This is the first in a weekly series about the car business. The auto industry plays an important role in the global economy, but record-high oil prices and a global slowdown have created a crisis in the sector. This column will highlight some of the interesting stories that emerge as that crisis plays out.
Sure, the economy is in the tank and the stock market is teetering on the edge of a very steep cliff. But the severity of the situation really hit home with shocking news about a beloved secular American feast day: General Motors (NYSE:GM) announced this week that it will not buy ad time during the 2009 Super Bowl (that's Super Bowl XLIII for all you Roman numeral lovers).
It seems that it was just yesterday that GM was promoting the new 2007 Cadillac Escalade at Super Bowl XL. Sales of the Escalade -- perhaps the most over-the-top of the gigantic SUVs that so many Americans fell in love with -- had been falling, and GM hoped to recapture consumers' bling-addled imaginations with a shiny new model displayed, appropriately enough, on a fashion runway. It was not to be, though, as Escalade sales continued to fall.
And who can forget GM's adorable suicide robot ad from Super Bowl XLI? Some stick-in-the-muds found it a bit insensitive, but it did get people talking. It did not, however, help GM increase its sales.
And that's the basic problem. Critics have long argued that GM relies too heavily on cheap redesigns and flashy advertising to sell cars, rather than focusing on good engineering and construction. The fact that GM is bailing out on the biggest advertising day in the media calendar suggests just how desperate it is. Maybe it has learned the lesson that you can't sell cars no one wants, no matter how much you spend on advertising. Let's hope that the money saved on Super Bowl ads is spent on making cars that can compete with Toyota (NYSE:TM) and Honda (NYSE: HMC).
This post is part of our Ads Gone Bad series. Share your thoughts and memories of this ad in the comments, and be sure to check out our other posts on marketing gone wrong.
In 2005, internet registrar GoDaddy.com made advertising history when its commercial showing a busty model struggling to keep her top on as she "testifies" before a group of politicians about the company's advertising plans proved too hot for the Super Bowl.
The spot was so racy and tasteless that Fox pulled it from its telecast of the game between the New England Patriots and Philadelphia Eagles before it was shown a second time. How the network that brought the world such tasteful programs as "Married By America" had the nerve to pass judgment on GoDaddy is beyond me.
This post is part of our Ads Gone Bad series. Share your thoughts and memories of this ad in the comments, and be sure to check out our other posts on marketing gone wrong.
If Americans are sensitive about racial issues, it's not without reason. Consider the Trail of Tears, or slavery, or the internment of the Japanese during World War II, and it's clear that we've breached more than our fair share of ethical boundaries. But, judging by the reaction to a Salesgenie ad that aired during Super Bowl XLII in 2008, we've also come a long way.
If the upset victory pulled off by the New York Giants in that game was shocking, so was the approach taken by Salesgenie.com's marketing masterminds. The commercial in question featured a pair of talking cartoon pandas, complete with Chinese accents -- a married couple, to be exact, and the apparent proprietors of Ling Ling's Bamboo Furniture Shack. (Click here to watch the ad.)
The storyline of the commercial is not too shocking: business is bad; nagging wife doesn't want to move back to the zoo; husband turns to Salesgenie.com for free sales leads; now, business is great! In other words, it's not nearly as appalling as some old, World War II-era Looney Tunes clips (don't click here if you're easily offended).
However, there was something distinctly off-putting about the Salesgenie pandas, with their broken English and their misspelled "Sofaz" sign. I remember seeing it myself and thinking, "Well, that's bold." It turns out the rest of the viewing public was equally unsettled, and the negative feedback was sufficient to result in the ad being pulled from the airwaves.
This post is part of our Ads Gone Bad series. Share your thoughts and memories of this ad in the comments, and be sure to check out our other posts on marketing gone wrong.
Mars Inc., has made not just one, but two ad campaigns for its popular Snickers bar seem to sneer at gays. Mars, one of the biggest privately held, family-owned companies, makes many of the world's most popular candies: Snickers, M&Ms, Twix, Starburst (along with Uncle Ben's Rice and pet food like Whiskas), but both of the ads gay rights groups found offensive were for the Snickers bar.
The first gay-themed Snickers ad made a big splash in Super Bowl XLI in 2007. Two mechanics get so wrapped up in eating the opposite ends of Snickers bar that their lips touch, prompting them to decide to "do something manly" lest they accidentally catch gayness -- so they pull their chest hair out.
