The Super Bowl: What the Indicator Says and Thoughts on Advertisements

After Sunday’s big blowout win by the Seattle Seahawks, many would assume that by the Super Bowl Indicator that the stock market will grow substantially in 2014. According to the Super Bowl Stock Indicator, when a team from the NFC has won, the market does very well, and when a team from the AFC wins, there is average growth.


It is hard to believe that something that seems so unrelated can have such an effect on the stock market. I previously heard about the Super Bowl Indicator in Professor Kester’s finance class, and I was a little taken aback by all of the statistics that point to its crazy success rate. The Dow has an average return of 10.88 percent when the NFC wins, as opposed to just 3.03 percent when the AFC wins.


From the result of the Seahawks winning the Super Bowl and being in the NFC, the market is supposed to soar, right? Not so fast says analyst Paul Hickey. He says that the last two times the Broncos have won the Super Bowl, despite being from the AFC, the market has gained 28 and 15 percent respectively. If that was not a good enough reason to cheer for the Broncos, “following the Bronco’s last four Super Bowl losses, the market averaged gains of only two percent.” Seems to me like even though the Seahawks and the NFC won, we will not see any significant growth due to the Broncos losing. It will be interesting to see how this plays out of the course of the year.


This year a Super Bowl Ad was around $4 million for 30 seconds of air-time. Since 2000, there the cost of an ad has doubled, and almost quadrupled since 1995. This seems like an outrageous amount to spend on 30 seconds of someone’s life, however, you have to think about how many eyes that are watching said ad. According to yahoo.com, there were about 111.5 million viewers, which (assuming everyone has both eyes) makes 223 million eyeballs that watch an ad.


Do Super Bowl ads work or not? It is hard to tell. Almost all of the brands that can purchase ads are already well known, so some people are not going to break their brand loyalty just because one commercial was really cool. In terms of getting their brand noticed, I believe that it is worth every penny of the $4 million that companies pay. There are people who solely watch the game for the commercials. In the average household there is probably more conversation happening during the game then the commercials.


While the game seemed to be boring and anticlimactic to the majority of its viewers, the commercials provided a much needed comedic relief. They might have even helped lighten the Broncos fans moods as they saw their historic season get flushed down the drain. This year provided some great commercials, and only time will tell whether they worked or not.







Sam Campbell






Sources:


http://www.forbes.com/sites/greatspeculations/2014/02/03/dont-expect-seahawks-super-bowl-win-to-save-the-stock-market/ http://finance.yahoo.com/blogs/breakout/super-bowl-indicator--why-a-broncos-win-will-be-better-for-stocks-184553427.html http://tv.yahoo.com/blogs/tv-news/super-bowl-2014-ratings--most-watched-ever-213304046.html