The Power of Marketing on Stock Price: From AI Ads to Scandals, How It Impacts Investors
Marketing campaigns have long played a pivotal role in shaping public perception, but their influence extends far beyond consumer behaviour—they can significantly impact stock price performance. As investors, understanding how branding strategies translate into financial consequences can offer a competitive edge. In this post, we explore examples from renowned companies to uncover how marketing initiatives can either drive growth or lead to setbacks for their stock price.
Bud Light’s Misstep: A Lesson in Brand Identity
Bud Light, a market leader in the USA’s low-calorie beer segment, launched a campaign in 2023 focused on diversity and inclusivity. While the aim was to resonate with broader and younger audiences in response to the brand’s declining market share, the collaboration with transgender influencer Dylan Mulvaney backfired and sparked controversy and a boycott campaign. Critics, social media users and Bud Light consumers blasted the apparent political and “woke” messaging of the marketing campaign.
The backlash led to a 24% drop in sales and a temporary loss of market leadership to competing brands such as Modelo Especial. The parent company, AB InBev (BUD), saw its stock price plummet by 10-15% shortly after the campaign’s release and led analysts to downgrade their forecasts. For investors, this underscores the importance of monitoring public sentiment of firms and its ripple effects on stock price. Misjudged campaigns can rapidly erode value, presenting both risks and potential buy-low opportunities for shrewd investors.
Coca-Cola’s AI Experiment: No Immediate Impact, Yet
In late 2024, Coca-Cola introduced an AI-generated Christmas commercial. The company saw the commercials as an innovative use of AI models introduced by the AI artist studios collaborating on the campaign. These models purportedly overcame the usual challenges of AI-generated content (for example 6 fingers on hands etc) for more lifelike animations of humans and a merry depiction of Santa Claus. However, the ad’s lack of emotional resonance and dystopian undertones, poor quality and unproportional animations, and the use of AI rather than employing visual artists, all led to criticism and fun-poking on social media.
Surprisingly, the campaign had no discernible effect on the Coca Cola Company’s (KO) stock price, already down 10% from October, at the time of writing. However, we could safely say that the controversy is a factor in prolonging its depression. However, the broader context reveals why even small marketing mishaps impact a company’s reputation with potential consequences for investor value.
Volkswagen’s Dieselgate Scandal: A Case Study in Crisis
Rewinding to 2015, Volkswagen’s manipulation of emissions data by installing defeat devices on certain diesel vehicle models to change engine performance during emissions testing (commonly known as “Dieselgate” or “Emmissionsgate”), cost the firm upwards of $30 billion in fines, lawsuits and settlements, and vehicle recalls to date. In the aftermath, Volkswagen’s (VOW3) stock price plummeted by over 30%, wiping out billions in shareholder value.
From a marketing perspective, the public’s reaction to the incident was compounded by the initial denials and dismissive commentary by executives at the company of there being a defeat device, even amidst scrutiny by regulators. The reputational damage from the scandal may have had implications for German industry, with the psychological connection between “made in Germany” and quality being eroded.
The scandal may have been the beginning of the decline of VW, as we are witnessing today with the drop in stock price after the controversial decision by the company to closing some of its German factories and lay off workers as a cost-cutting measure (see our analysis on Germany’s Economic Crisis 2024). The Dieselgate scandal serves as a stark reminder that corporate malfeasance can have enduring consequences for both brand reputation and shareholder confidence.
Apple’s Shot on iPhone: Marketing Success Done Right
On a positive note, Apple’s “Shot on iPhone” campaign has been a hallmark of effective branding since its launch in 2015. By showcasing user-generated content, the campaign highlighted the iPhone’s superior camera capabilities, contributing significantly to a 150% growth in iPhone sales over the following years. This success underscores the value of aligning product features with marketing strategies to drive both sales and stock performance.
Beyond the “Shot on iPhone” campaign, Apple’s marketing prowess extends to its ability to create a consistent and aspirational brand image. From its iconic “Think Different” campaign in the late 1990s to the sleek, minimalist product advertisements that highlight form and function, Apple has built a reputation for innovation and quality. The company’s product launches, often presented as theatrical keynote events, generate massive media coverage and consumer anticipation.
