Super Bowl XLVI (or 46 for those of us who don't speak Latin) is upon us. Many are predicting that this Super Bowl between the New York Giants and the New England Patriots will be the most watched TV show EVER. There are several reasons for this.  They are two of the most popular teams in the NFL hailing from two of the largest markets in the country.  In Super Bowl 42 back in 2008, the same teams played in a Super Bowl that was widely considered the greatest championship game of all time.

In Super Bowl 42 the undefeated Patriots were attempting to complete a perfect season and be the first team to finish with a 19-0 record. The Giants had just completed a mediocre 10-6 season.  They had a surprising playoff run as a wildcard team in making it to the big game.   The Giants were a huge 13 1/2 point underdog coming into the game.  The game itself was compelling from the start culminating with a dramatic game winning touchdown drive led by New York quarterback Eli Manning.

Fast forward four years……  Once again a dominant Patriot team (not quite perfect as back in 2008) faces a Giant team that struggled all season only to sneak into the playoffs with a 9-7 record.  The Giants have defied the odds once again in securing this meeting with the Patriots.  New England is only a 2 1/2 point favorite this time around, so the odds makers are expecting a very tightly fought game.  The world wants to see if the Patriots will get redemption.  Other subplots are generating interest as well.  Both teams are going for their 4th Super Bowl victory.  The game is being played in Indianapolis where Eli Manning's older brother Peyton secured his Hall of Fame credentials.  Eli is going for his second Super Bowl victory, to secure his legacy, and win one more than his big brother.

You may be asking what any of this has to do with the stock market and binary options…I'm getting there.

First we need to take a look at the second (some say first) most compelling aspect of this or any Super Bowl. The Super Bowl has become the single greatest advertising event of the year.  Major companies try to outdo each other with elaborate commercials.  With the Super Bowl being the most watched show of the year,  the advertisers mean to entertain the viewer as much as possible to bring exposure to their products.  It's not just the huge audience which makes this event attractive to advertisers. Let me explain…..

The value of television advertising has changed dramatically over the last few decades.  The proliferation of cable programming and the myriad of viewing options has diluted the value of commercials.  The advent of DVR (digital video recorders) has further diminished their value as people commonly record their favorite shows and fast forward the commercials.  The Super Bowl is a unique event drawing many more viewers than even the ratings suggest.  Many people watch the game together in groups at Super Bowl parties.  Others go to sports bars or restaurants to watch the game.  It is bigger than an actual game almost reaching the level of national holiday as the the day is referred to as "Super Sunday".  Since it is a live game few people record it and watch it later.  There are many people who watch the Super Bowl FOR the commercials as they can be very entertaining.

Another factor for advertisers is the coveted 18-34 demographic – people who are most likely to buy stuff. The majority of Super Bowl viewers fall in this demographic.  Seeing as this is the prime advertising venue of the year, companies that choose to buy air time for the game want their commercials to be as memorable as possible.  The most entertaining commercial are rolled out for the game making the ads themselves anticipated viewing events, which become "water cooler talk" for days after the game.  To understand the value of these commercial slots one need look no further than the price tag.  For the last couple of years a 30 second prime time network commercial spot sold for around 200-450 thousand dollars, depending on the time and show ratings.  Ad rates for this years game average a whopping 3.5 Million dollars per 30 second spot.

So we have a huge game with tremendous drama, hype and anticipating the largest viewing audience in history skewed towards the best advertising demographic.  We have companies investing huge amounts of money – not just to air the commercials, but to produce the most highly entertaining, attention getting commercials imaginable. The question begs to asked….. Does any of this have an effect on a company's stock price?

Fortunately for me there have already been studies done on this topic.  I will be discussing two of these studies. The first is by marketing professors Chuck Tomkovick and Rama Yelkur, at the University of Wisconsin-Eau Claire.  They determined that companies that advertised during the Super Bowl outperformed the S&P 500 index by more than 1% for the 10 days starting the Monday before the game until the Friday after.  This bounce was unrelated to the likability of a commercial as measured by USA Today's Ad Meter which rates viewer likability of commercials in real time.  The second study was conducted by researchers in the University at Buffalo School of Management and Cornell University. They examined 529 commercials that aired during 17 Super Bowls from 1989-2005.  They used ratings from the USA today Ad Meter and determined that the most likable commercials actually had higher than normal stock purchases in the days following the Super Bowl, thus increasing the stock price.

This last study seems to confirm that all of the attention garnered from this massive audience for a company which produces a likable commercial will gain at least a short term boost in the company's share price. This price increase may be something to look at in the binary option call market in the days following the big game.

Pin It on Pinterest