This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

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 (WMT - Get Report) is running a series of TV ads in which "real Wal-Mart shoppers" look into the camera and defend their choice of store. These are defensive ads, running in part because the company is dealing with yet another scandal, this one involving the collapse of the Rana Plaza building in Bangladesh.

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 (TGT - Get Report) has a better image, according to the slide deck.

Wal-Mart is doing image ads, it's playing defense. Your money may be better invested in companies that are playing offense. Target (TGT - Get Report) shareholders are doing better than Wal-Mart shareholders this year, with a gain of 18.03%, ahead of the S&P average.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
C $46.16 -1.20%
JPM $62.82 -1.20%
TGT $79.73 -2.00%
WMT $66.45 -3.60%
AAPL $93.16 -1.80%


Chart of I:DJI
DOW 17,685.20 -145.56 -0.82%
S&P 500 2,055.98 -19.83 -0.96%
NASDAQ 4,759.3580 -45.9330 -0.96%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs