What investors need to know

What investors need to know

New England Patriots fans erupt as Russell Wilson’s Seattle Seahawks pass is intercepted at the goal line to secure the New England Patriots’ Super W 49 victory.

Bob Berg | Moment Mobile | Getty Images

In a fragmented media landscape, events like the Super Bowl are valued by advertisers for the exposure they provide.

More than 100 million viewers are expected this Sunday when the Philadelphia Eagles take on the Kansas City Chiefs. Many who follow the game will pay as close attention to the commercials as they do to the action on the pitch. These commercials are an institution in their own right, generating conversation weeks before and days after the big game. Well-crafted Super Bowl ads may still be remembered by consumers years after their debut.

But capturing those eyeballs comes at a high cost. This year, companies are paying about $7 million for a 30-second spot — and that’s just for airtime. Add to that the cost of hiring the talent needed to produce the ad, and the cost keeps escalating.

Advertisers come and go

The value of these expenses can be hotly debated. For companies that sell beer, chips or cars, the game is often an annual ritual. But other advertisers could come and go.

This is certainly true of the cryptocurrency companies that bought up airtime last year. Crypto exchange FTX had won awards for its ad, which starred comedian Larry David as a time-travelling skeptic whistling about inventions from wheels to lightbulbs. The commercial encouraged viewers not to doubt the cryptocurrency. “Don’t be like Larry,” he said.

Months later, some skepticism seems to have been justified. FTX, now bankrupt, has collapsed in a scandal being investigated by federal prosecutors.

So does Super Bowl presence really help boost business? Judging by company stock prices, most didn’t have a great 2022.

Take coin base, another cryptocurrency exchange. The jumping QR code commercial was celebrated as extremely successful last year. It brought so many viewers to Coinbase’s app that it crashed on the night of the Super Bowl.

Coinbase stock is down 64% as of this evening. And the company said it won’t be back for this year’s game.

The curse of the Super Bowl commercial

symbol Surname Sector/Industry market value Price change since 2/14/2022 $lost/made when $10,000 invested
CVNA Carvana, Class A Consumer Discretionary 2,645.8 -90.0 -9,000.0
VRM Vroom Consumer Discretionary 163.0 -82.9 -8,290.0
COIN Coinbase Global, Class A finance 15,760.5 -64.4 -6,440.0
AMCX AMC Networks, Class A consumer services 775.4 -57.4 -5,740.0
FVRR Fiverr International technology 1,599.6 -47.6 -4,760.0
EXPERIENCE Expedia group consumer services 18,598.2 -39.6 -3,960.0
MNDY Monday.com technology 6,423.8 -37.1 -3,710.0
FOR Paramount Global Class B consumer services 14,696.1 -36.0 -3,600.0
AMZN Amazon.com Non-cyclical consumer goods 1,025,238.0 -35.5 -3,550.0
Google Alphabet, Class A technology 1,276,392.0 -26.7 -2,670.0
DKNG DraftKings, Class A consumer services 14,875.7 -20.4 -2,040.0
INTU Intuitive technology 118,477.5 -20.3 -2,030.0
CRM Foreclosure technology 169,630.0 -17.8 -1,780.0
META Metaplatforms, Class A technology 475,590.5 -15.7 -1,570.0
GM General Motors Consumer Discretionary 57,975.1 -14.1 -1,410.0
MSFT Microsoft technology 1,985,486.0 -9.6 -960.0
PLNT Planet Fitness, Class A consumer services 7,456.9 -9.6 -960.0
NFLX Netflix technology 163,366.5 -7.5 -750.0
BKNG posting balances consumer services 94,067.4 -4.7 -470.0
PEP PepsiCo Non-cyclical consumer goods 235,808.7 2.7 270.0
K Kellogg Non-cyclical consumer goods 22,934.1 3.8 380.0
WMT Walmart Non-cyclical consumer goods 378.145.3 4.7 470.0
Yummy Yummy! Brands consumer services 37,019.4 8.3 830.0
TMUS T Mobile USA telecommunications 178,921.8 14.6 1,460.0
HOLX holological healthcare 21.107.5 21.8 2,180.0

Source: CNBC; fact set

Stocks of online car sellers caravan And Vroom fared even worse. Their shares are down 90% and nearly 83%, respectively. Neither will be advertising during the game this year.

Of course, last year’s sharp declines by some advertisers do point to a broader market decline in 2022, with a number of tech names doing the worst on the list.

‘Not a good look’

Deb Gabor, CEO and founder of Sol Marketing, said that given the high cost of advertising during the game, companies need to look at the broader economy. For the most part they are, she said, citing Toyota as an example, as the automaker is skipping the game for the first time since 2017.

This year’s list of advertisers is full of snack and alcohol companies, she said. “People will need comfort,” she said. “And snacks and liquor is one place they’re going to find it.”

Gabor watches the Bay Area tech company working day closely. The HR software maker doesn’t seem cut out for a glitzy Super Bowl commercial, but it’s spending big on a 60-second spot that shows how companies often refer to their top employees as rock stars. The ad is chock-full of music legends, from Ozzy Osbourne to Joan Jett and Kiss frontman Paul Stanley, among others.

Gabor said she’s not sure how Workday will capitalize on this multimillion-dollar spot beyond the Super Bowl. However, she said the company has attracted some bad press since news of the commercial broke around the time it announced plans to lay off about 3% of its workforce.

“It doesn’t look good,” Gabor said.