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How Super Bowl Ads Affect the Stock Market

The Super Bowl LV (55) will take place on Sunday, February 7th, 2021. This year, as COVID-19 looms in the background, consumers are likely to notice an ever-growing list of new advertisers, many of which saw their businesses boom over the last year during the pandemic. Usually, companies like DoorDash and Chipotle shell out roughly $5.5 million for a 30-second commercial to promote their products and

The Impact of Superbowl Ads

There’s no better advertising spot on television than the National Football League’s Super Bowl Sunday. Since the first Super Bowl in 1967, companies have been using the NFL’s title game to launch new products, campaigns and build consumer awareness. The attention generated by Super Bowl advertising extends beyond the game with twice as many people viewing the commercials on social media sites than during the game.

Moreover, research has revealed that the Superbowl has an interesting impact on participating companies’ stocks, indicating that, on average, those companies outperform the S&P 500 market index by more than one percentage point in the ten trading days prior to the big game up until the following Friday. Aside from entertainment value, Super Bowl ads also serve as a message to traders and consumers alike that the company is in a strong position.

The Superbowl Indicator

The Superbowl Indicator is another phenomenon that relates to the impact of the Super Bowl on the stock market, although it can only be regarded as anecdotal. Coined by New York Times sportswriter Leonard Koppett, back in 1978, the Super Bowl Indicator is the theory that the winner of the Super Bowl can predict whether the market will be bullish or bearish for the following year. If the winner comes from the American Football Conference, markets will be bearish, and if the winner is from the National Football Conference, markets will be bullish. While there is no evidence or scientific explanation to justify this, as of January 2020, the indicator has been correct 40 out of 53 times, as measured by the S&P 500 Index.

As the pandemic continues to take an enormous human and financial toll, many brands have been forced to reassess their spending, especially brands that depend largely on restaurants, bars, movie theaters and stadiums, such as Coca-Cola. In fact, it’s the first time in 20 years that neither Coke nor Pepsi bought an in-game Super Bowl ad for their brands. It will be interesting to see how those brands will fare in the coming months and if this will serve as yet another indication that digital advertising is the way forward.

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