General Electric Co. (NYSE: GE)'s NBC Universal unit will charge $3 million per 30-second advertising spot in the 2009 Super Bowl, according to the Wall Street Journal (subscription required). Is it me, or does that strike anyone as particularly insane? The deal is this: I would be that many disinterested fans watch the Super Bowl just for the ads alone. The reason? These are the best of the best, attention-grabbing and inventive commercials.
So, why don't ad agencies and PR flacks do this the rest of the year? The only Super Bowl ad that stuck in my mind this year was Tide's 'talking stain" ad, which probably cost a few dollars to produce and was enormously effective. The cost of the campaign was the cost of the ad, of course. All those other advertisers that spend millions on Super Bowl ads this year? Can't remember one of them.
The price for a 2008 Super Bowl 30-second ad spot was $2.7 million, so NBC is upping the game here a bit. Is that ad inventory worth it? With media changing all the time, television is still a lucrative game, and smart advertisers are combining the web and television into complementary market platforms. Like the Tide commercial referenced above, the entire ad was designed to drive traffic to MyTalkingStain.com, not to your local supermarket to buy the product. That's smart marketing. If you spent $3 million for an ad, would you want the impact of the web to somehow be involved? I thought so -- but not all ads do, apparently.
I'm still enjoying the sweet taste left in my mouth from this morning's Coca-Cola Classic (I treat myself to three of four of the syrupy concoctions each week). I'm also still enjoying -- at least once a day -- Coca-Cola's (NYSE: KO) "It's Mine" Super Bowl ad, my favorite among the bunch. The dueling parade balloons concept (available to watch here) was clever and well-executed, nicely scored (with a 60-second excerpt from the Rossini Overture), and complete with a big payoff at the end. Also note the thoughtful inclusion of a young brunette girl, football in hand, around the 50-second spot. (Anyone else reminded of Lucy Van Pelt?)
Most importantly, the ad had solid brand placement, frequently reminding viewers what was being advertised. This was not the case with Coke's chief competitor, PepsiCo (NYSE: PEP), which employed dancing lizards and supermodel Naomi Campbell to publicize its SoBe Life Water. Problem was, "Life Water" was barely mentioned.
But the fun of Super Bowl Sunday is behind us, and the business of earnings is ahead. Coca-Cola is set to announce its fourth-quarter results tomorrow. The mean estimate among analysts is calling for per-share results of 55 cents, a 5.8% improvement from year-ago results of 52 cents per share. The high estimate at this point is 57 cents, with a low of 50 cents; the revenue estimate weighs in at 5.77%.
General Motors' (NYSE: GM) GMC had an ad on last night's Super Bowl for the first time in years. It cost something in the neighborhood of $5 million to broadcast, and if you're a GM stockholder, you might want to ask: why did GM waste so much money?
The ad (you can see it below) is a spare, black and white cartoon of a human figure rolling a large boulder up a hill. The figure works immensely hard, pushing the rock for over 45 seconds -- an eternity in Super Bowl ad time. Finally, he gets the rock to the peak of the mountain. Fade to a white GMC Yukon hybrid, which, according to the ad, gets 50% better mileage than a regular Yukon.
As an imperfect New England Patriots fan, I stopped watching last night's Super Bowl at half time. After squirming as the New York Giants defense tore through the Patriot's front line and repeatedly sacked quarterback Tom Brady, I had a strong feeling that the Patriots would not win.
Nevertheless, the bad news for me and the many far more loyal Patriots fans, could be good news for investors. According to ITtoolbox, that's because of the Super Bowl Predictor (SBP) -- whenever an "original" NFL team wins the big game, in this case, the Giants -- the market rises. The SBP has been right on the direction of the DOW in 33 of 41 Super Bowls which is an 81% success rate.
With all eyes this weekend on whether the New England Patriots can go undefeated for the whole season and beat the New York Giants in the Super Bowl, here are two stocks that should move up nicely so that you can go to Disney World on the profits.
Ing Groep (NYSE: ING) is certainly best of breed. The bank is very well run, and has not had to write off too much for subprime. It is currently trading with a dividend yield of 5.2% and has a tiny PEG of 0.77. This is a stock that Tom Brady can take to the bank.
