Super Bowl Ads and Stock Prices?

A paper titled “Super Bowl Advertising Effectiveness: Advertisers Experience Stock Price Gains” has gotten a lot of press in the past few days.  The paper claims to contain evidence that stock traded by firms who advertise on the Super Bowl broadcast outperform the S&P 500 by 1% in the 10 days around the game.  Many of the links to the media coverage can be found here, in a news release from the University of Wisconsin- Eau Claire.  I have not been able to find a copy of the paper anywhere on line.  A three page summary is available on page 309 of this document which is some sort of conference proceedings from 2008. THis may be the only published version of the paper.

Based on this summary, the authors use an event study methodology to address this question.  The basic idea is to collect stock price data from those companies that advertise on the Super Bowl broadcast and regress their returns on the S&P 500 returns, looking for excess returns.  I don’t believe the results for two reasons.  (1) What if better performing companies are more likely to advertise on the Super Bowl?   (2) What causal mechanism would generate an increase in sales before the ads were viewed?  The analysis period for the event study is 5 days before and 5 days after the game.  The idea is that simply knowing that a company will advertise on the super bowl is enough to increase the stock price.  Since the commercials are not shown at the beginning of the event period, the paper implicitly assumes strong-form market efficiency in order for this effect to appear.

Hat tip to Newmark’s Door.

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