Just when you thought you’d heard it all about Super Bowl 2008 advertisers...
I decided to follow up on this article that ran just before the big game:
"During the week before and the week after the 1996-2007 Super Bowls, the stocks of companies that ran in-game ads outperformed the S&P stocks by nearly 1.3%," said Chuck Tomkovick, a marketing professor who has conducted Super Bowl advertising research for a decade. "In essence, Wall Street rewards firms that run Super Bowl ads. It's a tradeable event."
I couldn’t wait for the two professors and their five student assistants to run this year’s numbers, so I took on the task myself.
Turns out that the math worked again, for the 11th year out of 13. On a cap-weighted basis (meaning you bought the same number of shares of each company), the portfolio turned in a gain of 1.73%, besting the S&P 500, which didn’t exactly set a high bar with its 0.05% gain over the two-week period.
Some skyrockets of note:
-E-Trade up 37.5%
-Under Armour up 28.2%
-Disney up 12%
However, the claim that “Wall Street rewards firms that run Super Bowl ads” clearly overstates the case and the portfolio requires a stomach of steel to execute. Here’s why:
- Sony down 7.9%
- InfoUSA (Salesgenie) down 7.3%
- YUM (Taco Bell) down 5.8%
- CareerBuilder (via public JV owners) down 5.5%
- Fully half of the stocks went down
- Without the three “skyrockets” you’d have come out even…before transaction costs
Just goes to prove modern portfolio theory. Buy a bunch of stocks and pray you get really, really lucky on a couple.
Madison Avenue and Wall Street may be in the same city, but getting back and forth ain’t all that easy.