"2020 was a great year... Not! It really sucked donkey. We just wanted to say we will see you soon for the game. We will see you on the Big Bowl..."
-- Wayne's World 2021 Super Bowl commercial
On Sunday, one of the grand sporting events of the year will take place: Super Bowl (LV) Fifty Five .
Back in January 2000, I created a brand new stock market Super Bowl indicator as a contrary indicator, very similar to the cover of Time.
My indicator dictates that the more intense the Super Bowl TV advertising by a group of companies, particularly in a specific industry, the more likely the stocks of those companies will perform poorly in the year ahead. Conversely, a reduction in an industry's Super Bowl commercials augurs well for the stocks in that sector.
Barron's' Alan Abelson was kind enough to include and highlight my newly minted indicator in his "Up and Down Wall Street" during the weekend of the 2000 Super Bowl. As it happens, My Stock Market Super Bowl Indicator gave a clear warning alarm to the end of the Dot.com bubble.
As the late Sir Alan wrote:
"As it happens, last week's tech wreck was accurately forecast by a remarkable new stock-market indicator, one we're proud to print for the first time anywhere, the Stock Market Super Bowl Indicator.
Before you start yapping about it being old hat -- or old helmet -- we respectfully suggest you cool it. Pure and simple, our new indicator has nothing to do with the old Super Bowl indicator. Unlike the latter, its predictive power doesn't depend on the outcome of the Super Bowl or, more specifically, whether the winner represents the National Football League's American Conference or the National Conference.
Our brand-new Stock Market Super Bowl Indicator is a contrary indicator, kind of like the cover of Time. Its critical components are the commercials carried on television coverage of the event and the identity of the companies doing the advertising. Its virtue is not as a forecaster for the market as a whole, but for individual sectors of the market.
The indicator is the handiwork of Doug Kass, a kindly hedge-fund operator who, despite a propensity to short quantum leapers, wound up last year with an improbable performance matching Nasdaq's improbable performance.
Simply put, the more intense the Super Bowl TV advertising by a group of companies, the more likely the stocks of those companies -- and others of a kindred ilk -- will do poorly in the year ahead. For 2000, we're sorry to report, the indicator is flashing red for the Internet crew.
By Doug's count, roughly 12 of the 30 companies shelling out an average of $2 million for 30-second spots are dot.coms. That's four times the number of 'Net outfits that made their pitch on Super Bowl TV last year and compares with only one in each of the prior two years.
What's more, for the first time, an Internet company, E*Trade, is sponsoring the half-time show. That's known in locker-room lingo as piling on.
If nothing else, the greater the number of look-alike or sound-alike companies doing the shilling, the less the impact of the individual shills. And in fact, there seems to be more than a modicum of evidence that for the viewer, the link between the commercial and the sponsoring Web company barely registers.
Making the auguries all the darker for those dozen dotcoms is the sad history of the sole 'Net TV advertiser during Super Bowls XXXI and XXXII, autobytel.com. A '99 IPO, the stock peaked at $48 and, last we looked, was a hair under 17.
Without Wall Street, Silicon Valley would not have been able to remove the burden of salaries from its operating statements and substitute stock options for cash compensation. Without the lovely boost to earnings afforded by the incredible lightness of labor costs, earnings growth would be considerably less, and so the multiples awarded that growth would be merely ridiculous instead of absurd. There would be only a quarter as many West Coast billionaires and half as many millionaires.
In like manner, since the vast bulk of Internet companies are bereft of even a hint of cash flow, Wall Street has, via stock offerings, endowed them with the means of promoting their wares, not only on TV during the Super Bowl breaks but also in newspapers and magazines, on billboards and in subway cars and every other space known to advertising man.
If, indeed, we are rapidly reaching the point of cognitive congestion where the consumer is under such assault from so many dot.coms that they have begun to merge in his psyche into one big indivisible glob, that spells trouble in capital letters. And not only for the 'Net companies, but also for the media on which that vast flow of lucre has been lavished."
