Advertising Appreciation

My sister is doing a marketing seminar later this month and I have been her consultant on the subject.  As a business nerd I am interested in marketing because it is vital to the success of a business.  How would the consumer know a business existed without marketing?  Advertising allows us to learn about new technological advances and changes to other products.  Ironically, we think we save time by not watching these 30-second commercials, but we spend hours reading the reviews of these products online.

But Jonathan, what does this have to do with financial planning?  Be patient, I’m getting there.  My clients know that I like to look at things from different perspectives.  What if our impatience for advertising costs us more in the future?  Sure, the statistics say inflation is stable at 2%, so prices of products aren’t rising very much.  However, there are many more products required for today’s standard of living.  Many of these products are monthly services, such as DVR.  This is a great invention allowing us to record shows and skip commercials, but it’s not free.  It may be included in a bundle, but those promotional rates always change.

Perhaps you decide not to bundle because you don’t need cable television.  You can watch the over-the-air channels and go to a bar to watch games, right?  While the bar pays for the cable service, you are buying food and drinks.  Not to mention, it costs you a few extra hours to actually go out.  Are we really saving much time and money?

Of course, we eventually get tired of the choices on local TV stations and begin subscribing to all the streaming services, such as Netflix.  Like DVR, streaming services are amazing innovations.  It is extremely convenient to watch things when you want, but it is not always a time saver.  How productive can we really be if we spend a whole day binge watching a series?

As we continue with these trends, media companies will adjust.  Companies like Disney are already pulling their content from Netflix and starting their own streaming service.  Netflix is raising prices and developing software that prevents the sharing of login credentials.  Although we all hate the cable bill, advertising allows the channel subscriptions to stay low.  Imagine paying $10 per channel each month.  Just 10 channels makes your bill $100 and we haven’t even paid for the internet required for streaming services.  We could be heading to that future if television loses revenue from advertising.

Our lives are already stressed enough.  By having a little patience, we can relax through the advertising segments, learn about new products, and maybe even save some expenses in the future.  We must focus on the big picture in financial planning.  Every action we take has consequences.  We must save money, but we also need to find ways to limit future expenses.  By appreciating advertising, we may be able to prevent higher future costs as marketing continues to provide revenue for media companies.

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