Photo courtesy of Best Buy
Best Buy store
Best Buy’s expensive Super Bowl ad appears to have been popular among viewers; meanwhile, the company continues to close big-box stores and cuts jobs, although its period of turmoil has proven lucrative for many executives.
February 5, 2013
As struggling electronics retailer Best Buy Company, Inc., attempts to turn itself around, it recently ran its third consecutive Super Bowl ad—one that appears to have been a hit among viewers, although some critics responded differently.
The Richfield-based company—whose founder, Richard Schulze, is working on a takeover bid—aired its commercial during the first quarter of the big game on February 3. It featured Amy Poehler—a Saturday Night Live alum, recent co-host of the Golden Globe Awards, and current star of NBC’s Parks and Recreation—asking blue polo-clad Best Buy workers about electronics products. The official ad can be viewed below, or an extended version can be accessed here.
The commercial claimed the seventh spot on the Associated Press’ list of “10 Super Bowl Ads that Stood Out.” Sixty-one percent of voters in a survey conducted by The New York Times called the Best Buy ad “funny,” with only 9 percent deeming it “weak.” And FoxSports.com included the commercial on its unranked list of the best Super Bowl ads.
Best Buy spokesman Jon Sandler told Twin Cities Business that the company is “proud of the spot” and received a “good response from viewers.”
Meanwhile, some advertising experts say the commercial focused too much on Poehler and failed to show how Best Buy workers can help customers with their product expertise, according to a report by the Star Tribune.
“If you are going to spend $4 million on a Super Bowl ad, you need to get customers excited about your products and services,” Bill Day, executive director of Minneapolis-based research and consulting firm Frank N. Magid Associates, told the Minneapolis newspaper.
Sandler contends that the overall response was positive, and “critics will always find something to complain about.”
For Best Buy, there’s more to the Super Bowl than just the hype surrounding a 30-second commercial. The company also relies on the big game to boost sales, as there is increased demand for flat-screen TVs.
This year, Best Buy took an unprecedented step by running Black Friday-like “doorbuster” sales in January that reduced TV prices by up to 40 percent, including larger flat-screen models, according to a report by the Star Tribune. Increased year-end sales could help investors win a higher price from Schulze, who was previously expected to submit a bid in mid-December; the company’s board, however, extended his deadline until the end of this month, allowing Schulze to review the company’s holiday performance prior to making an offer.
Best Buy recently announced that its same-store sales during the holiday season were essentially flat—welcome news on the heels of several quarters of declines and an announcement that caused the company’s stock price to rise. Best Buy’s stock was trading at $15.93 Monday afternoon, up about 30 percent from before its holiday sales announcement, but still well below the preliminary $24- to $26-per-share offer that Schulze said he was considering in August.
Meanwhile, the company continues to move forward under CEO Hubert Joly. Last week, Best Buy revealed plans to shutter 15 big-box stores in Canada, a move that is expected to result in the reduction of about 900 jobs, according to media reports. The company began a downsizing effort under former CEO Brian Dunn, and it closed 50 U.S. stores last year.
The restructuring has resulted in the loss of many jobs, and yet the period has proven lucrative for many executives. For example, when Dunn resigned last April, the board gave him a $5.5 million farewell package, according to a report by the Pioneer Press. Amid a subsequent exodus of key leaders, the company then awarded $2 million in cash, as well as stock awards valued at roughly $8 million, to four executives in a retention effort. Meanwhile, more than 100 other Best Buy leaders received smaller retention packages, for which job performance was not a factor, an unnamed source told the Pioneer Press.
Two of the executives who received large retention bonuses will now get multimillion-dollar packages as they depart the company, according to the Pioneer Press. They are presumably former Chief Financial Officer James Muehlbauer and Mike Vitelli, president of Best Buy’s U.S. operations, both of whom are expected to leave the company this month.
Meanwhile, Joly and the company’s board stand to make millions of dollars if Schulze is successful in his takeover attempt, as they each hold a significant amount of company stock.
Best Buy is Minnesota’s third-largest public company based on revenue, which totaled $50.7 billion in its most recent fiscal year. The company’s current fiscal year concludes in early March.
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