• Jeff Matthews

“Binomial Marketing Experiment” and Other Euphemisms

Okay, let’s get it over with right up front: I couldn’t care less about the Super Bowl. World Series, yes; Super Bowl, no.

Which is why I didn’t quite believe it when one of my daughter’s friends called from the college dorm where they were watching the Super Bowl to tell me Overstock.com had run an ad during the Big Game.

Overstock?” I asked him.

“Yep,” he said. “The guys in your blog.”

“What kind of ad? The lady in white?

“Sexy lady. She was in bed.”

Sounded like Overstock, but I still didn’t quite believe that a web retailer with negative operating margins had bothered spending money on a Super Bowl ad.

That is so, as they say, 1990’s.

But sure enough, in my USA Today today is a “Super Bowl Ad Meter” ranking every single ad shown last night—and there it is, described thusly: “Overstock.com: O as part of life.” (Overstock’s web site calls it “Red Objects.”)

Unfortunately for Overstock, however, this description appears under the heading “5 least popular.” In fact, the USA Today Ad Meter ranks Overstock’s sexy bed-lady 56 out of all 58 ads.

(According to the paper, the “Ad Meter” comprised “207 adult volunteers in Phoenix and McLean, Va” whose reactions were “electronically charted” during the game.)

Their favorite ad came from Bud Light, and scored an 8.39. The top ten ads—six from Budweiser alone—averaged in the high 7’s. The least favorite, from Gillette, scored a 4.05. The second least favorite, from Slim-Fast, scored a 4.28.

Next was Overstock’s “O as part of life,” at 4.91.

All of this is eerily reminiscent of last year’s so-called “binomial marketing experiment,” which is how the Overstock CEO described a mysterious, not-quite-defined $2.6 million expenditure that added to the 2005 first quarter’s woes.

Long-time readers will recall that following the earnings report some of Wall Street’s Finest dutifully wrote “$2.6 million binomial marketing experiment” in their research reports, despite the fact that not one of them appeared to understand what that actually meant. But it sure sounded cool.

While I took plenty of math in school, my own memory of binomial coefficients and how they bear on marketing expenditures is a little shaky—unless, perhaps, “binomial” comes from the Greek roots “bi” meaning “buy” and “nome” meaning “very little.”

I am, of course, making that definition up. But I am not making up the cost of a Super Bowl ad, according to USA Today today:

“The evening didn’t come cheaply for the winners—or losers. Each 30-second time slot cost a record $2.5 million—or $83,333 per second.” I don’t know what Overstock actually spent on last night’s ad. Nor can the opinions of 207 individuals be said to accurately reflect the 50 billion or however many people watched the Super Bowl. And I assume that more than a handful of individuals will, as a result of the sexy bed-lady, check out the site and pump up the numbers.

It will be interesting to hear the spin on tomorrow’s conference call…but beware “binomial marketing experiment” and other euphemisms.

Jeff Matthews I Am Not Making This Up

© 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.

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GENERAL

The content contained in this blog represents only the opinions of Mr. Matthews. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. The content herein is intended solely for the entertainment of the reader, and the author.

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