Does It Pay for Companies to Advertise in the Super Bowl?

Colin’s Note: Super Bowl Sunday is this weekend… So, today, I thought we’d do something a little fun.

The Super Bowl is one of the most-watched TV events of the year. Some folks, naturally, tune in for the game… some watch for the halftime show… And some watch just for the commercials that companies and brands put together.

So, for today’s video, we looked at 32 publicly traded companies that advertised in last year’s Super Bowl and evaluated their performance over the 12 months that followed with one question in mind…

How does a company’s stock perform over the year that follows after dropping millions of dollars to advertise on one of the biggest TV events of the year?

It’s all in today’s video, just click below to watch… Or, as always, read on for the transcript.

What is going on everybody? Hope the guys are doing well out there. Today, I thought we’d have a little fun.

We’re heading into one of the most fun weekends of the year, particularly if you’re an NFL football fan… And that’s the Super Bowl.

Now, being a Cincinnati Bengals fan myself, I’ve come to witness the Kansas City Chiefs numerous times over the past couple of years. I really respect that organization and respect the players on the field.

But on the other side of the ball, you have the San Francisco 49ers… And I just happened to be a proud season ticket holder of the San Francisco 49ers. So you can probably imagine which team I’m rooting for.

But at the end of the day… a great game, some great food, and some great times with friends and family always make every Super Bowl I’ve watched a memorable one.

But we have a question about the companies that advertise on the Super Bowl. How does their stock perform over the year that follows after dropping millions of dollars to advertise on one of the biggest TV events of the year?

Now, to decide this, we’re going to take a look back at last year’s Super Bowl advertisers and see which companies performed the best… and which companies performed the worst.

Now as a whole, I found about 32 publicly traded companies. Some are traded on the United States Stock Exchange and some companies trade on other stock exchanges. Some companies like Comcast or Stellantis advertise two different brands during the Super Bowl.

But overall, I found about 32 different companies. And, as a whole, if you had bought the basket of Super Bowl advertising companies last year, you’d be up an impressive 23% on your investment over the last year.

For context, the S&P 500 over the last year is up about 21%. So the cohort of Super Bowl advertisers is actually beating the S&P 500 – but just a little bit – over the last year. Now let’s take a look at some of the worst-performing stocks that advertised on the Super Bowl last year.

The worst-performing stock out of them all was Paramount Pictures (PARA). The motion picture maker and TV provider was down 45% over the last year as a lot of traditional cable and streaming companies took it on the chin over the last year.

That sector just has not performed well. You can look at Disney stock as kind of the quintessential example of that, but Paramount and others have not performed as well. Now also in that cohort is Warner Brothers (WBD). It was down 32% over the last year for basically the same reasons Paramount, Disney, and others have not performed well.

What’s also interesting is some of the worst-performing stocks over the last year that advertised during last year’s Super Bowl are two alcohol makers. There’s Remy Martin with shares down 39%… And Crown Royal with shares down more than 13%.

Also included in poor-performing stocks over the last year was Planters Peanuts. Shares of the parent company that owns Planters was down 33% over the last year. Also Reese’s – owned by Hershey’s – had an ad. And shares are down 18%.

Let’s look at the alcohol makers, Planters Peanuts, and Reese’s. What you have there is how in an inflationary environment, they have their input cost, the raw materials that go into their product, and the transportation of that product. Those costs largely outpaced any pricing power they had.

Now, what you have to factor in – and what will be interesting to monitor over the next year – is if the reverse can happen. If we can have a disinflationary environment where input costs like transportation and the raw materials – the peanuts and the stuff that goes into alcohol – can come down… can Planters, Remy Martin, and Crown Royal keep their prices the same and stretch their margin?

That’ll be interesting to see over the next year. I’m not convinced that they can do that. You have a lot of competition in that space. That’ll probably drop their prices as well.

Now, those were the poor-performing stocks. On the flip side, you have some stocks that outperformed over the past year after airing an ad on the Super Bowl last year. Near the top of the list, you have Google with shares up 35%, Squarespace up 38%, and Dodge and Jeep, both up more than 47%.

TurboTax, which is owned by Intuit, probably will have a pretty good quarter or two as we head into tax season. Those shares were up 55%. Booking.com – where you book a lot of travel – has shares up 58%. Kia, another automaker, is also up 58%.

But four stocks really outperformed after airing a Super Bowl ad last year.

The first one is Amazon with shares of the e-commerce giant up 67% last year. I went back and looked at their ads to see if there was something special about it. By many critics’ takes, Amazon’s ad last year – which featured a puppy dog and another dog essentially coming together in a family – was one of the highest-rated and most memorable ads of the Super Bowl.

Amazon also benefited from the cost-cutting strategy that they’ve been on over the last year… driving higher revenue but also reducing their cost and really increasing their profits.

Another company that really benefited over the last year was DoorDash (DASH). Shares of the food delivery app are up 83% over the last year. DoorDash is trying to prove that it’s not one of these pandemic darling stocks, like Zoom video, and that it’s here to stay.

Probably some evidence that these ridesharing and food delivery apps are here to stay is Uber. Shares of the rideshare giant were up an impressive 102% over the past year. The CEO and the executive team over at Uber have done a fantastic job not only diversifying their business away from just the traditional ridesharing businesses… but also doing a great job capturing market share away from competitors, particularly Lyft.

Now the number one undisputed leader in terms of running an ad on last year’s Super Bowl and having it parlay into stock performance over the last year… drumroll please… has very, very close ties to sports. In fact, it relies exclusively on athletic events being played for it to make money…

And that is the online daily fantasy and sports book website, DraftKings (DKNG). Shares are up an impressive 159% considering DraftKings has long been losing money. But it’s starting to reach a tipping point in terms of profitability. They’ve also been expanding away from just traditional daily fantasy into legalized sports betting after that became legal across states other than Nevada.

While the DraftKings ad last year featuring Kevin Hart was very low-rated and not very memorable, people have continued to gravitate to DraftKings’ products. Among FanDuel, MGM, and others, it is one of the major players in the online sports betting market.

It seems only fitting that the biggest benefactor of running an online Super Bowl ad last year was an online sports book.

We’ll see what happens over the next year. Hopefully, guys, enjoy today’s video. If you’re like me, you’re going to be sitting on that couch on Sunday. And you’re not only going to be watching the game and the competition but the advertising as well.

We’ll certainly come back next week and see if any companies have made any waves and garnered a little bit more attention based on their ad. Hopefully, you guys enjoy the Super Bowl. My name’s Colin Tedards, and I’ll see you again next week. Good luck with your investments.