Accelerated Returns

Accelerated Returns

The curve depicted below is a familiar one. It repeats itself over and over again in the human experience. It can represent the growth of the human population since antiquity, the Dow since the early 40s, computer ownership and the Internet sites since the 80s, recent software patents, seasonal home runs over 60, four-minute miles and viruses. Just as the bell-shaped curve and curve of diminishing returns hold time honored places as depicters of human and natural endeavor, so too does the curve of accelerated returns. It is also far more interesting, up to a point.

Unequal thirds of a curve

The first part of the curve above, the flat part, is the longest leg. It is pretty uninteresting and rarely provides a clue as to what is to come. The next portion, the rapid incline, is very interesting. This represents accelerated growth, a new trend, in a nutshell - NEWS. The final part flattens again. It is the end of rapid growth. If we have waited this long to recognize a trend, we are far too late. The trend is now history and we are in a period of perspective. Those who are paid to know, claim that we are now at the beginning of the second leg of the curve in an economic recovery. It is difficult to be certain, of course, because many of the indicators are not apparent yet, but if one waits to long, they can become history, so to speak. So the trick is to recognize a trend early enough to take advantage of its rewards.

Buy now/pay now

Many pundits and publications that deal with financial matters are encouraging investors to return to the market, now. Their premise is that we are about to experience an upturn or it is close enough so that stock prices are now about as low as they are going to get. If one begins to reinvest now, the price of the newly acquired stock should soon increase, reaping a short and longer-term profit for the investor. So it is with advertising.

If advertising were thought of as a mutual fund, a series of smaller investments in the same sector, we would be encouraged to buy now. The premise is just as evident as the stock market and perhaps that is because the outcome is at least partially dependent upon the fortunes of the stock market. There is at the very least, a co-dependency. So if we invest in advertising now, prices are cheaper, there are fewer competitors to crowd the market and the reasonable expectation is that things are going to get better, so the immediate and residual value of the advertising is worth a good deal more than its original purchase price.

Waiting for a sign?

It is strange that some people, who will take advantage of the stock market in times like these, will not take similar advantage of the advertising marketplace. It is one of the last markets to recover, offering a wide window of opportunity.. Even if the advertising market does not yield immediate rewards, it still offers two advantages. First, advertising major asset is and always will be to build brand equity, which in turn builds future sales, precisely what marketers have to protect right now. Second, even if advertising does not yield the immediate desired effect, like the stock market, its downside risk is small compared to a loss when times are good.

If it is true that we are poised at the beginning of the inclining portion of the recovery curve, a marketer that waits for too many signs is going to miss a major opportunity. This is the kind of opportunity that investors kick themselves for missing when it comes to their personal finances.