The effect of advertising on the

market value of firms: Empirical

evidence from the Super Bowl ads
Received (in revised form): 28th May, 2003

Jooyoung Kim
is an assistant professor of advertising in the Greenlee School of Journalism and Communication at Iowa State University. He
earned his PhD from the University of Florida. His research areas are in brand loyalty, brand extension and consumer affect.

Jon D. Morris
Professor in the Department of Advertising, College of Journalism and Communications, University of Florida, began his
advertising career in 1968, and worked for several agencies before earning his PhD from the University of Florida. His
research has appeared in Journal of Advertising Research, Journal of Current Issues in Advertising Research, Journal of
Educational Technology and International Journal of Instructional Media, among others. He has recently been developing a
model (AdSAM) for analysing emotional response to marketing communications. The model has been used in hundreds of
proprietary studies for multinational companies worldwide.

Abstract As integrated marketing communications increasingly emerge as the focus of

corporate communication efforts, companies have grown to realise that consumers are
not their only target audience. Rather, there are many stakeholder groups that also need
to be targeted with the company messages. This research examines some of the
important stakeholders — investors — and their perception of a company’s advertising
as reflected in the stock price performance at certain peak advertising periods. Using
standard event-study methods with the sample focusing on selected companies and
their Super Bowl ads, this study found a significantly different stock price performance
(compared to that of the prior periods) for the companies that advertised.

Background investors? Because effective

News-based investment strategy is a advertisements can often initiate sales for
well-known equity market principle. It a new brand or build positive images of
functions under the empirical assumption a new or existing company,
that stock prices respond very quickly to advertisements for investors can be
new information. In general, some classes perceived as a good indicator of positive
of news that can have an immediate future performance of the advertised
effect on stock prices are, for example: company. Although there have been
earnings; analyst reports/ many research efforts studying whether
Dr Jooyoung Kim
Greenlea School of recommendations; contracts/alliances; and advertising expenditure can be regarded
Journalism and reorganisations.1 This principle prompts as a financial investment, there have been
Communications, Hamilton
Hall, Iowa State University, an interesting question: are very few research efforts studying the
Ames, IA 50011, USA. advertisements (especially featuring new advertising’s newsworthiness for
Tel: ⫹1 515 292 4986; product/brand/company information consideration of investment in the
Fax: ⫹1 515 294 5108;
e-mail:
aired in a very high-rating programme advertised company. Do investors
[email protected] such as the Super Bowl) newsworthy for perceive advertising as a clue to a

䉷 Henry Stewart Publications 1479-1862 (2003) Vol. 12, 1, 53-65 Journal of Targeting, Measurement and Analysis for Marketing 53
Kim and Morris

company’s increase in performance? Will conceptually, as a form of investment. A

they react either positively or negatively causal link between advertising and sales
to the advertising? This research (or a sales base) has been suggested by
empirically explores and examines these several studies.19,20 Broadbent21 states that
questions. The study will examine ‘in an ideal world, if we invest an extra
investors’ perceptions, as measured by dollar in advertising, we would be able
stock prices, regarding companies’ to identify, say, three dollars of extra sales
promotional activities. caused by this advertising’. Other studies
suggest that advertising campaigns have a
significant intertemporal effect on sales
ECONOMIC AND FINANCIAL by influencing consumption habits22-24
VIEW OF ADVERTISING AS and in changing attitudes.25 Furthermore,
INVESTMENT some scholars find that advertising
Heavy television advertising in high-rated campaigns have positive effects on the
programmes is an important corporate market values of companies by providing
event, due to the large dollar amounts information to equity investors on the
typically involved as well as the expected expectations of cash flows.26,27 This
impact on sales and the level of suggests that investors may watch ads in
awareness in the market. Because of the much the same way as consumers who
mostly positive impact on a company’s would have positive impressions from the
future earnings, it has been argued that ads and have positive purchase intentions
advertising expenses are a form of of the advertised brands. Given the
investment, not just a single-period presence of the positive relationship
expense.2–8 Many economists have also between advertising and brand value,28 it
supported the view that advertising has a should be possible to reason that most
positive effect on companies and investors would infer that advertising (in
markets.9–11 Different or opposite views particular that which features new brand
of advertising have also been offered, or company information) will bring
such as variations in the advertising/sales about the heightened market value of the
ratio,12–15 and advertising as an expense, company through increased sales volume,
ie that advertising costs incurred are or brand/company awareness due to the
deducted as a business expense in that advertising.29–30 The conceptual
year, since the economic benefits cannot procedure for this view follows the
be measured reliably for most types of traditional Aad → Ab → PI process
advertising.16,17 The American Institute of (where Aad stands for attitude towards
Certified Public Accountants’ Accounting the ad, Ab attitude towards the brand
Standards Executive Committee also and PI means purchase intention), that is,
views advertising as an expense,18 but when investors watch an ad, they view
this view in fact seems only to regard the ad as if they were consumers. If this
the matter of whether to put advertising expectation is true, then it can be
in the ‘expense’ or ‘investment’ column expected that reactions to the ad and the
on the balance sheets, and does not product being advertised will be similar
address the matter of conceptually to those of a consumer, ie a positive
viewing advertising as an expense or an attitude towards the advertising leads to a
investment. positive attitude about the product and
In a strategic sense, however, the product’s company and positive
advertising has often been viewed as a expectations for future sales performances
sales trigger, and thus, at least of a brand. If they have a positive Aad,