Apple’s (AAPL) share price has mirrored its marketing success. The company’s strategic branding efforts, coupled with product innovation, have consistently driven the stock’s price evolution and delivered consistent returns for investors, making Apple a cornerstone in many investment portfolios (see our commentary on whether one should Consider Buying Apple Stock in 2024/5).
A Broader Market Context: Growth and Risks in 2024
The stock market, as of late 2024, has shown robust growth, with a 24% year-to-date rise following a 23% increase the previous year. This has sparked discussions about sustainability. Analysts are drawing parallels to the dot-com bubble of the late 1990s, where enthusiasm for emerging technologies like AI mirrors the internet boom of that era. Companies like Coca-Cola, while leveraging AI for marketing, highlight a key challenge: translating innovation into profitability (see our analysis of Investing in AI Stocks, and whether it is a Bubble or Not).
At the same time, market overexposure has introduced new risks. Data shows that 99% of professional portfolios in the U.S. are fully invested, leaving just 1% in cash reserves. This lack of liquidity became evident when unexpected market shocks, such as rate adjustments by the Federal Reserve, triggered sharp declines. For investors, this environment underscores the importance of maintaining liquidity and being prepared for market corrections. This preparedness can greatly enhance returns for shrewd investors by buying the dips, taking positions at bargain prices in an otherwise overpriced market with exorbitant P/E ratios (see our overview of the Global Market’s Performance in 2024).
Scandals and marketing mishaps of the magnitude we have seen emphasize the need for investors to do their due diligence and to diversify away company-specific risks. Investing heavily in a single stock or industry can expose portfolios to unforeseen shock to individual companies.
What This Means for Investors
- Stay Attuned to Public Sentiment: Campaigns that backfire can lead to short-term stock declines, while successful ones can boost valuations.
- Monitor Industry Trends: Innovations like AI may not have immediate effects but could shape long-term growth prospects.
- Diversify Investments: High-profile scandals like Dieselgate highlight the risks of concentrated positions.
- Maintain Liquidity: As recent market trends show, having cash reserves can provide flexibility during sudden downturns for individual companies as well as wider market corrections in the future.
As the stock market becomes increasingly influenced by branding and marketing dynamics, investors can benefit from keeping a keen eye on corporate strategies. Whether it’s identifying opportunities after a downturn or riding the wave of a successful campaign, understanding the interplay between marketing and market performance can enhance your investment strategy.
We encourage you to read our list of 5
Useful Psychological Tips for Successful Investors in 2025, sometimes it is
mind over matter to reach our full potential!
Optimizing Your Portfolio for 2025 and Beyond
As we approach a new year, it’s essential to evaluate your portfolio’s exposure to market dynamics shaped by marketing trends. Stay informed, such as by following our YouTube channel for the latest market insights, and consider how branding strategies might impact the companies you invest in. Diversify wisely, such as by using Exchange Traded Funds (ETFs) to instantly reduce your exposure, available on the trading platforms we offer our clients.
To see the vlog version of this article, please see our YouTube channel and make sure to like and subscribe!
If you’d like to explore how this situation might fit into your investment strategy, contact us an schedule a visit our office on Marbella’s Golden Mile, or RSVP and attend our upcoming DrinkEXchange event on the 17th of Jan 2025.
Kaspar Huijsman
Kaspar is a passionate investor known for his thorough analysis of news and market
dynamics. With over 25 years of experience in the financial world, he never relies on half- truths and always prioritizes knowledge.
“An investment in knowledge pays the best interest.”
— Kaspar Huijsman
Founder of https://hugoinvesting.com/
Founder of https://academy-for-investors.com/
LinkedIn https://www.linkedin.com/in/kasparhuijsman/
Former CEO BinckBank Spain https://www.binckbank.com/hugoinvesting
Former CEO Saxo Bank Spain https://www.home.saxo/about-us
Co-founder Alex Beleggersbank https://nl.wikipedia.org/wiki/Alex_(bank)
The information in this article should not be interpreted as individual investment advice. Although Hugo compiles and maintains these pages from reliable sources, Hugo cannot guarantee that the information is accurate, complete and up-to-date. Any information used from this article without prior verification or advice, is at your own risk. We advise that you only invest in products that fit your knowledge and experience and do not invest in financial instruments where you do not understand the risks.