We’re All Investors Now

April 18, 2020

Happy Saturday. It’s going to be a glorious Minnesota weekend. The golf courses are even opening! Signs of spring now take on metaphorical and fantastical meaning as glimpses of normalcy crack through the clouds under which we’ve been living now for nearly two months.

Last week, I had Ciceron’s financial advisor dial in to our Zoom staff meeting to provide us with his view of the overall financial markets to help Ciceron employees decide what to do with their 401ks. We’re advertising and marketing professionals, not financial ones, and this is uncharted territory. Of course, his advice was entirely dependent upon your personal time horizon towards retirement. For the majority of Cicerones, they have decades to have their money grow through the wonders of compounding returns. And their portfolios will experience an almost predictable number of ups and downs as the economy booms then correct itself then booms again. Basically, should they decide to stomach it, they shouldn’t do anything with their money right now. And they should be continuing to contribute!

Then there are people like me. I’m coming up on 52. I’ve been enjoying watching my 401K grow during this unprecedented economic boom, and I don’t have decades until I may need that money. My stomach for a massive dip ain’t so steely. I may want to move money into some safety zones.

But one thing we all share: buy low, sell high. This is what all smart investors do. Of course, timing the market takes skill. In our time with our advisor, he warned us of a term called a “bear trap” where the market appears to have hit bottom, then rises, tricking investors into going all in, then crashing even lower. Cunning bastard, that market is.

The other tried and true investor strategy is dollar cost averaging which essentially means you never stop investing in stocks. If you’re always buying, then your portfolio is full of stocks that were purchased when they were under value, right value, and maybe overvalued, but on average you got a good deal. It’s the Goldilocks model.

 

AS MARKETERS, BRANDS ARE NOT ALWAYS SO SMART LIKE THAT

In fact, they’re pretty bad at it. In normal times, brands are buying media only during great times, so they’re buying “stock” only when they’re at the highest values. It gets crazier yet. Look at the upfronts or the Super Bowl or the Olympics. Marketers and brands compete to see how much they can compete for greatly limited inventory and then figure out how much pain they can inflict upon themselves in the shortest amount of time possible. A professional investor would say this might just be the dumbest industry around, if it were based entirely on these behaviors.

Frankly, it’s no wonder that CFOs often roll their eyes at their CMOs. Making investments only in the best of times do not fit any practical financial discipline. So it’s no wonder why marketing budgets are the first to go in times of crisis. CMOs simply haven’t made a good case for marketing.

SO, LET’S BE GOOD INVESTORS

On these pages for the past couple of months, I’ve been talking a lot about how prices for media have dropped significantly while viewership of media has increased. In fact, there is so much supply, publishers don’t know what to do with it. The quote below is from a recent IAB Survey.

Or put another way, imagine if you will that Apple’s stock is sitting at $50 per share, and no one wants to buy it. Can you imagine? Any other investor would scream at the top of their lungs to BUY, BUY, BUY. But not marketers. Nope. They wait until it’s split three times and is sitting at $350 per share.

I’m going to make a bold prediction. I’m going to assume that getting customers to buy your products or services now would be attractive to your CFOs and CEOs. I’m also going to assume that having revenues coming in is a good thing. If you haven’t been able to directly tie your media investments to actual business results, then I’m going to assume that now is a good time to do that. It’s possible. In fact, it should be required. 

The case to buy now in marketing and advertising is one simply based on the same financial models that investors will tell you for your own portfolios. Don’t miss out on a down market. They all say it, and we all wish we had done it when it’s over. Especially if you are in one of the following industries. These are least impacted by the pandemic. 

The fact is that smart marketers are buying now because they are able to attract far more customers for less money because of lack of competition for those audiences. You’re beginning to see that now with the direct-to-consumer brands. They are able to participate in media channels like video and others that were cost-prohibitive under the boom times of only a couple of months ago. They’re making hay.

A FIRST-PARTY DATA BOOM. In our work with you all, we talk all the time about the importance of growing first party data pools (email addresses, device IDs, etc.) from which to market and remarket later. We use media to attract audiences then provide them opportunities to opt-in to receive ongoing communications. Especially in super competitive markets like the past five years, we have to use media not just for conversion events like sales but to grow first party data. Why repurchase people through media channels that you’ve already attracted previously? This is one of those great economic models that only digital provides.

So take a look at now. You can purchase audiences now for much less than before. The same people. Across all channels. If your investment strategy is to attract good paying customers at a very low price, keep your same first-party data strategy in place, then your long-term financial prospects are at peak performance. It’s a pure Excel spreadsheet of financial perfection, to be honest. It’s buying Apple at $50 not $350, and you’re a hero to your CFO (plus speaking their language).

THE ONLY CHANGE IS MESSAGING Here’s where smart marketers are making their major changes. They are ramping up their investments in inexpensive audiences but attracting them with modified messaging. We have a creative and messaging challenge, not a media one. Media is not the problem. It’s the fuel. Messaging, on the other hand, has to be adjusted to fit the times. But not always. If you sell a product or service that makes people feel good about themselves or their communities or their prospects for a finer life, then that message alone may provide comfort with very little modification. That’s why I’m buying shoes or music or tennis gear right now. It feels good. I don’t need Nike to modify its message to me about tennis right now within the context of the coronavirus. Just show me that great shoe, maybe at a discount, and those suckers are on my feet. 

CONCLUSION

I like to think of myself as pretty self-aware. And my self-awareness is telling me that this entire post may come off as self-serving. I get it. But shed away that potential bias for a moment, and just look at this current market as only having financial gains for you. You only have these opportunities once every decade. Yes. Life still SUCKS. I want to be outside with friends and family. I want to play tennis. I want to see my Ciceron peeps in the worst way right now. The least we can do is at least do something amazing during our work hours, and this is a time to do that.

 

Our best,

 

Andrew