54 Journal of Targeting, Measurement and Analysis for Marketing Vol. 12, 1, 53–65 䉷 Henry Stewart Publications 1479-1862 (2003)
 The effect of advertising on the market value of firms

Ad as ad H1 Aad Ab

(Investor mindset) View an ad Afirm PIstock

Ad as investment H2 Ainvestment

Figure 1 Conceptual model of ad-induced investment decision process

Ab and PI experience, then the market companies primarily based on earnings,

value of the stock of the company perhaps because they attach economic
engaged in the advertising would be value to intangibles only when it is
expected to increase, due to the positive reflected in higher earnings rather than
performance of product as projected when investments are made. These
through the advertising. This leads to the research results imply that no investors
first hypothesis: would assess the value of the company
based on intangibles such as
H1: Investors behave like consumers, advertisements. Therefore, the second
and make investment decisions hypothesis is:
based on their response to ads as
consumers. H2: Investors view advertising as an
investment, and therefore use a
Contrasting views also exist, however. restricted approach to evaluating
Barth et al.31 have found that the the impact of advertising on the
relationship between advertising expense, market value of the advertised
brand value and the market value of product’s company.
company equity was seen to show a
statistical interaction. They determined This conceptual model of hypotheses 1
that while a positive relationship between and 2 is illustrated in Figure 1.
advertising expense and brand value has
been found, advertising expense
surprisingly has a significantly negative THE PRESENT RESEARCH
relationship to the value of company The current study was designed to
equity (after controlling for brand value determine if investors perceive advertising
estimates and the other potential brand as a clue to potential positive (or negative)
proxies). Another study shows that future earnings and, therefore, the
intangible assets such as goodwill, rights company’s value, or if they simply view
(patents, trademarks, etc), brands and ads as would any prospective customer of
advertising exhibit no significant positive the product. That is, do they use the
relationship to stock price. Ely and information when making a decision
Waymire32 conclude that investors value about a company’s stock? Finding the

䉷 Henry Stewart Publications 1479-1862 (2003) Vol. 12, 1, 53-65 Journal of Targeting, Measurement and Analysis for Marketing 55
Kim and Morris

answer to this question would most charged for the spots, but also for the
certainly help marketing communication newsworthiness of the content found in
researchers and practioners in their the ads, such as launching a new business
conception and implementation of (eg Victoria’s Secret website in 1999), a
marketing plans, and help them build new company (eg Computer.com in
profitable relationships with company 2000), or just attractive and creative
stakeholders, the investors.33 executions. For these reasons, several
With this in mind, this study media companies such as CBS and USA
examined investors’ perceptions of Today have promoted the Super Bowl’s
advertising by investigating the advertised Greatest Commercials (or Ad-Meter)
companies’ stock price activities around after the games.
the time when certain advertising took Although the most acknowledged
place, under the assumption that the perception has been that these spots
stock price activities reflect the investor attract the consumers’ notice and bring a
behaviours. Furthermore, any significant good deal of prominence and attention to
over- or under-performance of stock a corporation in spite of the expense,35
prices was investigated to determine there have been extensive debates about
differences in stock price performance by whether airing a commercial during the
company types (eg dot.com, Super Bowl ($2.1m per 30 seconds as of
bricks-and-mortar, etc). This study used year 2001) makes marketing sense. Many
the ‘event-study method’ to investigate marketers who support Super Bowl
the stock price reactions to Super Bowl advertising argue that these spots bring
advertising. This method has been used them a large, captive audience (ratings
extensively in finance literature and is over 40, see Table 1), significant
widely perceived as an accurate indicator post-Super Bowl publicity, and a
of stock market behaviour.34 A detailed word-of-mouth after-effect. Others argue
review of this method is discussed later. that the commercial message needs to be
part of an integrated marketing
communication effort, or the large
SAMPLE: SUPER BOWL ADS OF expenditure is simply wasted.36
1998, 1999 and 2000 This study gathered three years of
Because of their potential for influencing applicable Super Bowl ads: 35 companies
investors, the sample chosen for this (that had gone public before the ads) that
study was the past three years of Super aired a total of 70 ads. As an example,
Bowl advertisements. Some of the Pets.com advertised during the Super
potential influences included the Bowl in 1999, but was excluded from
intensive time-frame to air the the sample because it was not a publicly
commercials (one four-hour event) as traded stock at the time. The sampling
well as the likelihood of the significant time period was limited to three years in
impact implied via the high ratings for order to compare the stock performances
the programme, the newsworthy content of dot.com companies and traditional
and the presence of controversial debates companies, as the dot.com ads are recent
about the efficiency as well as the phenomena. The final sample brands and
effectiveness of Super Bowl ads. Super companies are shown in Table 2.
Bowl advertising has consistently been This study also used USA Today’s
one of the biggest yearly events for the Ad-Meter scores for Super Bowl ads for
advertising industry, not only because of the purpose of exploring the relationship
the large amount of money that is between stock price performance and

