The Golden Market

Beer Ads and College Sports: NCAA Over the Edge

2008-04-11T16:28:00.000-07:00

College students and their increasing consumption of alcohol is a never-ending problem all across the country. As I explored the web this week, I found an article about the recent NCAA Basketball Tournament and the amount of beer advertising during its televised games. Apparently, some school officials are upset about the amount of beer ads that were played during this year's Final Four Tournament. On Wednesday, April 9th, over one hundred University Presidents and Athletic Directors, with the help of the Center for Science in the Public Interest, wrote a letter to NCAA President Myles Brand expressing their concern on the excess amount of beer advertisements played during last weekend's telecasts (see picture to right). These officials believe that the NCAA needs to reconsider its policies on alcohol advertising, especially since it violated the present policy, which limits beer advertising to sixty seconds per hour and no more than one-hundred and twenty seconds per telecast. According to the CSPI, the two semifinal games last Saturday played a total of four-hundred and forty seconds worth of beer ads, and Monday night's final in which Kansas beat Memphis contained two-hundred and seventy seconds worth. I decided to dig deeper into the blogosphere and search for related blogs on this issue. One blog I discovered titled "Dude! Several Colleges Call Beer Ads During NCAA Tournament 'Embarrassing'" agrees with the decision of school officials to have the NCAA limit alcohol advertising during college sports. The author of this blog, nicknamed Sportz Assassin, believes that drinking alcohol is the personal responsibility of the student, and the NCAA should follow its own policy of limiting beer commercials during telecasts. A second blog I found is titled "270 Seconds of Beer", in which author Heather Koerner shares her opinion of selling beer at sporting events, and gives her praise of the university officials against the advertising and selling of beer during college sporting events. I also chose to comment on these blogs and offer my own opinion on the matter since I myself am a college student and have seen these ads first-hand. I linked these comments to their appropriate web page and have conveniently displayed the comments below.

"Dude! Several Colleges Call Beer Ads During NCAA Tournament 'Embarrassing'"
Comment:
First off, I'd like to thank you for your insight on this subject. I watched the two semifinal games last Saturday and have to say, I did notice an abundance of beer ads. I actually thought I was watching a replay of the Super Bowl. I agree with you when you say that drinking alcohol is the responsibility of the college student. As a college student myself, I have had my share of drinking experiences. Whether before football games, during post-game parties, or just a regular Thursday or Friday night, I have been there and done that. However, it concerns me greatly that college students drink so much alcohol. I feel it is not primarily because of the ads aired during basketball or football games because these ads are displayed everywhere and played during every type of telecast, not just college sporting events. Fraternities and even sororities throw weekly parties where beer is the main beverage consumed, and popular drinking games such as beer pong are consistently played. I also agree with you when you say that "the abuse of alcohol by college students is a big issue and a sore spot for these colleges." Year after year, you hear of another college student dying due to alcohol poisoning or even riots occurring near campuses (such as the one at USC earlier this spring). The universities that signed this letter are obviously accustomed to this type of behavior on their campuses. They are concerned with students’ safety, which is one of their top priorities once a student signs that letter of intent. I do not blame these officials for trying to do the right thing. The NCAA did violate their own policies, and if they continue to do so, they will have a lot more people on their case than the one-hundred university officials. I know you stated that "the NCAA needs to follow their rules," but I was wondering if you think their alcohol advertising policies will change for the better or worse in the near future. Will the "High and Mighty" NCAA eventually decide to increase the allowed time for alcohol advertising, and even allow hard alcohol advertising? Thanks again for your insight on this issue and I appreciate any response that you wish to leave.