Host Hotels and Resorts (NYSE: HST), formerly Host Marriott, the largest hotel real estate investment trust (REIT) in the US, owns some 120 luxury and upscale hotels in North America. Most of its hotels operate under the Marriott and Ritz-Carlton brands and are managed by sister firm Marriott International. Other brands include Four Seasons and Hyatt. It is currently trading with a 4.9% dividend yield and very close to the 52-week low. As the economy starts exiting the slow growth mode, it should do well.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has no positions in any stock mentioned as of 2/1/08.
With many of the world's top companies lining up to shell out big bucks for Sunday's big game, investors might want to take a look ting-to-do-with-the-stooo.
According (subscription required) to the Wall Street Journal, "Shares of Super Bowl advertisers tend to outperform the Standard & Poor's 500-stock index in the week after the game. A trading strategy based on buying those companies would have beaten the benchmark in 10 of the past 12 years, by an average margin of 1.3 percentage points, the research shows."
Of course once you factor in the trading costs and tax burden of buying a bunch of stocks and selling them a weak later, this isn't such a hot strategy.
Most people think the Super Bowl will be about just the Patriots and the Giants squaring off against each other. For the Israeli company Radvision Ltd. (NASDAQ: RVSN), the actual game will be an afterthought. The small company that has a cutting edge video-conferencing technology will be playing an important role in the Pre-game show.
It was announced that along with LifeSize Communications, Radvision, will connect NFL stars in Phoenix and U.S. Army soldiers stationed at Fort Lewis, Washington during Super Bowl XLII using high definition video communication systems.
"Even football stars have heroes, and the players have tremendous respect for our nation's men and women in uniform," said Coach Charles Hatcher.
As investors from around the world gear up for some Super Bowl fun and excitement, one firm is hoping to score a touchdown from the hype surrounding the world's most watched football
E*Trade (NASDAQ: ETFC), the beleaguered online broker, plans to spend as much as $4 million for two ads airing during this weekend's Super Bowl.
Is this just some more post-boom, sock puppet lunacy?
Maybe, but today's Wall Street Journal article doesn't think so. As the troubled broker tries to re-cement its image and reputation, the article claims that "the Super Bowl distraction couldn't come at a better time."
Of all the idiotic predictors of market performance (and I would argue that nearly all of them are idiotic: predicting the future direction of the stock market as a whole is darn near impossible), the Super Bowl Indicator has to be the dumbest.
Here's how it work: When an "original" National Football League team wins the big game, the market rises; it falls when the winner is a team that joined the NFL in the merger with the American Football League in 1970. The indicator has an 81% success rate historically.
So if the Patriots win the Super Bowl, that's a bad omen.
Many sports fans are in a state of withdrawal, as they suffer through the first Sunday without football in months. The question becomes what to do? You could hang out with your wife and try to communicate with her! Well it's just a thought.
If you have 9 or 10 hours with nothing to do, try doing some research on this stock:
Dover Corp. (NYSE: DOV) manufactures industrial products and components, and manufacturing equipment in the United States and internationally. It operates in four segments: Electronic Technologies, Engineered Systems, Industrial Products, and Fluid Management. The stock recently appeared on one of my stock selection screens. It has a yield of 2.%, and is trading at a PEG of just 0.77. The company is still producing double-digit earnings growth, and with the economy looking to start picking up in a quarter, this looks interesting.
Don't fret, Super Bowl is next week, and then there is always the Pro Bowl if you get desperate!
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has no position in any stock mentioned as of 1/27/08
HJ Heinz Co. (NYSE: HNZ) should have really strong sales this week leading up to Sunday's Super Bowl. With more interest this year than in any Super Bowl in recent memory, with the two storylines of the Patriots trying to run the table, and a New York team in the big game, not only should TV ratings skyrocket, but I would expect the number of Super Bowl parties to be up as well. Clearly that will benefit the condiment maker.
Heinz is trading toward the bottom of its 52-week range and sports a yield of over 3%. What makes this even more interesting is that investing guru Nelson Peltz owns a share. About two months ago, Peltz filed a prospectus for the $750 million initial public offering of a special purpose acquisition company (SPAC). Due to the ways SPACs are set up, he will need to make some kind of acquisition, and that deal may just be Heinz.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has no position in any stock mentioned as of 1/27/08