56 Journal of Targeting, Measurement and Analysis for Marketing Vol. 12, 1, 53–65 䉷 Henry Stewart Publications 1479-1862 (2003)
 The effect of advertising on the market value of firms

Table 1: Three years of Super Bowl ads

Year Price* Adj. Price** Rating*** Viewers****

1998 $1,300,000 $1,374,172 44.5 90,000,000

1999 $1,600,000 $1,654,742 40.2 83,720,000

2000 $2,100,000 $2,100,000 43.3 88,465,000

*Average price for 30 second commercial

**Adjusted for inflation to 2000 dollars
***Percentage of US households
****Age 2⫹
Source: Advertising Age

consumers’ attitudes towards the ads. were significant influences of ads on the
This analysis addresses the first hypothesis market value of the company that is
that questions whether investors view ads advertising. Hypothesis 1 was tested by
from the perspective of consumers. For investigating the relationships between
example, a result that shows both Ad-Meter scores and stock price
significantly positive stock price increases performances, and Hypothesis 2 was
and high Ad-Meter scores would tend to tested by using a newly created concept,
support the notion that there is a positive the Financial Impact Size of Advertising
relationship between a company’s stock (FISA) on the company that is
price and a good attitude towards the advertising. Conceptually, FISA can be
advertising of the company’s product expressed as follows: Ad expense/
(H1). USA Today started the Super Bowl Company size. Thus the more a
‘Ad-Meter’ in 1989 to gauge consumers’ company spends on advertising compared
opinions about Super Bowl ads. During to the company size, the higher the
each Super Bowl, volunteers (usually financial impact on the company. This
100–250) chosen by a national polling conceptual aspect of FISA was used for
organisation, using hand-held meters, the analysis of H2. If a high FISA leads
register how much they like or dislike to a significantly negative stock price
each ad shown during the game. The performance (or vice versa), H2 is
newspaper posted the results of the assumed to be supported.
Ad-Meter on the Monday following the This study used the event-study
game. Although the Ad-Meter cannot be method to analyse the effects of
viewed as a measure with strong validity advertising on the advertised company’s
or external reliability mainly due to the stock price. This method provides an
sampling process (ie using volunteers), estimate of the unexpected change in
this study used the Ad-Meter scores and share price around the advertising day.
examined their relationship to the stock By design, an event study controls for all
price performances, assuming the scores the relevant organisational or external
operationally represented consumer factors (eg industry, profits, sales, assets,
attitudes toward the ads at the time of performance, equity) that may mediate or
the actual advertising. moderate the effect of advertising on the
stock prices of companies. The
event-study technique is an extensively
METHODS used method in the finance literature,
In order to investigate the hypotheses, and is widely perceived as an accurate
first, it is necessary to determine if there indicator of stock market behaviour.37