"270 Seconds of Beer"
Comment:
I would like to commend your post on this matter, as it directly relates to me. I myself am a college student, so I understand why these universities are apprehensive towards beer advertising. The main concern of these colleges is to try and prevent students from consuming alcohol. Beer, known as the most popular alcoholic beverage amongst college students, is consumed more than any other beverage during sporting events, including college and pro. Most beer ads leave a lasting impression on the viewer, such as the recent "Dude" campaigns for Bud Light (pictured to the left), but remembering these ads does not mean that students will go buy that brand of beer. Personally I believe the decision to limit the amount of beer ads during NCAA sporting events is appropriate. How do you think the NCAA should handle this situation? The NCAA profits greatly from beer promotion, so do you think they will simply increase ad prices or end up increasing the amount of time allowed for beer ads? I believe that the NCAA will do nothing, at least until the current contract with beer companies ends. Even with the increase of alcohol related incidents (such as the seventy thousand sexual assaults and seventeen hundred deaths) on college campuses each year, there continues to be nothing or very little done to prevent them.

As a frequent attendee of sports games (mainly professional hockey and college football), I am aware of unruly fans that consume too much alcohol. I enjoy going to all sporting events, and most of the time I am not affected by these fans. There are some instances, however, when they just get out of hand and take it too far. If someone wants to drink in the presence of their own home, that is fine with me. I do not understand why people want to mix their drunkenness with sporting events and bother surrounding fans. Even though beer is not sold at most college stadiums and arenas, it does not prevent students from drinking before games. You mentioned having beer spilled down your back too many times to count, which is funny because there have been many instances when I have witnessed this occur. I often wonder how these guys even drive home after the game. What if they decide to drive home drunk? This inexcusable behavior is why some people do not even deserve the right to drink alcohol. I appreciate your opinion on this significant issue, and I value any feedback you would like to offer.

Advertising Gold: Marketing in the 2008 Summer Olympics

2008-04-04T12:13:00.000-07:00

On July 13, 2001, Beijing, China was honored with the right to host the 2008 Summer Olympic Games. Opening ceremonies are set for August 8th, with closing ceremonies commencing on August 24th. This summer, there will be twenty-eight different sports being played across thirty-one venues, with three-hundred and three medals being awarded to athletes coming in first, second, and third place. These upcoming 2008 Summer Olympic Games (logo pictured on the left) will prove that athletes will not be the only ones winning gold medals. Companies across the globe are anxious for the games to begin so they can promote and share their image and products with the world. Although advertising in Olympics held overseas is too expensive for some companies in the United States, the decision to market to a broader audience can and will benefit these corporations fortunate enough to sponsor the games. The costs of becoming a sponsor may thwart some companies from doing so, but the firms able to advertise during the games will see a greater profit and return for their money.

This year's Olympics may not only surpass previous Olympiads in terms of athletic performance, but it will be the most advertised ever. It is estimated that over seventy companies will be sponsoring the Beijing games, and they will consist of three tiers of support: Worldwide Olympic Sponsors, Beijing 2008 Partners, and Beijing 2008 Sponsors and Suppliers. Some of the Worldwide Olympic Sponsors are McDonald 's, Coca-Cola, Visa, Kodak, and General Electric (see picture below to the right). Beijing Partners include Volkswagen, Adidas, and Johnson & Johnson; whereas Beijing sponsors and suppliers are comprised of companies such as UPS, Budweiser, Snickers, and Staples. These companies are looking for an advantage over their competitors, and the answer is the XXIX Olympic Games. Some firms are paying up to two-hundred million dollars for the privilege of becoming an Olympic partner, while others are spending an average of seventy-eight million dollars to be sponsors or suppliers. It seems like a hefty price tag to some, but the benefits that result from it are astounding. Olympic sponsors are already seeing their stock prices soar.

Every four years, the Summer Olympics are held in a different country and in an overall different setting. Going international may be troublesome for some well known businesses in the United States due to high costs, but popular firms such as McDonald's, Coca-Cola, and Visa are first in line to be partners. Advertising will help increase sales and stock price, which will in turn generate more profit. It is proven that the corporation promoting itself will increase brand and product knowledge amongst the millions of viewers and attendees of the Olympics. In fact, a recent study done by Initiative Sports Futures claims that the Opening Ceremony alone could be the first sporting event ever to attract over one billion viewers. Pierre Justo, the Beijing-based managing director of sports research for TNS Sports Asia, says "The scale is totally different from previous Olympic Games. Everybody is waiting for TV audiences, especially in China, breaking records. We will see figures we've never seen before." McDonald's stock price rose twenty-one percent after it sponsored the 2004 Olympics in Athens. Granted sponsoring the Olympics was not the only cause of this increase, but it can be inferred that it was a major influencer. From May 2004 to December 2004, McDonald's, Johnson & Johnson, and Kodak's stock prices all increased by six dollars and General Electric's rose five dollars. This is proof that advertising in the Olympics can be one of the smartest things a corporation can do. Their advertisements and logos are sure to be seen by millions of people all over the world, which will definitely increase market share and profits. Companies going international tend to do well overseas as well as in the United States, and global advertising and expansion are two major reasons why they succeed.

Corporations looking to expand internationally, especially within the thriving Chinese economy, have the opportunity to advertise and sponsor the upcoming Olympic games. It will provide a chance to grow while allowing each partnering company to showcase its products or services to the two-hundred and three different countries representing this years' Olympics. According to Nathalie Bastianelli, head of Havas Sport China, "This is the potential of the Chinese market [...]With its economic growth, the brands are very interested in this market and a big event like the Games is a good opportunity to get closer to the Chinese consumer." Adidas is one of the primary international corporations hoping to strengthen its presence in China, even though it already holds over thirty-five hundred outlets in four-hundred cities. Erika Korner, head of Adidas' Olympic program, states: "It was an obvious decision for us to sponsor the Olympics in a country where our growth is highest." Many companies are following suit, including UPS and Budweiser.

When August 8th arrives, there will be many familiar brands and advertisements displayed during each competition. The number of recognizable corporations on television as the games are in progress will be astonishing. Advertising and sports are considered norms in our culture, so when the two merge they create the best possible situation for a company to market itself. The potential is there to expand business and increase market share. Firms just have to be willing and able to spend the millions of dollars needed to sponsor 2008's games. The risk is sometimes worth the reward and the benefits will outweigh the costs, and advertising in the Olympics is one of those situations.

Marketing 101: Exploring the World of Advertising

2008-03-26T22:42:00.000-07:00

Exploring the web for resources related to marketing and advertising can be a challenging task, especially for someone like me just entering the blogosphere. However, I soon discovered that by using the Webby Awards criteria for websites and the IMSA criteria for blogs, the search for resources related to my blog becomes simple and more efficient. I recently found five websites and five blogs that effectively focus on marketing and advertising, and these resources pass the previously mentioned criteria. The first website is RedFly Marketing (pictured on the left), which is a full service search engine and online advertising company. Its main strength is that it is a Qualified Google Advertising Company, which helps expand business and retain customers using the pay-per-click marketing scheme. On the other hand, its weakness is its inability to compete with similar companies because it is somewhat of a new company and it is based in Ireland. Sales and Marketing Executives International has over ten thousand members worldwide, making it a leading organization which prides itself on lending services to sales and marketing professionals. In addition to annual dues, SMEI also charges fees for its members to attend individual events and seminars, which can prevent some people from joining their organization. Another organization that is influential in the field of marketing is POPAI, the Global Association for Marketing at-Retail. This organization is a leading international trade association and has been around for over seventy years. Its members include leaders from premier companies such as Wal-Mart, Coca-Cola, and Microsoft, which I believe is its main strength because it proves they can compete against other global trade associations. POPAI is open to any and all types of companies, which might be regarded as a weakness because of its non-exclusivity. There are two well-known advertising news websites that are popular amongst the marketing community. Adweek and Advertising Age contain a variety of information in news articles, videos, polls, and even blogs. The catch-side (and downside) to these sites is that for an annual fee, the reader can subscribe to receive magazines in print, read all of the online articles, and get exclusive access to other topics such as archives and full-screen videos. Netconcepts is a leader in sales and online marketing, and its blog contains a mixture of online marketing news for the country of New Zealand. The exclusivity and bias towards companies in New Zealand can be perceived as a weakness, but the information included in the blog relates to advertising as a whole, which also consists of news from the United States. Another foreign blog that encompasses marketing news is Metafocus, which is based in the United Kingdom. This blog contains an abundance of information of how to succeed in online marketing, and even has a link to its renowned six steps to online success. Along with Netconcepts, its weakness is its limitation to companies in Europe which can be harmful to business development. My personal favorite is Advertising Lab, a blog that is updated daily with topics ranging from the newest advertising developments to the latest business news. Its variety of topics keeps readers interested, even though some posts seem too short and vague, which may be this blogs' only downfall. The Marketing Productivity Blog focuses on web analytics and business models performed by most companies in the United States. Jim Novo, the producer of the blog, offers workshops and services to help improve a company's business analytics, but the downside to that is he has not had any speaking engagements since the end of last year. The final blog I came across is Direct Marketing Rx, which takes advertisements of today and evaluates their efficiency. There is also a side blogroll providing links to other blogs and news sites, which some readers may find convenient. However, the blog's individual topics are sometimes outdated and no longer pertinent to news going on in the world today. Overall, further exploration of these ten resources can help understand the realm of marketing and advertising a little better.

