Do Buzzy Super Bowl Ads Boost Related Stocks?
Investing.com | Feb 07, 2016 02:20AM ET
by Clement Thibault
The Super Bowl. It's not just the annual American football season finale, it's also a massive television event, producing viewership records which are broken year after year after year. An added bonus: for savvy stock-pickers able to pinpoint the ads that will go on to become the most acclaimed after each broadcast, it might also be an early indicator of what equities will see a 5-20% boost in share price over immediate and upcoming quarters.
Super Bowl XLVIII, which saw the Seattle Seahawks anointed 2013 champions when it aired on Sunday February 2, 2014, totaled 112.2 million viewers, a record at that time; The following year, Super Bowl XLIX, which aired on February 1, 2015, saw the New England Patriots crowned 2014 champions. That broadcast broke the previous season’s record, with 114.4 million viewers tuning in over the course of the game, ending with 120.8 million viewers during the final, decisive minutes.
But championships and record audiences are only a small part of the story. The Super Bowl is also a money-making machine for participating franchises, networks and advertisers because of the vast number of viewers. In fact, advertisers—who pay premium rates for just a few seconds of air time—often see dramatic upticks in sales immediately after the game. Which guarantees that the cost of a 30-second ad is heart-stoppingly high.
Last year, the going rate was $4.5 million for half a minute. This year it is projected to average $5 million. The total revenue the network garnered from the full roster of ads in 2015 was a staggering $350 million.
Since the Super Bowl first aired in 1967, the commercials have become as much a part of the spectacle as the game itself. According to a poll by Monthly Consumer Survey, 25.1% of viewers report that for them, commercials are the most important part of the broadcast. 77.1% of viewers consider them part of the entertainment proposition, and only 4.5% report being bothered by the commercials.
With the advent of the internet, the best commercial spots have a massively extended shelf-life. According to Mashable, over 1600 years of Super Bowl ads have been streamed on YouTube in 2015 alone.
We've tracked back over the past 5 years’ worth of Super Bowl games, looking at companies that arguably had the best and most hyped commercials during Super Bowls 2011-2015. We also charted their stock’s performance in the quarter or quarters following the game in which their commercial aired.
Here’s what we found:
h2 2015 – Budweiser (Anheuser-Busch)/h2Budweiser’s "Lost Dog" (parent stock Anheuser-Busch Inbev SA (N:BUD)) was without a doubt the most talked about commercial of 2015’s game. Of course, featuring a puppy in the starring role is a pretty surefire way to create buzz, and Budweiser hit the nail squarely in the head with the touching commercial that left viewers in tears and wanting more.
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The commercial was posted on YouTube and to-date has over 30 million views. On Friday January 30, 2015, the market close prior to that Super Bowl, Anheuser Busch traded for $122.07 a share. Within a month, on February 26th, the stock peaked at $128.35, an increase of 5.1% in value.
That’s a 5% boost in just a month thanks to a cute Lab puppy.
Watch the commercial:
Clearly, good companies with good Super Bowl commercials can see a gratifying boost to their stock after the Lombardi Trophy is handed out to the winning team. When done properly, that $5 million or so spent on a few fleeting seconds of air time doesn't seem so costly after all.
This year’s contenders for best Super Bowl commercial include Nestle's (OTC:NSRGY) ad for Butterfinger. The company has been hyping the commercial, and the product, with the #BolderThanBold hashtag. The ad features former New England Patriots wide receiver Terrell Owens and comedian Billy Eichner. The company released a teaser , hoping to garner pre-game interest.
Also in the mix is Korean electronics manufacturer LG (KS:066570). Their commercial stars actor Liam Neeson and was directed by Ridley Scott, whose sci-fi film Alien was a global success. The ad, titled ‘The Man From The Future’ promises "it will change everything ".
Also expected is an election themed commercial from Bud Light, starring comedians Amy Schumer and Seth Rogan. A teaser was recently released. So far, additional details are scarce, but with Rogan's and Schumer's reputations (and popularity) we assume it will generate some post-game buzz (and YouTube replays).
Super Bowl 50 airs on Sunday February 7. Enjoy the game and the commercials, but remember to think of your portfolio as well. Which commercials—and their stocks—will you be keeping an eye on?
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