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Kim and Morris

Table 2: Samples

Year Company Ticker Event date* Est. period # of spots Ad-Meter** CAR

1998 American Express Co. AXP 26/1/1998 2/9/97–23/1/98 1 7.91 0.0388

Anheuser-Busch BUD 26/1/1998 2/9/97–23/1/98 9 7.67 –0.0212
AT&T Corp. T 26/1/1998 2/9/97–23/1/98 1 7.41 –0.0915
Federal Express Corp. FDX 26/1/1998 2/9/97–23/1/98 1 6.55 –0.0256
First Union Corp. FTU 26/1/1998 2/9/97–23/1/98 1 Not reported –0.0202
Ford F 27/1/1998 2/9/97–23/1/99 1 Not reported 0.0326
General Motors Corp. GM 26/1/1998 2/9/97–23/1/98 2 6.37 –0.0005
Intel Corp. INTC 26/1/1998 2/9/97–23/1/98 2 4.79 0.049
Monster.com*** TMPW 26/1/1998 2/9/97–23/1/98 2 Not reported –0.0383
Pepsi–Cola Co. PEP 26/1/1998 2/9/97–23/1/98 4 7.725 –0.0429
Pizza Hut YUM 26/1/1998 2/9/97–23/1/98 1 Not reported 0.0019
1999 Anheuser–Busch BUD 1/2/1999 1/9/98–29/1/99 9 8.75 –0.0225
Apple Computer AAPL 1/2/1999 1/9/98–29/1/99 1 5.96 –0.0833
AT&T T 1/2/1999 1/9/98–29/1/99 1 6.09 –0.0178
Federal Express FDX 1/2/1999 1/9/98–29/1/99 1 6.95 0.0141
First Union FTU 1/2/1999 1/9/98–29/1/99 1 6.7 –0.0052
Ford F 1/2/1999 1/9/98–29/1/99 1 6.95 –0.0561
General Motors GM 2/2/1999 1/9/98–29/1/99 2 6.16 –0.0495
Johnson & Johnson JNJ 1/2/1999 1/9/98–29/1/99 1 5.77 0.0026
Monster.com*** TMPW 1/2/1999 1/9/98–29/1/99 2 6.27 0.0249
Pepsi One PEP 1/2/1999 1/9/98–29/1/99 1 7.02 –0.0407
Siebel Systems SEBL 1/2/1999 1/9/98–29/1/99 2 5.49 0.0211
Victoria’s Secret IBI 1/2/1999 1/9/98–29/1/99 1 6.3 0.0264
2000 20th Century Fox FOX 31/1/2000 1/9/99–28/1/00 1 5.68 0.0445
Anheuser–Busch BUD 31/1/2000 1/9/99–28/1/00 8 7.05 0.0015
EDS EDS 31/1/2000 1/9/99–28/1/00 1 7.39 0.0493
E–Trade*** EGRP 31/1/2000 1/9/99–28/1/00 1 7.08 –0.078
Federal Express FDX 31/1/2000 1/9/99–28/1/00 1 6.95 –0.0446
General Motors GM 31/1/2000 1/9/99–28/1/00 1 4.27 –0.0258
Healtheon–WebMD*** HLTH 31/1/2000 1/9/99–28/1/00 1 6.13 –0.1446
HotJobs.com*** HOTJ 31/1/2000 1/9/99–28/1/00 1 5.26 –0.0979
MicroStrategy MSTR 31/1/2000 1/9/99–28/1/00 2 5.45 –0.1918
Monster.com*** TMPW 31/1/2000 1/9/99–28/1/00 1 4.99 –0.0788
Motorola MOT 31/1/2000 1/9/99–28/1/00 2 6.99 0.0978
PepsiCo PEP 31/1/2000 1/9/99–28/1/00 3 7.27 –0.0405

* Event date is the Monday after the Super Bowl Sunday because the stock market does not open on Sunday
** Source of Ad-Meter scores is USA Today. Scores for multiple ads are the average scores
*** Dot.com companies

The technique has been used in — estimating the unexpected shareholder

analysing several aspects of corporate returns
incidents or behaviours on stock prices of — analysing the unexpected returns.
the companies. For example, these events
or incidents include the impact of the The event studied was Super Bowl
1982 Tylenol poisoning incident;38 bank advertising. The expected shareholder
failures;39 unfavourable product returns were predicted using the past
information on television;40 various returns during the ‘estimation period’, a
corporate financial incidents;41–44 the use control period of time before the date of
of celebrity endorsers;45 and the brand the Super Bowl. Thus, the estimation
extension announcements.46 Commonly, period reflected a period not influenced
event studies follow four basic steps:47–50 by the event in question (ie Super Bowl
ads). Regression modelling was used to
— identifying an event to be studied estimate normal stock performance
— modelling the expected shareholder through the period. The present study
returns set the estimation period as 150 days

58 Journal of Targeting, Measurement and Analysis for Marketing Vol. 12, 1, 53–65 䉷 Henry Stewart Publications 1479-1862 (2003)
 The effect of advertising on the market value of firms

before the event. The event dates for the stock exchanges (ie NYSE, AMEX and
three sample years of Super Bowl ads are NASDAQ). The unexpected shareholder
shown in Table 2. The event periods return, termed as ‘abnormal returns’
were the Friday before (t ⫽ ⫺1), the (AR) in event studies, at each day in the
Monday (t ⫽ 0: the event date), and event period can be calculated as follows:
Tuesday (t ⫽ ⫹1) through Friday
(t ⫽ ⫹4). Because the stock markets are ARjt ⫽ Rjt ⫺ (aj ⫹ bjRmt)
closed on Sunday, the event date is set as
Monday. The numbers in parentheses Where (aj ⫹ bjRmt) is the predicted (or
indicate the number of days before (–) or expected) stock return on day t based on
after (⫹) the event date. Friday (t ⫽ –1) the company j’s regression equation and
before the Super Bowl was included in Rjt is the actual stock return of company
the event period because there has often j on day t. Using this equation, the
been a considerable review of upcoming cumulative abnormal returns for the
Super Bowl ads on Friday. The daily event period can be calculated by adding
stock prices and market indices were all the abnormal returns in the event
obtained from the Wharton Research period as follows:

冘
Data Services (WRDS) at the University Ti
of Pennsylvania. The data origin is the CAR (T1, Ti) ⫽ ARt
Center for Research in Security Prices t=Tl
(CRSP) at the University of Chicago.
The market model that was used to Finally, the statistical hypothesis tested in
estimate normal performance of stocks general event studies is: abnormal returns
was estimated over the period using the have occurred (Ha: CAR ⫽ 0) or not
following regression model: (Ho: CAR ⫽ 0). Accordingly, this study’s
methodological hypothesis for the
Rjt ⫽ ␣j ⫹ ␤jRmt ⫹ ejt purpose of the event study can be stated
as: ‘Super Bowl advertising produced
Where Rjt is the observed daily return abnormal returns, on the days of the first
for company j on day t, ␣j is the week following the Super Bowl for the
intercept, ␤j is the regression coefficient companies that advertised in the Super
for the company j, Rmt is the observed Bowl’.
daily return on the market index on day
t, and ejt is the error term of the
company j on the trading day t. In the RESULTS
regression equation model, a company’s Using the actual event period data and
stock return was the dependent variable CRSP Value Weighted Return data,
and the daily return on the market index every expected return for the event
was the independent variable. Therefore, period was calculated using the market
the model shows how a company’s stock models acquired from the regression
price has performed compared to the analysis (Table 3). After testing the
overall market conditions (ie return on significance of the abnormal returns,
the market index). The present study differences in abnormal returns were
used the ‘CRSP Value Weighted Return’ studied by company types. The company
as the return on market index in place of types studied were ‘dot.com’ and
Rmt because it reflected the performance ‘bricks-and-mortar’ companies. The
of a weighted average portfolio of all rationale for using this dichotomous
stocks traded in the three major US typology comes from the questions that

䉷 Henry Stewart Publications 1479-1862 (2003) Vol. 12, 1, 53-65 Journal of Targeting, Measurement and Analysis for Marketing 59
 60
Kim and Morris

Table 3: Actual and expected returns

Stocks** Actual returns Expected returns

t=l t=0 t=l t=2 t=3 t=4 CAR t=l t=0 t=l t=2 t=3 t=4 CAR
Fri Mon Tue Wed Thu Fri (–1,4)* Fri Mon Tue Wed Thu Fri (–1,4)*