-- Alan Abelson, Barron's (January 2000)
Of course, the rest was history, as one of the largest stock market declines (especially of a technology and Internet kind) occurred during the subsequent few years.
Previous Super Bowl Advertisers (2013-15)
I haven't updated my Indicator in a number of years -- last time I looked:
There was a total of 15 new advertisers in 2015's Super Bowl. Most of those additional advertisers are in the digital commerce and technology space. That, according to my indicator, was a negative "tell" for technology shares.
In total, there was 30 advertisers (some with multiple product ads) consisting of seven food companies, (only) six auto manufacturers, one travel company, four financials, four consumer product entities and eight technology companies in advertisements this year
PepsiCo not only advertised in the 2015 Super Bowl, was the official sponsor of the halftime show featuring Katy Perry and Lenny Kravitz (as it will be this year).
Interestingly, the biggest player over Super Bowl history -- the automobile industry -- was a lesser profile than in recent years. (Over the last decade, car makers have spent more than $500 million on Super Bowl commercials, representing nearly one quarter of all the advertisements).
According to The Detroit News, 11 automakers aired commercials during the 2014 Super Bowl. In 2015 , only a handful will be paying the big bucks, as Ford , Lincoln, Hyundai, Acura, General Motors , Honda and Volkswagen did not advertise during the game.
In 2014 there was a preponderance of consumer products companies that had anted up for 30- and 60-second advertisements during the Super Bowl! Auto advertisers were close behind. Combined, they represented the lion's share of last year's Super Bowl ads.
Of the 30 2014 Super Bowl advertisers, 12 were consumer-products related, accounting for 11.5 minutes of advertising (or 40% of the total number of advertisers) -- and that did not include Pepsi, the beverage and snack company that sponsored the halftime show. Eleven advertisers were automobile-related, accounting for 8.5 minutes of advertising (or 27% of the total). Between consumer product and auto companies, the two sectors accounted for 23 out of 30 advertisers, representing 20 minutes of all Super Bowl commercials (or 67% of the total).
Auto manufacturers stocks faltered last year, but consumer products were among the market leaders.
In 2013, the food and beverage sectors were responsible for an outsized 41% of all Super Bowl advertisements and, on cue, this defensive group was an underperformer in that year's sharp U.S. stock market advance.
$5.5 Million for 30 Seconds of Your Time
The cost of a half-minute commercial in 2021 Super Bowl is $5.5 million -- down about $100k from 2020 but up $200k from 2019. (It reportedly took CBS about two months extra to sell out the advertisements this year).
Reviewing This Year's Super Bowl Advertisers
Although nothing will top last year's Super Bowl Halftime show featuring Shakira, 2021 will mark another year of unique and weird ads (e.g. Tide focusing on a Jason Alexander's sweatshirt, and Cheetos dropping Ashton Kutcher's first single -- a total pissa of an ad #Itwasn'tme!
Much like literally everything else, Super Blow LV advertising was affected by the coronavirus with huge names like Coca-Cola (KO) and Pepsi (PEP) sitting this one out, although Pepsi is sponsoring the Half Time show.
In total, there will be about 38 advertisers (some with multiple product ads) this year consisting of only three auto companies, 12 food, eight beer companies, four technology companies, four in financial services, nine consumer product companies -- and of course... drum roll... Robinhood!
For the tenth time, Pepsi will be the sponsor for the half time Super Bowl ceremonies this year.
We can conclude that the proliferation of beer and food companies this year compared to previous years could produce pressure those sectors over the balance of 2021 On the other hand, auto stocks are underrepresented vis a vis prior Super Bowls.
Here is a full list of the 2021 Super Bowl advertisers.
The Greatest Super Bowl Ads of All Time
For fun, here are some of the best Super Bowl advertisements ever aired!
Enjoy the game!
(This commentary originally appeared on Real Money Pro on February 5. Click here to learn about this dynamic market information service for active traders and to receive Doug Kass's Daily Diary and columns from Paul Price, Bret Jensen and others.)