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The Market Responses to Super Bowl Advertising: the Role of Product Type and Multiple Executions sustainability Article The Market Responses to Super Bowl Advertising: The Role of Product Type and Multiple Executions Jung-Gyo Lee * and Kyung-A Ko Department of Media, Kyung Hee University, Seoul 02447, Korea; [email protected] * Correspondence: [email protected]; Tel.: +82-2-961-9170 Abstract: This study uses event study analysis to examine the impact of Super Bowl commercials on the stock prices of sponsoring firms by product type and the frequency of ad executions. By examining 272 Super Bowl advertisements from 142 firms that aired from 2010 to 2019, the results show that the execution of Super Bowl advertising was positively associated with excess returns. In particular, the abnormal return for the day after the event represents the largest gain in excess returns over a period of ±10 days around the event day. Further, cumulative average abnormal returns (CAARs) are consistently positive right after the event day. The findings demonstrate that Super Bowl commercials yielded higher returns for low-involvement and hedonic products. The number of ad executions is found to substantially enhance the effectiveness of Super Bowl advertising. Keywords: Super Bowl advertising; event study; product type; multiple executions Citation: Lee, J.-G.; Ko, K.-A The Market Responses to Super Bowl Advertising: The Role of Product 1. Introduction Type and Multiple Executions. The Super Bowl, the championship game of the National Football League (NFL) in the Sustainability 2021, 13, 7127. https:// U.S., is one of the most popular sports events in the world. In 2020, it recorded 102 million doi.org/10.3390/su13137127 viewers and charged $5.5 million for a 30-second commercial. Fox’s Super Bowl ad revenue in 2020 totaled $525.4 million and ad prices continue to rise every year [1]. While there is Academic Editors: anecdotal evidence of the various benefits of Super Bowl advertising such as high reach of Ferran Calabuig-Moreno, Manuel various demographics, it is still unclear whether advertising expenditures pay off in terms Alonso Dos Santos, of return on investment [2]. The event study approach is a useful way to appreciate the Jerónimo García-Fernández and Juan financial impact of specific marketing activities of companies by assessing the abnormal M. Núñez-Pomar returns associated with the announcement of those activities [3]. Since the stock price quickly reflects the future expectation of an event in the market, the abnormal stock return Received: 21 May 2021 generated by the event can be seen as the reliable indicator of long-term impact on the Accepted: 21 June 2021 Published: 25 June 2021 value of a firm [4]. There have been many attempts to examine the relationship between the announce- Publisher’s Note: MDPI stays neutral ment of various marketing activities such as celebrity endorsement contracts [5], brand with regard to jurisdictional claims in extension announcements [6], awards of product quality [7], product placement [8], and published maps and institutional affil- abnormal returns for firms. Although several studies attempted to examine the economic iations. impact of Super Bowl advertising from an event study perspective, the findings are rather mixed and inconclusive [3]. While the majority of studies found a positive impact of Super Bowl ads on stock prices (e.g., [9]), several studies found a negative relationship between Super Bowl ads and stock returns (e.g., [10]). For example, Kim and Morris [10] showed that 22 of 35 Super Bowl advertisers analyzed experienced stock price declines the day Copyright: © 2021 by the authors. Licensee MDPI, Basel, Switzerland. after the Super Bowl. We believe that there exist underlying conditions which maximize This article is an open access article the effectiveness of the Super Bowl ads. distributed under the terms and The primary purpose of this study is twofold. A first goal of this study is to explicate conditions of the Creative Commons the moderating role of product characteristics in determining the salience of Super Bowl Attribution (CC BY) license (https:// effects. Even if many attempts have been made to understand the financial impact of Super creativecommons.org/licenses/by/ Bowl advertising, little attention has been devoted to issues concerning the ways that 4.0/). product involvement and hedonic/utilitarian attributes of products affect the influence of Sustainability 2021, 13, 7127. https://doi.org/10.3390/su13137127 https://www.mdpi.com/journal/sustainability Sustainability 2021, 13, 7127 2 of 15 Super Bowl campaigns. Only a handful of studies examined the impact of product charac- teristics on the effectiveness of Super Bowl advertising. For instance, Kim and Cheong [11] examined how executional elements affect the likability of Super Bowl advertising. The results indicated that the influence of executional elements was greater when the adver- tised product was low involvement rather than high involvement. This study posited that the relationship between the Super Bowl advertising and abnormal stock returns would depend on the product involvement and hedonic/utilitarian