98amx –0.0125 0.0040 0.0520 –0.0067 0.0098 –0.0008 0.0457 –0.0075 –0.0041 0.0091 0.0091 0.0065 –0.0062 0.0070
98bud –0.0138 –0.0042 0.0042 –0.0168 0.0171 0.0042 –0.0093 –0.0024 –0.0007 0.0060 0.0060 0.0046 –0.0017 0.0119
98f –0.0154 0.0052 0.0337 0.0097 0.0163 0.0049 0.0544 –0.0040 –0.0011 0.0107 0.0107 0.0083 –0.0029 0.0217
98fdx –0.0257 –0.0010 0.0029 0.0361 –0.0122 –0.0086 –0.0085 –0.0068 –0.0031 0.0118 0.0118 0.0088 –0.0054 0.0171
98ftu –0.0246 0.0000 0.0027 0.0053 0.0198 –0.0103 –0.0072 –0.0050 –0.0022 0.0088 0.0088 0.0066 –0.0039 0.0130
98gm –0.0055 0.0011 0.0044 0.0327 0.0148 –0.0364 0.0111 –0.0055 –0.0026 0.0088 0.0088 0.0065 –0.0044 0.0116
98intc 0.0090 0.0065 0.0193 0.0217 0.0139 –0.0122 0.0582 –0.0097 –0.0053 0.0119 0.0119 0.0084 –0.0080 0.0092
98pep –0.0153 0.0034 –0.0103 0.0104 0.0120 –0.0203 –0.0200 –0.0055 –0.0019 0.0124 0.0124 0.0095 –0.0041 0.0229
98t –0.0019 –0.0582 0.0233 –0.0168 0.0131 –0.0040 –0.0445 0.0000 0.0030 0.0151 0.0151 0.0127 0.0011 0.0470
98tmpw 0.0053 –0.0529 –0.0335 0.0405 0.0667 –0.0365 –0.0104 –0.0029 0.0000 0.0116 0.0116 0.0093 –0.0018 0.0278
98yum –0.0138 –0.0047 –0.0024 0.0306 0.0023 –0.0046 0.0075 –0.0054 –0.0030 0.0068 0.0068 0.0048 –0.0045 0.0055
99appl 0.0077 –0.0061 –0.0428 0.0255 –0.0575 –0.0413 –0.1144 0.0122 –0.0052 –0.0123 0.0117 –0.0252 –0.0124 –0.0311
99bud 0.0107 –0.0106 0.0009 –0.0152 –0.0027 0.0041 –0.0128 0.0067 0.0016 –0.0005 0.0066 –0.0043 –0.0005 0.0097
99f –0.0170 –0.0112 –0.0288 0.0233 –0.0424 –0.0097 –0.0859 0.0129 –0.0049 –0.0122 0.0123 –0.0255 –0.0123 –0.0298
99fdx –0.0053 0.0453 –0.0118 –0.0134 –0.0128 0.0076 0.0097 0.0113 –0.0007 –0.0057 0.0110 –0.0146 –0.0057 –0.0044
99ftu 0.0145 –0.0143 –0.0133 0.0049 –0.0329 –0.0101 –0.0512 0.0102 –0.0076 –0.0149 0.0096 –0.0282 –0.0150 –0.0460
99gm –0.0251 0.0404 –0.0368 0.0000 –0.0266 –0.0129 –0.0610 0.0118 –0.0019 –0.0075 0.0114 –0.0177 –0.0076 –0.0116
99ibi –0.0093 –0.0219 0.0240 0.1064 –0.0523 –0.0269 0.0200 0.0178 –0.0010 –0.0088 0.0172 –0.0227 –0.0088 –0.0064
99jnj 0.0044 –0.0169 –0.0090 0.0173 –0.0059 0.0015 –0.0085 0.0063 –0.0018 –0.0052 0.0061 –0.0113 –0.0052 –0.0111
99pep –0.0204 –0.0224 0.0213 –0.0032 –0.0193 –0.0049 –0.0490 0.0095 –0.0014 –0.0058 0.0092 –0.0139 –0.0059 –0.0083
99sebl 0.0000 –0.0286 –0.0147 –0.0119 –0.0091 0.0640 –0.0003 0.0249 –0.0035 –0.0152 0.0240 –0.0363 –0.0153 –0.0213
99t 0.0090 0.0310 –0.0174 0.0333 –0.0375 –0.0308 –0.0123 0.0113 0.0009 –0.0033 0.0110 –0.0110 –0.0034 0.0055
99tmpw 0.0643 –0.0188 –0.0340 –0.0154 0.0313 –0.0043 0.0231 0.0171 –0.0003 –0.0074 0.0165 –0.0203 –0.0075 –0.0018
00bud –0.0019 0.0112 0.0222 0.0118 –0.0295 –0.0148 –0.0009 –0.0137 0.0047 0.0036 –0.0005 0.0048 –0.0013 –0.0024
00eds –0.0675 0.0286 0.0232 –0.0100 0.0229 0.0724 0.0695 –0.0095 0.0083 0.0072 0.0032 0.0084 0.0025 0.0202
00egrp –0.0321 –0.0691 –0.0534 0.0157 0.0864 –0.0085 –0.0610 –0.0373 0.0183 0.0148 0.0024 0.0186 0.0002 0.0170
00fdx –0.0537 0.0259 –0.0158 –0.0096 0.0243 –0.0079 –0.0368 –0.0201 0.0096 0.0077 0.0011 0.0097 –0.0001 0.0078
00fox –0.0339 –0.0576 0.0372 0.0974 0.0047 0.0140 0.0618 –0.0216 0.0123 0.0102 0.0026 0.0125 0.0013 0.0173
00gm –0.0468 0.0198 0.0582 –0.0455 0.0061 0.0061 –0.0020 –0.0230 0.0144 0.0120 0.0037 0.0146 0.0022 0.0238
00hlth –0.0150 –0.0714 0.0375 –0.0065 –0.0140 –0.0142 –0.0836 –0.0114 0.0185 0.0166 0.0100 0.0186 0.0087 0.0610
00hotj –0.0072 –0.1920 0.0314 0.1087 0.0392 –0.0340 –0.0539 –0.0272 0.0207 0.0176 0.0070 0.0209 0.0050 0.0440
00mot –0.0570 0.0643 0.0028 0.0566 0.0545 0.0230 0.1441 –0.0518 0.0307 0.0255 0.0071 0.0311 0.0038 0.0464
00mstr 0.0364 –0.1040 –0.0441 0.0923 0.0276 –0.0472 –0.0391 –0.0366 0.0494 0.0439 0.0249 0.0498 0.0213 0.1527
00pep –0.0166 0.0263 –0.0037 –0.0294 0.0019 –0.0095 –0.0310 –0.0230 0.0111 0.0089 0.0014 0.0112 –0.0001 0.0095
00tmpw –0.0817 –0.0132 –0.0080 0.0863 0.0277 0.0016 0.0128 –0.0487 0.0399 0.0343 0.0146 0.0404 0.0110 0.0915

Journal of Targeting, Measurement and Analysis for Marketing Vol. 12, 1, 53–65 䉷 Henry Stewart Publications 1479-1862 (2003)
*CAR is the cumulative returns of each stock for the event period
**Year and tickers are shown. The company names of the tickers can be found in Table 2
 The effect of advertising on the market value of firms

Table 4: ANOVA of same day comparisons between expected and actual returns

Sum square df Mean F Sig.

