When Are Super Bowl Advertisings Super? An Empirical Analysis Of The Economic Impact Of Super Bowl Advertising
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This dissertation investigates the relationship between Super Bowl advertising and advertisers' market valuation. The first essay identifies several factors that influence the financial rewards of this media-placement strategy. Specifically, I examine the impact of each ad's featured characters and appeals, and the product benefits promoted, on abnormal stock returns for sponsoring companies that appear in Super Bowl ads. Event study results show that Super Bowl advertising from 2004 to 2008 is positively related to abnormal stock returns for advertisers. Cross-sectional regression analyses indicate that market value of Super Bowl advertisers is positively related to likeable characters, emotional appeals, and approach messaging. The combined use of likeable ad characters with either emotional ad appeals or approach messages is also positively associated with firm valuation. The interplay between ad characters, emotional appeals, and the approach/avoidance messaging in a given Super Bowl ad determines its relative effectiveness. The most successful Super Bowl ads appear to be approach-oriented with likeable ad characters, or emotionally-based with likeable ad characters. Leaving out any of these key ingredients can result in a less positive impact. In fact, certain incongruous combinations (e.g., ads featuring rational appeals with likeable characters, or likeable characters with avoidance messaging) may negatively affect the recipeThe second essay examines the relationship between advertising efficiency and the market valuation of Super Bowl advertisers. First, stock market reactions to Super Bowl advertising are tracked. Event study results show that Super Bowl advertising from 2005 to 2010 is positively related to abnormal stock returns for advertisers. Next, the impact of advertising efficiency on the financial rewards of this media-placement strategy is examined. Data Envelopment Analysis (DEA) is used to assess advertising executional efficiency. Four advertising executional factors were considered as DEA inputs: (1) advertising expense, (2) advertising length (seconds), (3) frequency (count) and, (4) number of brands promoted. Two types of advertising effectiveness were included as DEA outputs: (1) Ad Meter ratings; and (2) Nielsen ratings. Cross-sectional regression analyses indicate that advertising efficiency is positively associated with cumulative abnormal stock returns of Super Bowl advertisers. These findings suggest that efficient conversion of advertising inputs to advertising outputs matters in generating positive abnormal returns. Along with advertising efficiency, brand reputation is found to have positive impact on Super Bowl advertisers' financial performance. A negative interaction between advertising efficiency and brand reputation is observed contrary to expectation. Theoretically, this dissertation extends the advertising-finance interface by explaining the relationship between Super Bowl advertising and advertisers' performance. While prior research has explored annual sales, profits, Tobin's Q, and analyst recommendation as indicators of firms' financial performance of advertising, the current study is the first to link advertising characteristics and efficiency to short term abnormal stock returns. From a practitioner's perspective, advertisers also should think twice about allocating so much money for a single advertising exposure. Simply pouring the large amount of the advertising expenditure cannot guarantee big financial reward. Therefore, advertisers must consider how to efficiently convert advertising effort and resource to desirable advertising outcome. Poor efficiency in generating positive advertising outcomes discourages most advertisers from being rewarded by stock market.From an investor's perspective, individuals attempt to obtain accurate and appropriate information when making investment decisions, eventually resulting in a sound investment. However, stock market movement does not always explain the dynamics of shareholder valuations. Given this, considering marketing and financial information simultaneously investors can assort when they make investment decisions. Investors' decision making should be based not only on prior stock market performance but also on a company's advertising characteristics and efficiency. In this sense, information about the marketing-finance interface offers new investment criteria, leading to more deliberate investment.