought up in Carshalton, Surrey, daughter to "one of the most significant cancer research scientists of the last century", Dickens failed her GCSEs because she bunked off "after register every afternoon to ride four-legged lunatics for a local horse dealer". After leaving school at 16, she wound up in the advertising industry, joining the UK arm of a US barter company in 1999.
The business model was simple: firms bought advertising space partly using their own goods and services. But after eight years in the UK market, the business was struggling. "We quickly realised that if the model was changed to reflect the UK media market it could be a very useful tool for a lot of clients and media owners." Along with Paul Jackson, a co-founder of Astus, Dickens took the US company's billings from £4m to £43m in two years. But they were unable to convince the owners to make the further changes needed to take the business forward. So "we put our money where our mouths were, and left to set up Astus" in 2003. "I suspect that quite a few people thought we were absolutely mad. There had already been numerous unsuccessful attempts to do what we have done."
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They had £640,000 of investment from the team and one private investor. "For the first six weeks there was only two of us. We had a horrible, tiny, serviced office with no windows." It was originally a cleaners' cupboard, but they soon graduated to a slightly larger space. "There were eight of us crammed into a room with only six desks. They were so close together that we all had to stand up if someone wanted to get up and move away from their desk." With no sales team, they produced a brochure entitled Who Shot The Salesman and put a big effort into telling ad agencies what they were doing. "They are always the key to a successful barter deal. Once we felt that they were growing in confidence we were able to target some potential clients, always involving the media agency too."
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What made Astus different was delivery. Firms typically paid for advertising with 80% cash and 20% of their own products, so on a media buy of £1m a company would pay £800,000 in cash and £200,000 in product. But unlike past models that made barter companies out to be snake-oil salesmen, firms saw the advertising run before they had to pay in product. This helped confidence. Mercedes came in as the first client.
By month three, the company was profitable. By the end of 2003 it had £6m turnover. In 2008 it topped £1m of profit. Astus is now the market leader: not bad for someone who failed almost all her O-levels and had little interest in lessons. Does she have any idea what her old school might say about her now? "I cannot imagine what they'd say now as I've never been invited back to join the Old Girls' Association!"
