In an age of social media and the internet, the ability for a marketing campaign to go viral can mean big bucks for the company involved. A well executed advertisement can result in a material bump for revenue, and a higher share price as a result of heightened investor interest. Here are two US stocks that have caught my eye recently, involved in doing just that.
Big celebrity promotion
First up is American Eagle Outfitters (NYSE:AEO). The clothing retailer has over 1,170 stores around the globe, and is known for on-trend, affordable apparel, especially jeans and casualwear. Over the past year, the stock is down 5%.
In the short run, the stock has popped 43% in one month, thanks in a large part to the benefit from a new campaign featuring actress Sydney Sweeney. The ‘Sydney Sweeney Has Great Jeans‘ campaign has gone viral, despite stirring controversy over its tagline’s pun on genes and jeans. The campaign featured high-tech elements such as interactive 3D billboards and an AI-enabled try-on feature, to appeal to younger audiences.
The flagship pieces sold out within a couple of days, with the latest earnings call saying it generated 40bn ad impressions and added over 700,000 new customers. More than that, it drove the business to a second-highest-ever Q2 revenue and boosted operating income and beyond market expectations.
I think the business can keep pushing ahead from here. It has helped to draw massive attention to the brand, something that should be felt for several quarters to come. With hype now around who could be the face of future campaigns, it could lead to the brand becoming even more iconic.
As a risk, some might think the spike in sales is just a temporary thing. This excitement could indeed fade, with the basic company operations nothing majorly different from competitors. But that accusation can be levelled at many successful companies.
Reconnecting to youth
Another case I spotted was Gap (NYSE:GAP). The retailer designs and sells wardrobe staples around the world, and has been doing so since 1969. Over the past year the stock is up 24%.
The brand has really focused this year on bringing back a marketiung push to help fuel sales. For example, it just featured the global K-pop girl group Katseye as part of a new campaign. It has them dancing in Gap denim, which went viral, gathering 400m views in just three days and generating 8bn impressions.
CEO Richard Dickson emphasized the campaign as proof that Gap had transcended pure retail and returned as a pop culture brand. Obviously, time will tell whether this is the case. But it shows the clear direction of the business going forward. So far, it is being well received from investors, as the recent share price spike indicates.
The latest results included a quote from Dickson that “we are advancing our transformation with discipline, clarity, and momentum.” The changes in marketing are conciding with cost savings in other areas, which should help to filter to down to higher profits in the coming year.
One risk is that Gap owns several brands, so it’s hard to operate all of them in an efficient manner, with the brands catering to different demographics. Yet overall, I think it’s a company that investors can consider for future growth.
