Well, I’ll tell you – I get an estimated return of $0.60 per click.
I can say that much, because I’ve been in the industry since 1983. I worked with the likes of the likes of Disney, Paramount and Fox for two decades, and have seen our stock price rise from approximately $5 to $25 in about a quarter of a century.
One of the issues with advertising nowadays is the number of impressions consumers see per $1 spent, which is not what investors are looking for in a stock. That’s one of the reasons stock prices have become so volatile. In some years the “return on investment” for investors is the highest for a single company. In other years, it’s much less because of the numerous variations of companies that are in the same industry. The key to understanding the stock is to understand its return on investment (ROI), and the difference between each major industry where you work or where you are living.
Here’s how the ROI can tell you a lot about a stock:
1. How much of your return for the investment will be generated outside of advertising?
In the case of Disney, I could be certain that a large part of the company’s annual net profits will come from operating activities. For a company as large and diversified as this there may still be some advertising activity, though I know they won’t do much of it.
2. It’s a long-term investment. If the company is able to generate some revenues outside of advertising this can result in the company being able to sell shares to new investors.
In the case of Paramount it’s quite likely they will generate some revenue outside of advertising (or that the company won’t).
3. What’s the ROI for Disney versus Sony? Will Walt Disney Imagineering be able to generate revenue?
In the case of a movie studio as large and diversified as the one that owns Lucas, I would be less certain about how much revenue would be generated, though I’m sure they can’t make much more than Disney.
4. In the case of a company of comparable size, does the return from advertising exceed the return generated by the company’s business?
In the case of a large multinational corporation, I could be absolutely certain about how much revenue would come from advertising, but in the case of the company that owns Lucas this might not be so certain – not as much as for a company with
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