RadioShack's big Super Bowl ad bet goes bust

RadioShack can't escape the 80s
RadioShack can't escape the 80s

The Seattle Seahawks have a chance to repeat as Super Bowl champions. But struggling electronics retailer RadioShack will not be defending its title as the best Super Bowl advertiser.

Spending what little cash it has left would not be the best idea.

RadioShack had a great ad during Super Bowl XLVIII last February that featured pop culture icons from the 1980s such as hip hop stars Kid 'N Play, wrestling champ Hulk Hogan, and everyone's favorite feline-consuming alien puppet: ALF.

E! Online declared that "RadioShack's Super Bowl Commercial Brings In (Almost) Every '80s Star, and It's Totally Awesome."

Marketing industry bible Ad Age had the following headline: "In Shocking Upset, RadioShack Wins the Super Bowl."

And shares of RadioShack (RSH) even surged as much as 12% the morning after the Super Bowl.

Rad! RadioShack 80's ad boosts stock
Rad! RadioShack 80's ad boosts stock

The company tried to use the Super Bowl ad to let people know that it was remodeling stores and was not the same, old RadioShack consumers remembered.

"Our Super Bowl ad promised a new and improved RadioShack. And one of the keys to any successful rebranding effort is ensuring that there is consistency between the brand messaging and the in-store execution. Here, we believe we are on the right track," CEO Joseph Magnacca said in a conference call with analysts last March.

But the ad didn't help the company at all. Instead, it arguably reinforced the notion that the company had an antiquated brand image.

The more than 111 million people who watched the commercial were laughing at RadioShack, not with RadioShack.

Just a few weeks after the Seahawks annihilated Peyton Manning's Denver Broncos, RadioShack announced a massive wave of store closures.

In the months that followed, the stock tumbled below $1 and sales evaporated while losses mounted. RadioShack also burned through most of its cash on hand.

RadioShack is now reported to be near bankruptcy.

Last month, Magnacca told analysts that the company was now planning to cut its marketing budget and would focus more on promotions and ads about specific products as opposed to building the RadioShack brand.

So this begs the following question: Is spending millions of dollars on a commercial worth it? Fox (FOXA) charged $4 million for a 30-second spot last year. RadioShack also had a minute long version of the ad online.

Related: Check out a preview of this year's Super Bowl ads

Walter Guarino, professor or marketing and communications at Seton Hall University, gives credit to RadioShack for going the self-deprecatory route with its ads.

But he said the problem is that the shelf life of a humorous ad may not last long. And people are mainly looking to be entertained ... not beaten over the head with a product pitch.

"The Super Bowl is the biggest party of the year. You can't get too serious. But a lot of times people laugh at the ads and then it's quickly out of their mind," he said.

Guarino said the most successful Super Bowl advertisers, companies like Anheuser-Busch InBev (BUD) and Pepsi (PEP), have gigantic marketing budgets and can afford to spend big bucks to reinforce their image throughout the year.

He added that it's hard for a small company to bet big on the Super Bowl and generate more business as a result. Controversial Web domain registry GoDaddy comes to mind.

"GoDaddy is a one-shot Super Bowl phenomenon. But they are rare," he said.

To be fair, RadioShack is not the only company that has appeared to waste money advertising during the Super Bowl.

SodaStream had commercials in 2013 and last year. The spot last year featured Scarlett Johansson sucking on a straw and was a clear attempt to entice the male audience. But SodaStream (SODA) shares are now near an all-time low following a big drop in sales and profits.

And who could forget 2000?, and are just three of several Internet firms to blow venture capital and/or IPO money on a Super Bowl spot that year.

Their ads may live on thanks to YouTube. But the companies are now all in the great dot-com graveyard in the sky.


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