Six Flags Going International: A Look At The Deal With Dubai

2008-03-06T00:04:00.000-08:00

On Tuesday, March 4, 2008, theme park developer Six Flags Inc. and the Dubai Holdings’ Tatweer unit announced a deal that would bring a five million square-foot amusement park to Dubailand, a strip of desert land in the United Arab Emirates. The theme park, called Six Flags Dubailand, will be the first developed by the company outside of North America, and Six Flags announced that they will break ground on this project sometime in 2009. Although this theme park is the main focus of the project, it is only part of the overall project that Tatweer envisions. This proposed project will include concepts such as tourist attractions, shopping malls, restaurants, and residential units. The three billion square-foot Dubailand will be home to a number of tourist attractions, including DreamWorks Animation Park, Universal Studios Dubailand, Bawadi, and Global Village. Projects that are in the advanced stages of development include The Tiger Woods Dubai, Dubai Sports City, Falcon City, Motor City, Dubai Heritage Vision, and Al Barari. According to Saeed Al Muntafiq, Executive Chairman of Tatweer, the realistic time frame that the Dubai Strategic Plan will be complete is by 2015. He states that "the new alliance with yet another global leisure and entertainment leader such as Six Flags consolidates Tatweer's commitment to becoming a leading global tourism, leisure and entertainment investor, and a key contributor to the tourism objectives of Dubai Strategic Plan 2015."

By far, Dubailand is considered to be the most ambitious tourism, leisure and entertainment project in the world and Tatweer's hope is to increase global tourism and appeal to all age groups. Al Muntafiq said: "The addition of Six Flags, one of the world's most reputed leisure and entertainment companies, to our burgeoning portfolio complements Dubailand's value proposition as an unrivalled tourism destination. It is a privilege for Tatweer to be selected by Six Flags as its regional partner and Dubailand as the destination to host the first Six Flags theme park outside of North America." Even though the financial terms of the deal were not disclosed, it is believed that the entire development will be paid for by Tatweer. Mark Shapiro, CEO of Six Flags, is thrilled and believes that this deal will turn around the company's misfortune and allow for them to expand more globally. He states: "This is an historic day for our company. Expanding Six Flags beyond our current North American borders validates the growing strength and momentum of our brand. Through this partnership with Tatweer, we now have the opportunity to create a world-class theme park destination that will allow guests from around the globe to experience Six Flags' unique combination of thrills and entertainment." Six Flags Inc., already the world's largest regional theme park company with 21 parks across North America, believes that it will prosper from this project and eventually expand into other countries as well. This deal is a bold move for a company that has been under some scrutiny for the past few years. Six Flags is over $2 billion in debt, but Shapiro believes that expanding internationally will possibly give them a new depiction and a semi-fresh start. Even though the company has sold eleven of its parks and properties in the past three years, he says that "the overseas brand-building will have a positive impact." Six Flags will help Tatweer by conceptualizing and overlooking the development of the theme park, which some people believe will be even more ambitious and thrilling than any of the other parks across the United States, Canada, and Mexico.

