Back in 2008, we debunked research that concluded Super Bowl advertising was an assured booster to stock prices. Coincidentally or not, the guy who headed the research, Professor Chuck Tomkovick, has seemingly abandoned that focus and switched gears to test the effect of “sexy” Super Bowl ads.
So, we felt this might be a good time to retest his bold statements in 2008 that “[The Super Bowl] is a tradable event” and “Wall Street rewards firms that run Super Bowl ads.”
The process to do this analysis is excruciating. These are also the steps an investor would take to actually set up this portfolio. It would be easier to sit for a bar exam. Blindfolded.
- Determine which spots ran nationally
- Find out the parent company
- Determine if parent is a public company
- Find out if international parents trade U.S. ADRs
- Obtain the proper stock symbols
- Adjust for company earnings announcements
- Track the S&P 500 index as the baseline
We ended up with 20 companies. It would have been nearly impossible to find the date each announced its intention to advertise in the big game (which could immediately impact share price), so we used the closing price on Friday February 3 as the starting point.
Next, we took the close on Monday after the game, to determine what if any immediate lift the ads had on stock price. Then we checked the close on Thursday February 9, to measure residual impacts – especially important in 2012, given the social media fanfare. (We used Thursday’s close since the entire market tanked on Friday).
After one day? An even-dollar-weighted Super Bowl portfolio increased 0.6%, against a flat S&P. Fourteen of the twenty stocks rose in price, while six fell.
After four days? The Super Bowl portfolio increased 1.5%. Just four of the stocks were still lower at this point. The S&P baseline was up 0.5% for the period, so Tomkovick was right. Almost the same gain his team calculated in 2008 (except they used a two-week period).
[Quick note about earnings announcements. Three companies released results during our measurement period, so we excluded them from the four-day calculation. This did not change the result significantly due to offsetting impacts – one of the companies had a very bad quarter.]
But hold on. Let’s introduce some Lairig Marketing reality. Unless you have your own seat on the New York Stock Exchange, you must pay a broker to get you in, then out. Using an average $10 commission per trade, there is an additional $400 bogey before you make money.
Let’s say you had $20,000 to play with. You bought $1000 of each of our 20 companies. Factor in those commissions. After day 1, you are down $275. After day 4, you are still lagging by $115.
It could have been worse. One of the portfolio stocks – Skechers – caught an upgrade Monday morning, February 6. This lifted Skechers stock so high that it ended up being 50% of the portfolio’s total gain after one day, 30% after four days. Without this stroke of luck, your day-1 loss expands to minus $330, and your $115 day-4 loss grows to minus $150.
As in 2008, we conclude two things:
The stock market is, still, a casino.