attributes of products. The results shed light on how the effectiveness of the Super Bowl ads is maximized. Another intriguing question inspiring this research is whether the number of execu- tions of Super Bowl advertising plays an important role in determining the salience of such effects as well. The effects of multiple exposures to advertising on consumers have been extensively studied [12]. The results of prior research suggest that there is a positive relationship between the number of exposures to an advertisement and the recall of that advertisement [13]. This study postulates that the effectiveness of Super Bowl ads will be enhanced by increasing the number of ad executions. Given the high costs and risks involved in Super Bowl advertising, it is critical for advertisers to consider the optimum level of frequency to generate the desired outcomes. The remainder of this paper is organized as follows. Section2 reviews the relevant literature and theoretical background. Section3 addresses the data, key variables, and research method, while Section4 represents the empirical findings. Section5 involves discussion, limitations, and conclusions of the present study. 2. Theoretical Background 2.1. Super Bowl Advertising The Super Bowl is the most popular sports event in the world; it garnered 102 million viewers and charged $5.5 million for a 30-s commercial in 2020. Firms spent a total of $525.4 million on Super Bowl advertising in 2020, and ad prices continue to rise every year [1]. Many companies spend a substantial part of their advertising budgets on this event because of the exceptionally high level of viewership and the broad demographics of viewers [14]. Watching the commercials during the Super Bowl has become an important part of the Super Bowl experience [2]. Super Bowl commercials are distinct from typical advertisements in several ways. Since viewers watch the new advertisements for the first time, ads have become an interesting topic for online and offline discussions, both before and after the game. It was reported that 52% of Super Bowl viewers talked about the Super Bowl commercials the following day [15]. Further, Super Bowl commercials are probably the only ones evaluated by both viewers and news media [11]. USA Today has reported likeability scores for each Super Bowl advertisement since 1989. Most studies on Super Bowl advertising have focused on the impact of executional elements by using short-term measures of advertising effectiveness such as ad recall, ad lik- ability, and buzz [16]. For example, in a non-laboratory setting, Newell and Henderson [13] examined the effects of length, frequency, and pod placement on the recall of Super Bowl commercials. Super Bowl viewers were surveyed the day after the game to assess their recall of ads embedded in the game. The findings indicated that advertising recall was positively related to the length and frequency of advertisements. Some researchers attempted to examine the relationship between Super Bowl adver- tising and consumer’s online behavior. For example, Lewis and Reiley [17] found the positive influence of 46 Super Bowl commercials on online searches of advertised products within 15 seconds following a Super Bowl ad appearance during the game. Similarly, Chandrasekaran, Srinivasan, and Sihi [18] investigated the influence of Super Bowl ad content on online brand searches. By analyzing the 2004–2012 Super Bowl commercials, the authors found that the informational content of the TV commercial significantly improved consumers’ online brand searches, whereas website prominence and prior media publicity yielded negative results. Sustainability 2021, 13, 7127 3 of 15 Nail [19] emphasized the role of media coverage and word-of-mouth discussion in assessing the persuasiveness of Super Bowl advertisements. The results demonstrate that aggressive promotion activities were the best strategy to boost consumer discussion after the game. In particular, increasing media coverage and word-of-mouth communications before the Super Bowl were found to drive post-game activities such as discussion after the game. More recently, the impact of consumer engagement with Super Bowl ad tweets on engagement with the advertiser’s Twitter account was empirically examined [20]. The authors used Python to collect viewer participation data from the official Twitter accounts of the Super Bowl advertisers. The findings of regression analysis indicated that the number of retweets and favorites on Super Bowl ad tweets positively affected the numbers of followers and favorites on the official Twitter accounts of the Super Bowl advertisers. 2.2. Event Study and Economic Worth of Super Bowl Ads Since the ultimate goal of marketing activities is to improve the economic worth of stockholders, it is becoming more crucial for marketers to verify the return on investment for their marketing activities [21]. An event study analysis is a statistical method to examine the influence of an event on the stock price of a firm [5]. The event study approach assesses abnormal returns, which are defined as the differences between actual returns around an event of interest and expected returns.
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