Six Flags will not announce their 2007 fiscal year numbers until late Monday afternoon, but it is believed that they will be higher than 2006's. Last month, Six Flags reported a preliminary 7% increase in fourth-quarter revenue, as well as a 4% increase in attendance. For the past forty-seven years, Six Flags has provided entertainment to millions of families and has appealed to every age group imaginable. They even have a strange old guy with glasses named Mr. Six as their mascot, and they carry themed attractions for the Looney Tunes, the Justice League for America, and Thomas the Tank Engine for kids. Six Flags theme parks hosted 28.5 million guests in 2006, which only trailed Walt Disney Parks and Resorts. The company expects attendance to grow in 2008 due to its introduction of eight new roller coasters in eight of its largest theme parks. Since the announcement of the alliance on Tuesday, Six Flags' stock has fluctuated and ranged from $1.70 to $1.96, ending at $1.71 per share Thursday afternoon. Six Flags, Inc. hopes that expanding internationally will help increase its market share price and they have even started looking at other countries to expand into within the next few years. The company's stock hovered around $6 at this time last year, and its management hopes that it can regain the same form that it was able to achieve in past years. Whatever Six Flags attempts to do in the near future, it still has a huge hole to dig out of. Two billion dollars in debt is a bit much for a company that loses money every year, which Six Flags has been doing since 1998. If they believe they can climb out of that hole by international expansion, then who is stopping them? Only Six Flags can save itself from destruction.

Marketing and Advertising: The Wave Of The Past, Present, and Future

2008-02-29T16:29:00.000-08:00

Marketing and advertising have always been a constant in the business world, and today more than ever it can be seen everywhere you look; on television, on the internet, on billboards, in newspapers and magazines, and also heard on the radio. While searching the web this past week, I found a number of unmatched resources that I decided to include in my linkroll because of the significance they portray in my field of marketing and advertising. During my exploration of the web, I discovered nine sites that convey first-rate content, structure and navigation, visual design, functionality, interactivity, and authority. Their overall experience is also unparalleled, which helps them pass the Webby Awards grade of criteria. In addition, the one blog I came across passes the IMSA criteria, and it offers opinions, commentary, and news that is substantial in the world of marketing. This blog, entitled the Marketing Profs Daily Fix, involves a number of contributors and marketing professionals, which I believe is its primary strength because it helps limit its biases. It is also a leading blog in the marketing community, and it informs readers of hot topics in the area and shares a variety of information on the marketing profession itself. However, this blog does have a weakness, which I believe is the lack of effective visuals to support the topics of its posts.

The nine websites that I encountered allow deep exploration into the fields of marketing and advertising. These organizations are trade associations which pride themselves on offering its members a wide array of resources, services, expertise, certifications, and programs regarding the marketing and advertising agency business. Five of these organizations deal primarily with advertising. They are comprised of the American Association of Advertising Agencies, the American Advertising Federation, the Interactive Advertising Bureau, the International Advertising Association, and the Association of National Advertisers. Three of these organizations, the AAAA, AAF, and IAA, have an established history and are known as being premier leaders in the advertising industry, which gives them a huge advantage over their competition and I believe is their main strength. The key positive of IAB is that it primarily promotes interactive and online advertising for agencies, which is significant in this era dominated by the internet. The main strength of ANA is that its membership is attractive for both larger businesses and smaller companies. Throughout my evaluation of these five organizations, I found some possible weaknesses that can be developed further. Roughly sixty percent of AAAA's members generate revenue of less than $10 million per year, which is a huge disadvantge compared to its competition. I feel that the AAF is the best organization of the bunch, but they do not hold enough advertising events throughout the year to appeal to the younger audience (i.e. college students). The IAA also does not hold enough events or programs, which makes it difficult to spread the benefits of their membership. The IAB is a fairly new organization, which may persuade some potential members to sign up with a more experienced one. Lastly, the ANA only deals with corporate, not individual businesses, so their potential to grow is only delayed by their own obduracy.

