Kim, Jooyoung, and Jon D. Morris. 2003. The effect of advertising on the market value of firms: Empirical evidence from the Super Bowl ads. Journal of Targeting, Measurement & Analysis for Marketing 12, no. 1: 53-65.
In their article, Jooyoung Kim and Jon Morris argue that companies should focus on communicating to stakeholders through their use of advertisements. The authors studied stakeholders’ perceptions of advertisements, whether or not stakeholders view advertisements as predictors of company performance, and whether or not stakeholders would invest in companies based upon their advertisements. Using Super Bowl advertisements, they examined stakeholders’ perceptions and behaviors by measuring stock price performance during peak advertising periods.
After statistically analyzing the collected data, Kim and Morris concluded that Super Bowl advertisements can be seen as overly expensive and inefficient. They reported that investors do not view advertising as predictors of company performance. Instead, stakeholders base investment decisions upon a company’s earnings, not advertisements. They did, however, find a difference in returns between .com companies and brick-and-mortor companies, as .com companies experienced a poorer return on investment. They did not find a relationship between stock price performance and ad likability or frequency.
I found this article interesting because it focuses on a target audience rarely talked about. I have read many articles regarding consumers’ perceptions of advertisements, but this is the first I’ve found that takes this different approach. The authors inform readers of investment strategies and illustrate the financial impact advertisements have on businesses and investors.
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