Archive for the ‘Super Bowl’ category

Short These Stocks

February 2nd, 2009

I’ve long had a theory that you could make a lot of money by shorting the stocks of companies that have really bad advertising–especially companies that run really bad advertising on the Super Bowl. My feeling is that if they’re making stupid decisions about something as important as how they present themselves to their potential customers, they’re probably making a lot of other stupid decisions, and sooner or later those decisions will negatively affect their financial performance and their stock price.

It takes a pretty effective commercial to generate enough incremental sales (and incremental gross profit) to justify spending $3 million or more on a 30-second exposure.  Of course, many will argue that an advertiser can reap other benefits from Super Bowl exposure–such as increased brand awareness and perhaps an improved brand image.
But Super Bowl ads are a huge crapshoot.  First of all, a high percentage of the viewers are drinking alcoholic beverages at loud parties that make it hard to hear most of the commercials.  Second, expectations are high from an entertainment standpoint, and if your commercial falls short of the bar, the criticism from both viewers and the media can be brutal.  And, perhaps most important, the premium placed on entertainment often means that the ads forget to communicate why the viewer should purchase the product being advertised. To me, the best (or worst) example of this over the years has been the Bud Light ads, which are usually hysterical but never give you a conscious (or even subconscious) reason to buy Bud Light over any other beer brand.  Sure, Bud Light is the number one light beer, but I suspect that’s driven by the superior quantity–rather than quality–of their advertising.
So what companies should you short based on yesterday’s ads?  My #1 choice would be Teleflora, for a tasteless ad that generated groans from the people I was with and focused on taking a shot at its competition rather than telling us why we should become a customer of Teleflora.  My #2 choice would be Cash4Gold, a sad ad that tried to be clever but missed by a mile. Given the nature of their business and the state of our economy, the company may succeed, but it won’t be because of their advertising.