April 16, 2020, by Katrina Pascual
For brands, advertising can become a hit or miss. It could cost them millions of dollars or gain more customers. With advertising, sales can take an immediate hit.
In some cases, having a good or well-crafted ad can help increase stock prices. On the other hand, if brands launch a poorly made ad, it may hurt the brand not only in sales but with stocks too.
Controversial or bad advertisements can cause a brand’s stocks to take a hit.
Sometimes, investors may even choose to buy more stocks since the brand or company went viral. It’s common that in any controversial ad, stocks would take a hit. It doesn’t last long and stocks would rebound for the company after a couple of days.
Other times, false advertising could also affect consumer perception and even impact stock prices. As such, it may also be considered as bad advertising.
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In this article, we list 10 companies that have had issues in their advertising and its eventual impact on their stock prices.
The Peloton ad is one of the most controversial ads in 2019. It told a tale of a woman gifted by her husband the new Peloton bike. Viewers will see the wife using the Peloton ad at different points in her life. The ad seemed harmless, but what caused the backlash is how people perceived the ad.
The woman’s facial expressions looked like as if she were scared and taken hostage by an abusive husband. Thus, the social media outrage and the eventual stock plunge. Some even called the ad sexist. For some, it was bad advertisements due to the woman’s expressions.
According to the Wall Street Journal, Peloton’s shares dipped to as low as 15%. However, like with many other brands, Peloton’s stocks went on to recover. As for Monica Ruiz (the Peloton wife), she addressed the issue in a Today Show interview saying she felt her expressions what sparked the issue.
The ad is still up on YouTube.
The Pepsi debacle was one of the most heavily criticized ads. To put it mildly, it featured Kendall Jenner offering Pepsi during a rally. Thanks to Kendall Jenner, the rally became a celebration when one of the police officers drank Kendall’s Pepsi.
Most social media users were outraged at how Pepsi wanted to make light of rallies that end in violence. One notable voice amongst the crowd was Bernice King, Martin Luther King, Jr’s daughter. She tweeted, “If only Daddy would have known about the power of #Pepsi.”
The Pepsi ad had an impact on its stocks. Many observed that stocks dipped slightly on the day of the ad. However, Pepsi managed to recover despite the debacle and the eventual pull-out of the ad.
One of Snapchat’s absolute worse bad advertisements. An ad in Snapchat sparked outrage not only from its users but also from notable people like Chrissy Teigen and Chelsea Clinton.
The ad in question was in the form of a poll. It involved Rihanna and her past relating to abuse in 2009. Many agree that the ad seemed to make a joke over domestic violence and it was done in poor taste.
It was bad advertisements at its finest that Snapchat’s stocks took a hit and it further fell when Rihanna addressed the offensive ad. Not only did stocks plunge, but it lost almost $1 billion dollars.
Snapchat pulled out the ad and issued an apology after the advertising blunder.
In the wake of the #MeToo movement, P&G’s Gillette launched an ad campaign about addressing toxic masculinity.
The ad showcased stereotypes of men, but Gillette wanted to set an example for men. It’s for men to become more conscious and mindful and support other men too.
Some praised Gillette for making an ad that was appropriate during the rise of #MeToo. Many took offense because it tells men how to be men that it sparked outrage on social media.
Fortune reported that P&G’s shares fell when the ad was released, but like some of the ads in this list, their shares bounced back.
One of the most controversial ads in the late 2010s is their Colin Kaepernick ‘Just Do It’ ad campaign.
Nike’s Colin Kaepernick ad had divisive viewpoints. Some took offense from Nike’s ad campaign that they burned their shoes in protest. Meanwhile, others lauded the shoe company for taking a risk with Colin Kaepernick. Nike shoots its shot and it was an eventual triumph for the brand.
Sainsbury, a UK-based supermarket, launched an ad during Christmas. It depicted a real-life event that happened more than 100 years ago. According to Real Business, the ad received over 800+ complaints by using World War I as the setting of their advertisement.
Sainsbury’s stocks did take a hit, but it wasn’t as significant. The supermarket chain still kept the ad on YouTube and didn’t let any backlash pull it out. Plus, Sainsbury’s revenue increased during Christmas in 2014.
H&M wanted to promote one of its newest sweatshirt designs, “Coolest Monkey in The Jungle” in the UK. However, their promotion of the new sweatshirt backfired when the ad seemingly had racist overtones. This incident was an example of bad advertising.
Social media users were quick to criticize the ad and even celebrities chimed in on the matter. The Weeknd, a former H&M collaborator stated he was offended by the ad and he would no longer work with the brand. G-Eazy was another celebrity that no longer wants a connection with H&M after the debacle.
Due to this incident, stocks went down to 40%, according to NS Business. There were reports that despite the incident, it was still sold outside of the US. However, according to H&M, they pulled out the garment from its stock.
Under Armour’s case was an instance when the advertisement wasn’t even launched yet, stocks had already dropped. The footwear brand’s 2008 Super Bowl TV commercial may have cost the shoe brand some millions of dollars.
According to CNBC, news about their ad costs affected their stock prices. When the Under Armour ad finally saw the light of day during the Super Bowl, the ad received mixed reviews. The ad featured the shoe brand’s first opportunity to market athletic shoes other than cleats. It also showed a futuristic setting that may have only catered to its target audience.
Ridiculously bad advertising comes in different ways. It’s not just about message and design, but it’s also how things get promoted and released to the public. ExxonMobil and Fitbit’s cases are two controversial cases regarding false advertising.
ExxonMobil’s ads are subject to scrutiny and criticism. Based on several news reports, it published misleading ads that deny Exxon’s involvement in climate change.
Not only that, there were some internal issues that went about in ExxonMobile. There was also controversy over ExxonMobil’s attempt to increase its stocks. It eventually led to ExxonMobil to be tried for defrauding the public and its investors.
ExxonMobil has seen a decline in shares not only due to its actions but also its products are no longer as in demand as before.
Despite its controversies, ExxonMobil won the trial.
Fitbit also faced some backlash over false advertising that it led to consumers filing a lawsuit against the company. Those who accused Fitbit mentioned the features of its product, PurePulse™, didn’t do its actual work.
Due to the news and complaints received, Fitbit’s stock was affected for one day. PurePulse™ isn’t the only Fitbit product that received backlash over false advertising. Other Fitbit models that tracked sleep failed to make do on its promise too that it caused some consumers to file some complaints about it too.
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Advertising plays such a huge role in terms of a company’s revenue and stock. Advertisement response also can determine stock prices.
In cases like Nike and Gillette, those brands experience momentary dips in stocks. It will eventually rebound after a few days since their ads lean toward controversies and may have had more positive effects.
Meanwhile, for Snapchat and H&M, their concepts weren’t well-received due to celebrity influences, so their stocks took a plunge.
Learning from the above-mentioned brands or companies’ mistakes, brands should take careful consideration and planning that it doesn’t offend or cause boycotts. Bad advertisements can create an impact on stock prices because, with backlash, it may affect the way its consumers perceive the brand and eventually affect revenue too.
As such, brands should ensure that their advertising efforts are not only truthful but can deliver a consistent brand message that won’t negatively impact their brand.
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