The other four organizations I came across deal with marketing as a whole. These include the Direct Marketing Association, the eMarketing Association, the Business Marketing Association, and the Promotion Marketing Association. The primary strength of the DMA is that it contains the majority of Fortune 100 companies as its members and is an international leader with members in forty-six countries. The eMA is also an international leader with over forty nations being represented by them, and their primary strength is that it is the world's largest international association of emarketing professionals. The positives of the BMA and the PMA are they also have an established history, which makes them premier powers in the world of marketing. Even though these organizations have many strengths, there are some weaknesses that I feel can be improved upon. The DMA primarily holds conferences and events on the East Coast of the United States, which may make it hard for some business owners to attend. The eMA requires users to be paid members to access some of its online resources, which may discourage some browsers from inquiring about their organization. The primary weakness of the BMA is that it strictly focuses on business-to-business marketing as opposed to branching out to business-to-consumer marketing. I found that the lack of events and conferences held by PMA is their primary weakness, but other than that, it seems like they are resourceful and generate plenty of business. Throughout my analysis and evaluation of each of these organizations, I realized that there is a lot more to marketing than just coming up with a slogan or packaging a good or creating an ad. I learned that there are professionals willing and able to help, multitudes of classes and workshops, and an ample amount of resources available in the realm of marketing.

Microsoft's Takeover of Yahoo: A Good Deal or Bad Deal?

2008-02-18T15:22:00.000-08:00

As I began to research online for potential marketing issues for my next post, I came across a number of articles and posts that involved two of the largest corporations in the United States, Microsoft Corp. and Yahoo Inc. It all started on January 31, 2008, when Microsoft made an offer to takeover Yahoo. This acquisition would combine the most powerful software giant (Microsoft) with one of the most powerful internet pioneers (Yahoo). Microsoft's original bid for Yahoo, offered at $31 per share (which amounts to $44.6 billion), was rejected and the two companies are still in negotiations. After Yahoo rejected Microsoft's offer, News Corp. (FOX) and Time Warner's AOL began talks with Yahoo about possible mergers. But while researching online, I came across two posts: one that argued the acquisition would be beneficial for Microsoft, and one that explains how Yahoo should just accept the deal before it's too late. I came to the conclusion that Microsoft and Yahoo can only benefit from this deal, and I do not believe that Yahoo will sell or merge with any other company that is also in the bidding war. However, Yahoo does need to make a decision fast, especially since their employees are being targeted by other competitors and shareholders are losing their patience. I also believe that with Yahoo as an asset, Microsoft can and will be able to compete with the highly praised Google enterprise.

The first post I explored, "Microsoft buying Yahoo!-Good or bad?" explains that this takeover is the right decision and it will be ideal for Microsoft. Accordingly, the second post I came upon, "Do or die time for Yahoo," argued that Yahoo has no choice but to merge, saying that Microsoft will just force a hostile takeover and the internet mogul will end up selling for less if it does not deal now. I have read that people are worried about internet start-up companies and entrepreneurs getting the short end of the stick, but I do not think this deal will affect them that much. True, Yahoo has been and still is one of the biggest buyers of these types of smaller companies, especially ones they can acquire for less than $50 million. But I believe Microsoft will easily pick up the slack in that department, even though they are not accustomed to this type of activity. Microsoft will battle with Google for "start-up supremacy" and online advertising, even if it means buying lower end start-ups they would otherwise leave untouched. Also relative to this argument is the fact that there are over 20 companies who are extremely active in purchasing start-up companies, including Amazon, Disney, and the previously mentioned News Corp. and AOL.

