How to be an Intelligent Investor - And Advertiser

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I believe the core principles of value investing in the stock market also apply to the world of advertising. Whether you're buying stocks or advertising, the goal is the same: create a profitable return on your investment. And in each activity, there's a speculative factor with no guarantee for success. Anyone can buy stocks, or bonds, or advertising; it is the intelligent buyers who find value where nobody else is looking.

Value Investing

In 1949, legendary investor, Benjamin Graham, published one of the most popular books ever written about investing in the stock market, "The Intelligent Investor – The Definitive Book on Value Investing." You may know one of his most loyal followers – Warren Buffett.

Graham searched for gaps in the intrinsic value of businesses and the prices of those businesses, then took advantage of those gaps by purchasing stocks or bonds in these companies at a discount.  These deviations in value often occurred because the prevailing herd on Wall Street (and the media) didn’t favor a specific industry or category of business.  When these enterprises were out of favor, or boring – yet still profitable and dependable businesses – their stock could often be bought below the fundamental value of the business. In plain terms, the companies were undervalued by Wall Street.

For example, remember the dot-com bubble in the late 1990’s?  This is when the herd on Wall Street speculated excessively on dot-com businesses while profitable, but untrendy, businesses saw values stagnate and stock prices sink.

Become an Intelligent Advertiser

I find most business owners today are quick to dismiss traditional or offline media as a viable marketing option.  When I refer to offline or traditional media, I’m talking about everything but the internet.  Generally speaking - print (Direct Mail, Newspapers, Magazines) and broadcast (Radio and Television).

How can I blame them? For years they were restricted to boring newspaper ads, dreary direct mail, and seemingly ancient radio and television.  A lot of business owners think traditional media tactics are too expensive, wasteful, and difficult to execute profitably.

Many businesses are handing over their marketing duties to younger adults who have very little exposure or interest in traditional media.  Or, they hire digitally-focused advertising agencies with zero experience - or interest - in anything offline or traditional.

The marketing universe is consumed by propaganda in trade publications, newspapers, white papers, research studies, books, commentary and interviews with industry leaders – all focused entirely on social and digital media trends. 

Good news, this creates opportunity for the intelligent advertiser.  Offline media options are very much out of favor.  Not because they don’t work, but because they had their bubble, and it burst many years ago.  While digital and social media attract the spotlight, I urge you to consider the significant underlying value in traditional media. 

If we were to compare advertising tactics to the stock market – you might classify offline media as an old blue-chip stock cranking out reliable profits and dividends for its investors - like IBM or Chevron.  Far from sexy, but profitable, and a classic value investment because the price of traditional media has never been lower. 

There have never been more ways to spend money on advertising than there are today.  And many “experts” give digital and social media far more credit than they deserve for their true influence on consumer behaviors.  Many digital solutions are wonderful, but just as many are faddish, unproven, wasteful, and fueled by hype. 

In case you hadn’t noticed, every major digital or social media company - from Facebook to Google to Amazon to Apple – all invest a considerable sum into traditional media. 

So much marketing advice these days comes from people rebelling against traditional media. They have a vigor and desire to disrupt (and I applaud and support their efforts), but this clouds their judgment when they won’t consider all the available options. Professional marketers and service providers who ignore how to execute successful marketing in traditional media are basically shunning the lowest-hanging fruit of potential success.

The Bottom Line

I’m not saying you shouldn’t invest in digital marketing or online infrastructure.  The point is: don’t get caught up in the hype, and don’t dilute your already small advertising budget (in comparison to your national competitors) with a bunch of unproven digital and social media tactics – unless those tactics truly are the right solution.  In the pursuit of value, Intelligent investors and advertisers don’t have a bias toward any advertising tactic. The only metric that matters is return on investment. 

Shane Nichols is the General Manager of Ball State Sports Properties for Learfield Communications.

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