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ERROR: type should be string, got "https://www.wsj.com/articles/SB92793617586370518\nTrading Places: How Internet Ad Barter Generates Over Half of Some Firms' Revenues\nBill Alpert\nUpdated May 31, 1999 12:01 am ET / Original July 16, 2019 10:00 am ET\nA s in the May-September romances shown in so many movies, old and new media firms are saying: \"Let's get together.\" Infoseek is losing itself in Disney 's arms. IVillage and NBC cross-fertilize. Even Lycos and USA Networks , despite canceling their wedding this month, will trade Internet and on-air plugs.\nThe exchange of ads between companies, with no cash involved, is no New Age phenomenon. Publishers and broadcasters have bartered ads for ages. And the Internet is shaping up as one of the most promising media for ad sales, with $1.9 billion tallied last year by the Internet Advertising Bureau trade group.\nBut dramatic deals, in which some Internet startups exchange stock for TV time, overshadow the more mundane practice of trading banner ads between Websites. Website A will advertise on Website B, and Website B will advertise on Website A. Both contend that the arrangement produces revenues, which each runs through its income statement, along with some imputed expenses.\nHealthGate Data, a Burlington, Massachusetts, firm that runs a health-care Website, got 18% of its $2.4 million in 1998 revenues from barter deals. \"These barter transactions have no impact on our cash flows,\" the firm asserts in its pending initial offering registration, \"and typically, no significant impact on our results of operations.\"\nBut as any Internet stock follower will attest, revenues do have a significant impact on stock prices-primarily because there rarely are any profits in view. With the Internet stocks having recently descended to a low earth orbit, stock market valuations as a multiple of sales are less often measured in the hundreds. But even at the 80-times sales multiple to which HealthGate aspires in its target deal pricing, barter revenues clearly deliver big bucks for the bang, to a Web firm.\nOn an industry-wide basis, according to the Internet Advertising Bureau survey, barter comprised but 6% of total ad revenues. \"It's no different from traditional advertising-supported media that do barter,\" says the study's author, Pete Petrusky, \"whether broadcast, cable or print.\"\nThe top 10 Web publishers have cornered 71% of ad revenues, says Petrusky, who is the director of the New Media Practice at PricewaterhouseCoopers, in Manhattan. These leviathans of cyberspace prefer cash, and they have the clout to demand it, says Petrusky, so barter deals are more common among the Web's minnows.\nThat explains why our computer scan of Securities and Exchange Commission filings turned up a bunch of small Internet outfits whose barter sales are far above the industry's 6% mean. As the accompanying table shows, barter accounted for more than half of what a couple of them have reported in revenues.\nTable: Reciprocity\nFirst among these is Crosswalk.com , a Chantilly, Virginia, company that operates a Website for Christians \"where faith and values meet.\" This self-described \"religious corporation\" lost $3.5 million, or 23 cents a share, on $1.08 million in revenues last year. And 52% of those revenues came from providing Web ads and services in exchange for such non-cash goodies as ads, product discounts and conference promos.\nCrosswalk.com came public in 1997 through Barron Chase Securities, an underwriter that gained unwanted notoriety when two of its brokers were sentenced for taking bribes from stock promoters.\nOne of Barron Chase's more unusual underwritings was for a topless bar called Rick's Cabaret International .\nThat makes it rather surprising that it also underwrote Crosswalk.com's IPO, considering that the religious corporation's bylaws mandate that officers and directors be fundamentalist Christians who believe the Bible is \"authoritative, and without error in the original manuscript.\"\nThe Devil is in the details of valuing barter revenues. The only Biblical passages that mention \"barter,\" in Ezekiel and Job, give no guidance on revenue recognition. The only accounting writ that applies is nearly as ancient. It is Statement No. 29 on \"Accounting for Nonmonetary Transactions,\" from the era when the Accounting Principles Board, a predecessor of today's Financial Accounting Standards Board, held sway. While the general rule is simple-report barter transactions at the estimated fair market value of the product or service received-the task is time-consuming and subjective. It's as hazardous as valuing \"in process research\" for a writeoff, or come to think of it, as hazardous as valuing a stock.\nCrosswalk.com's officials didn't return our Friday voicemails asking how they valued barter. In its own financial footnotes, Yahoo says it uses the fair value of either what it gives or receives in barter, \"whichever is more readily determinable in the circumstances.\" Infoseek, while avoiding the B-word, says the exchange of \"reciprocal advertising space\" comprised less than 10% of its revenues for the three years through October '98.\nIn the circumstances of a banner ad exchange, measuring the value of traffic and viewer demographics at Websites requires a significant level of due diligence, says PricewaterhouseCooper's Petrusky. \"Quite frankly, that's why some of the larger companies won't do barter,\" says the auditor, \"because of the headaches in trying to value it.\"\nStill more complexities come when a company runs a bartered ad in one quarter, but receives the offsetting benefit in a later one, says Petrusky's boss, Tom Hyland.\nThe Internet's facilitation of barter, in ads or anything else, is a feature-not a bug. Barter is as fine a path to profit as any other-provided it ultimately leads to cash. \"Barter's a double-edged sword,\" says Rich LeFurgy, a San Francisco consultant who is chairman of the Internet Advertising Bureau. \"If you're giving it away, it's not perceived as worth that much. Used intelligently, it's an important tool for an online media company, but as a long-term strategy, it's not sustainable.\"\nFor investors, transparency is what matters, observes Paul Kedrosky, a commerce professor at the University of British Columbia in Vancouver: The financials should be transparent, or you should be able to decode them from the footnotes.\nWith investors growing cynical about barter revenues, it's refreshing to discover that Mediconsult.com , a New York health-care Web firm that came public in April, proudly notes that its revenues include no barter transactions, to avoid \"potentially inflated results.\"\n\"Some of the deals we're asked to participate in are confusing enough, let alone adding that we're bartering for this or that,\" says Robert Jennings, Mediconsult.com's CEO. \"We think the U.S. has a nice currency, and we like using it.\"\nA s in the May-September romances shown in so many movies, old and new media firms are saying: "Let's get together."