Friday, January 30, 2009

Overstock.com Throws a "Hail Mary" Pass at the Super Bowl

Overstock.com earned $1.01 million in Q4 of 2009, though they lost over $12 million for the full year. I believe the profit in Q4 is the only profitable quarter in their history.

According to the earnings announcement, they were able to make this profit by cutting expenses:
"Combined technology and G&A expenses decreased 17% to $21.5 million in Q4 on lower depreciation and compensation credits. The company had accrued profit sharing and executive bonuses throughout 2008. These were reversed in Q4 resulting in a one-time benefit of $3.7 million when the company decided not to make a profit-sharing contribution and the senior executive team requested not to receive a bonus. For the year, tech and G&A expenses fell 5%. Total operating expenses were tracked down 29% for the quarter at 9% for the year. Operating income for the quarter was a positive $5.7 million compared to a loss of $6.8 million in Q4 2007."
This is good news right, and the share price proves it by gaining 12% today. Then tonight I see the following press release:
"Overstock.com, Inc. (Nasdaq: OSTK ) announced today that it will be airing a 30-second Super Bowl advertisement featuring Overstock.com spokesperson Carlos Boozer. The commercial is scheduled to air immediately following the halftime show."
I'm not sure what I'm reading. I feel like I'm watching a Twilight Zone episode. Overstock is going to spend upwards of $3 million for a 30 sec. spot, an amount that is 5% of their total marketing expense for the entire year of 2008; Gone in 30 Secs.

Is this a "Hail Mary" pass? Aren't their more effective uses for that $3 million? This better be one very exciting TV spot.  I'm sure there are more effective marketing uses for that money.

Observers of ecommerce, will be able to see how much of a spike in traffic Overstock gets from this ad buy looking at the various traffic management sites. 

If you are a 3P seller on Overstock, let me know if your Overstock sales improved following the Super Bowl.

Just my 15%

6 comments:

ms.pat said...

You do realize that at one time Byrne said space aliens were following him? Nuff said ;-)

ms.pat said...

Incidentally, there was a nice Overstock commercial during Letterman last night. They are shipping out things for only 2.00 and change.

Anonymous said...

"spike in traffic Overstock gets from this ad buy looking at the various traffic management sites"

I'm chuckling as I paste this Randy. Really I am.

But you typed it!

Anonymous said...

Personally, I thought for 3M this ad could have been much better. Carlos Boozer is not exactly a household name and the commercial was really confusing to novice online buyers whom I assume OS was targeting to some level based on the children in the ad.

Anonymous said...

It probably wasn't a bad ad spend for them. In this economy, I bet there were alot more people staying home for the event, rather than spending money somewhere else. If you don't have money, and are staying home watching the Super Bowl, then seeing an advertisement for discounts from Overstock hits the mark, in my opinion.

ebuyerfb said...

I saw the ad. I didn't really get it. In fact I didn't even realize this was the ad until it was over so I had to replay it on my DVR.

I was really hoping for a 1984 Apple type commercial but that obviously didn't happen.