"Microsoft buying Yahoo!-Good or bad?"
Comment:
Throughout my research on this topic, I have come to the conclusion that Microsoft will in fact benefit from this deal if it does take place. They will challenge Google for internet supremacy, and hopefully the deal will get finalized soon. Although I agree with you wholeheartedly in every aspect you touched upon, I do believe you left out a big piece of the puzzle. What about the argument that people (so-called experts) are making about smaller start-up companies and the effect the deal will have on them? I'm not a big "computer guy" and I don't read up too much on advances in technology, but at first glance, I do believe that this sounds like a problem. I've read a few blogs and articles explaining that Yahoo is one of the biggest, if not the biggest, buyers of these start-ups and I really wonder if this deal will have that much of an effect. I believe that even though Yahoo does buy quite a few of these "cheaper" (under $50 million) companies, there are plenty of other companies that can pick up the slack, and entrepreneurs need not worry. There are companies out there such as Amazon, eBay, Disney, and Comcast that are frequent buyers of these start-ups, and with the majority of these companies prospering today, why should there be any worry on who's going to buy who? I was just wondering what your take was on the argument over these start-up companies, and if you have any idea on what Microsoft's plan is for future purchasing of companies under $1 billion. Thanks again for your insight on this proposed deal and I appreciate any feedback that you wish to leave.

"Do or die time for Yahoo"
Comment:
Most "experts" find it hard to believe that this deal is going to go through. I believe it will...eventually. Microsoft's offer is now worth just $40 billion (according to Microsoft's closing share price as of 2/19/08), down from the original offer of $44.6 billion. Yahoo Inc. should have taken the deal when it was first offered, and now they are going to lose out on billions of dollars. The takeover will happen, it's just a matter of time. Microsoft plans on going straight to the Yahoo shareholders, bypassing the board of directors who rejected the first offer, and Microsoft CEO Bill Gates has said Microsoft will not increase its offer. Once Yahoo realizes that, they will have nothing else to do but sell. Microsoft does not need to instigate a hostile takeover. They just need to be patient because the deal will get done. From what I have read, Microsoft shareholders are already astonished at the offer Microsoft originally laid out, and they believe Microsoft will be overpaying for Yahoo. I believe that Microsoft's original offer was more than enough, and Yahoo should not rely on a better offer from another corporation or from Microsoft itself. Also, with Yahoo's board of directors all up for re-election this spring, this makes for the best deal possible for both companies. I believe Yahoo should take the money and run with it, because they are just delaying the inevitable.

Super Bowl Ads: Are They Effective In Generating Profit?

2008-02-10T19:25:00.000-08:00

On February 3, 2008, one of the greatest must-see events in sports history was held in Phoenix, Arizona. Seventy three thousand fans packed The University of Phoenix Stadium to watch the underdog New York Giants face off against the favored and undefeated New England Patriots. These fans were there to possibly witness history (with the Patriots going undefeated) or see the greatest upset (the Giants were twelve-point underdogs) in Super Bowl history. Even though it can be argued as one of the best Super Bowl finales ever (Giants won 17-14), the real show was on television; in between plays, during timeouts, and even through halftime. Millions of people tuned in at home to watch the game, but those record 97.5 million people also witnessed another year of Super Bowl advertisements. One after another, commercials ranging from beer companies to investing firms humored, informed, or shocked a record setting audience. Although some companies believe the ad costs are too high and out of their budget, it is always worth it to have almost one-hundred million people see their commercial, even if it is for only thirty seconds. These thirty-five advertisers negotiated for and obtained commercial time in order to promote their products and services, and the only way to find out if they succeeded is to look at the post-game numbers: stock price and market share.

This year’s Super Bowl ads on Fox had a price tag of $2.7 million for a 30-second spot, compared to $2.4 million last year on CBS. The graph to the right shows the cost per ad and the number of viewers since the first Super Bowl in 1967. Fox generated revenues of over $225 million from advertisements alone. It is no question that Fox came out a clear-cut winner during this year's game, especially with commercials promoting their own TV shows such as Prison Break and Terminator: The Sarah Connor Chronicles. But how did the companies that purchased these ad spots fair, and how do they expect to perform in the near future?