Friday Between 0.001 1 0.001 1.363 0.247

Within 0.038 68 0.001
Total 0.039 69
Monday Between 0.006 1 0.006 5.150 0.026
Within 0.082 68 0.001
Total 0.088 69
Tuesday Between 0.001 1 0.001 1.139 0.290
Within 0.032 68 0.000
Total 0.033 69
Wednesday Between 0.002 1 0.002 1.971 0.165
Within 0.053 68 0.001
Total 0.055 69
Thursday Between 0.000 1 0.000 0.079 0.779
Within 0.047 68 0.001
Total 0.047 69
Friday Between 0.000 1 0.000 0.640 0.427
Within 0.022 68 0.000
Total 0.022 69

have arisen regarding the Super Bowl Levene Statistic (1, 68) ⫽ 3.397,
advertising effects for one type of p ⫽ 0.07), thus indicating the existence
company versus the other.51 More of abnormal returns. The mean of CAR
importantly, this dichotomy could serve (ie cumulative actual returns –
as an operationalised typology for cumulative expected returns), –0.0232
classifying a high FISA (dot.coms) and a (standard deviation ⫽ 0.057), surprisingly
low FISA (bricks-and-mortars). Because shows that the overall abnormal returns
dot.com companies in the current were mostly negative. Among the
research sample are small in size companies, 22 showed negative and 13
compared to bricks-and-mortars, and showed positive abnormal returns.
given the fact that their ad rates (ie ad Companies that showed the most
expenses) were similar, the conceptual negative cumulative abnormal returns
FISA proposed earlier indicates that include MicroStrategy (0.1918 in 2000);
dot.coms would have higher FISAs and Healtheon-WebMD (–0.1446 in 2000);
the bricks-and-mortar companies would and HotJobs.com (–0.0979 in 2000).
have lower FISAs. For instance, a high Companies that made the most positive
FISA suggests a high financial impact for cumulative abnormal returns include Intel
the company airing the Super Bowl ads. Corp. (0.049 in 1998); EDS (0.0493 in
Hypothesis 2 implies that a high FISA 2000); and Motorola (0.0978 in 2000).
may lead to a negative stock price Another ANOVA was conducted to
performance. see which particular days in the event
window (–1 < t < 4) showed significant
abnormal returns. The result (Table 4)
Finding the abnormal returns suggests that only Monday (ie event
An analysis of variance (ANOVA) was date) showed significant abnormal returns
conducted to see whether cumulative (mean difference ⫽ –0.0188, SE of
abnormal returns existed. As Table 4 difference ⫽ 0.0082, F (1, 68) ⫽ 5.15,
shows, a significant difference was found p ⫽ 0.026) among six days in the event
between expected and actual cumulative window. These results imply that the
returns (F (1, 68) ⫽ 4.943, p ⫽ 0.03; effect of advertising on a company’s stock

