Ads Don't Cure What Ails Your Investments
NEW YORK (TheStreet) -- We assume ads are meant to sell products or services.
When a publication like Advertising Age analyzes spending by the largest advertisers each year, most of the text involves strategies about media, about products, about who is spending more and who is spending less.
Little is written about why certain ads are running. Are they running to keep a company on offense, or for defensive purposes? And what should that choice tell investors?
Right now Wal-Mart Stores
As The Guardian reports, Wal-Mart is trying to separate itself from this event, promising more factory inspections but refusing to go along with a legally binding agreement, fearful of what this might mean in an American court.
So are the new TV ads advertising meant for growth, or political face-saving? My concern here is strictly financial. If you're spending money defending yourself, you're not making money for shareholders.
Wal-Mart shares are up 15.46% so far this year, which sounds great until you realize that the S&P 500 is up 15.72%. Despite spending about $2.5 billion on advertising in 2012, Wal-Mart is barely running in place.
A recent report about the company and its advertising, which Colin Parajon of Interpublic posted on Slideshare, illustrates the problem.
Wal-Mart has 10% of the total U.S. retailing market, concentrated in southern states, and among low-income demographics. But a brand image word cloud from Brandtags shows words like "monster," "greedy" and "monopoly" alongside more positive terms. Focus groups use words like "cheap" and "dirty" to describe it. Target
Wal-Mart is doing image ads, it's playing defense. Your money may be better invested in companies that are playing offense. Target