According to the Retail Advertising and Marketing Association’s 2008 Super Bowl Consumer Intentions and Actions Survey, 75.7 percent of viewers consider the commercials entertainment, and the percent of Super Bowl viewers that will tune in primarily to watch these ads is roughly 36.3 percent (see pie graph below). In RAMA’s survey, 18 percent of viewers wish that companies would just save the advertising money spent during the game and use it to pass savings along to shoppers, while 18-24 year olds (12.6 percent) are twice as likely as other groups (6.1 percent) to buy products from Super Bowl advertisers. Year after year, companies such as Anheuser-Busch and Pepsi are frequent leaders in airtime during the Super Bowl. This year, Anheuser-Busch spent roughly $14 million on seven advertisements (they did, however, receive a 25 percent discount from Fox for being the games biggest ad buyer and received one of the few 60-second spots during the game). Some fan favorites, according to MSNBC.com, during this year’s Super Bowl were ads for Budweiser, Tide, Coca-Cola, Pepsi, Doritos, Bud Light, and E-trade. They were an array of serious and funny commercials that people remember once the game is over and even search for online to see again.

Super Bowl ads are expensive to air, but they can also be costly to make. Audi paid $1 million just for the right to use The Godfather imagery in their ad, and other companies spent money getting well-known celebrities to act in their commercials. And every year, Anheuser-Busch shoots multiple ads and spends money to test them in focus groups before they decide which ones to air. One may ask the questions: Do these companies see a dramatic increase in revenues after the game is finished? Why spend so much money on one commercial when they can spread it out for multiple spots during other television events? Although a company should be wise with their marketing funds and spread out their advertisements, using a large portion of their allowance on an event seen around the world is not such a bad idea. Especially since it was the second-largest television event ever seen (second only to the 1983 "M-A-S-H" finale). There are definitely certain aspects of commercials that catch the eyes and ears of the audience and may even influence whether or not its products or services get sold. Celebrities play a huge role in promoting these products or services, as do animals, babies, and well-known fictional characters such as superheroes or cartoon characters. Clever and funny commercials get people talking the next day, which may ultimately lead to searching and re-watching the ads online or even buying the products or services advertised. These big name companies thrive on making decisions like airing an ad on Super Bowl Sunday, and the revenues and profits following this event reflect whether or not it was a good one.

However, the majority of companies that can afford to spend millions of dollars for a 30-second ad are bound to see an increase in sales, according to Chuck Tomkovick, a professor of marketing at the University of Wisconsin. He states that "these companies are getting more for their money than just 30 seconds." He has researched Super Bowl advertising for more than ten years and believes that the internet is a big reason for companies' advertisement success, due to the hype surrounding their ads: "There's an Internet following on these ads and they're being publicized way in advance." Studies have also shown that creativity can even increase stock price and revenues. Kenneth Kim, a researcher at the University of Buffalo, says: "Companies with well-liked commercials see, on average, a quarter of a percent increase in their stock prices the following Monday." While this increase may not seem substantial, the average company who purchases an ad has a market value of $30 billion, and a quarter of a percent of that increases its value by $80 million. Most investors would agree that an $80 million revenue boost is worth the measly $2.7 million spent for a Super Bowl ad.

Not only are beer and car companies are getting into the act, but movie studios are also taking advantage of the Super Bowl ad phenomenon. Research has shown that movie revenues increase an average of 36 percent if their trailer is shown during the game. Another example of a company greatly increasing their profit and market share is Under Armour Inc. The athletic apparel maker who had a 60-second ad during the game stated their market share price climbed about 30 percent after announcing it was advertising a new shoe during the Super Bowl. Tomkovick, who has completed a study on Super Bowl advertisements and the effect they have on stock prices, reported that companies who advertise during the game inflate their stock value by 1.3 percent. However, companies that try to promote beverages and automobiles stay relatively stable with no sudden increase. This can be explained by the demand for these products, which stays constant throughout the year. It is not a guarantee that a company will increase business revenues if they air a Super Bowl ad, but it is a possibility that their stock price will go up.

Year after year, Super Bowl ads humor and inform their audience, which eventually helps the company generate more business. Buying a 30-second spot during the largest sporting event of the year is beneficial to a firm willing and able to spend $2.7 million. This year's game, along with previous Super Bowls, proved that theory. Companies who purchase ad space see an increase in revenues, which may lead to increases in profit, stock price, and market share. The risk is worth the reward, especially with the number of viewers each year consistently breaking records. Fans and non-fans alike are already thinking about next years' game, just so they can see what commercials will stir up controversy or just give them a few laughs.