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Kim and Morris

Table 5: Monday (t ⫽ 0)’s descriptive statistics of AR by company types

N AR mean Std. dev. Std. error

Bricks-and-mortar 29 –0.0049 0.03812 0.00708

Dot.com 6 –0.0858 0.06753 0.02757

price can be immediate, albeit short (1, 33) ⫽ 0.019, p ⫽ 0.891). The mean
term. Since the Super Bowl ads are aired for the dot.com and the bricks-and-
on one day only, these results are not mortar companies were –0.0858 (n ⫽ 6,
surprising, and support the contention Std. Dev. ⫽ 0.0675) and –0.0049
that advertising can influence the stock (n ⫽ 29, Std. Dev. ⫽ 0.0381) respectively,
price of the advertiser. Based on these showing the dot.com companies had
results, Hypotheses 1 and 2 were tested. significantly more negative abnormal
A correlation analysis was conducted returns than the more traditional
to test H1, and to determine if there bricks-and-mortar companies.
were significant relationships among As the analysis of within-the-same-day
abnormal returns (ie CARs), the comparison (Table 4) showed, the
likeability of advertising (ie Ad-Meter abnormal returns between the dot.com
scores), and the frequency of advertising and bricks-and-mortar companies on the
(ie number of spots). The result showed Monday (t ⫽ 0) were significantly
no significant correlation between CARs different between the two company types
and the two advertising related variables (see Tables 5 and 6). Although Thursday
(for CAR and Ad-Meter: r ⫽ 0.062, (t ⫽ 3) also showed a statistically
p > 0.05, CAR and number of spots: significant difference, these results were
r ⫽ 0.144, p > 0.05). These results discounted because the data from
showed that investors’ reactions to the Thursday did not satisfy the homogeneity
advertising were not dependent on the of variances assumption of an ANOVA
likeability of the advertising or (Levene Statistic (1,33) ⫽ 18.334,
frequencies of advertising. Thus H1 was p < 0.001). T-test under the
not supported. non-equal-variances-assumption showed
no significant difference between the
company types (t(5.329) ⫽ –1.65,
Abnormal returns by company types: p ⫽ 0.156). Overall these results are
Testing H2 considered sufficient support for
In order to test H2, differences in Hypothesis 2 (H2).
abnormal returns by company type (ie
dot.com and bricks-and-mortar), which
operationally represent the two levels of DISCUSSION AND IMPLICATIONS
FISA, were analysed using ANOVA. This study showed that the Super Bowl
Among the 35 companies sampled, six advertisements had a significant, negative
were dot.coms. These include cumulative effect by appearing to create
Monster.com (1998, 1999, and 2000), abnormal returns on stock prices of the
E-trade (2000), Web MD (2000) and advertising company, particularly on the
HotJobs.com (2000). The results showed Monday following the game. The
a significant difference for abnormal findings suggest that Super Bowl
returns between two company types (F advertising, from an equity position,
(1, 33) ⫽ 5.001, p < 0.05; Levene Statistic could have been seen as an overly

62 Journal of Targeting, Measurement and Analysis for Marketing Vol. 12, 1, 53–65 䉷 Henry Stewart Publications 1479-1862 (2003)
 The effect of advertising on the market value of firms

Table 6: ANOVA of same day comparison for two company types

Sum of Mean
Event window squares df square F Sig.

Friday (t ⫽ 1) Between groups 0.001 1 0.001 2.583 0.118

Within groups 0.018 33 0.001
Total 0.019 34
Monday (t ⫽ 0) Between groups 0.032 1 0.032 16.886 0.000
Within groups 0.063 33 0.002
Total 0.096 34
Tuesday (t ⫽ 1) Between groups 0.003 1 0.003 3.341 0.077
Within groups 0.026 33 0.001
Total 0.029 34
Wednesday (t ⫽ 2) Between groups 0.002 1 0.002 1.722 0.198
Within groups 0.047 33 0.001
Total 0.050 34
Thursday (t ⫽ 3) Between groups 0.004 1 0.004 8.184 0.007
Within groups 0.016 33 0.000
Total 0.020 34
Friday (t ⫽ 4) Between groups 0.002 1 0.002 2.515 0.122
Within groups 0.022 33 0.001
Total 0.023 34

expensive rather than an efficient verified through the results that showed
investment. In addition, these results significant abnormal returns and the
seem to support Ely and Waymire’s52 significant differences in abnormal returns
view that investors do not view between online and offline companies,
advertising as a predictor of better immediately following (the Monday
company performance. In fact, in some after) the Super Bowl advertising.
cases it may be seen from the opposite The major goal of most corporate
perspective. Ely and Waymire53 stated communication efforts is to build
that investors value companies primarily favourable consumer perceptions and
based on earnings, and would not appear attitudes towards their brands. In most
to see advertisements as directly cases, advertising has been one of the
engendering better company most utilised communications tools for
performances in the near future. achieving that goal. Consumers are not
As the significant difference in the only target audience of that
abnormal returns between dot.coms and communications effort, however. There
bricks-and-mortars seemed to show, are many important peripheral groups
many financial analysts believe that Super that are affected by these
Bowl advertising would bring about a communications, which can in turn
very poor return on investment, influence the success of a company.
especially for many of the dot.coms. For Among them, as this study showed, are
example, internet traffic data showed that the investors who may not react as
more than two-thirds of the dot.com expected to corporate communication
companies that advertised in the Super activities, particularly if these activities
Bowl noticed a large drop in traffic a are known to be expensive.
week after the Super Bowl.54 Investors Moreover, this study found no
might fear these future consequences relationship between stock price
and, therefore, react immediately after performances and ad likeability or ad
witnessing this costly advertising. The frequency. The implication is that
immediacy of the investor reaction was investors may focus less on the content

䉷 Henry Stewart Publications 1479-1862 (2003) Vol. 12, 1, 53-65 Journal of Targeting, Measurement and Analysis for Marketing 63
Kim and Morris

of ads than on the fact that companies, such as PE ratio, stock trading volume
particularly those with short track and some psychological variables, should
records, are making large expenditures. be used to investigate the reasons behind
They may, therefore, question the abnormal returns following an advertising
decision making at the corporate level. event, by providing insights into the
While most companies in this study effects of a company’s advertising on the
showed significant negative abnormal thoughts, feelings and intentions of stock
returns during the testing period, a few traders who view them.
companies actually showed significant
positive abnormal returns (for example,
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