The startup that’s making a big, expensive bet on a Super Bowl ad this year | Hacker News Reader

The startup that’s making a big, expensive bet on a Super Bowl ad this year

qz.com

31 pointsprostoalex46 comments

Reminds me of Pets.com

"In January 2000, the company aired its first national commercial as a Super Bowl ad which cost the company $1.2 million. [...] That ad was ranked #1 by USA Today's Ad Meter and had the highest recall of any ad that ran during the Super Bowl. [...] Although sales rose dramatically due to the attention, the company was weak on fundamentals and actually lost money on most of its sales. Its high public profile during its brief existence made it one of the more noteworthy failures of the dot-com bubble of the early 2000s."

https://en.wikipedia.org/wiki/Pets.com

> In the ad, SoFi vows to propel its members to “greatness,” but says not everyone fits the bill. “Find out if you’re great at SoFi.com,” the voiceover reads. “You’re probably not.”

If there's one thing the majority of people watching the superbowl love, it's condescension from a corporation.

It's like negging. How lovely.

The only way for this to work for them is if the ad is controversial enough that people talk about it online after the game. Being incredibly condescending might work.

It's definitely an obnoxious strategy, and it's kind of sad to see. Unfortunately that doesn't mean it won't be effective. After all, we're talking about them here.

Eh, If there's one thing I've learned about people, it's that nobody thinks they're not great. The ad is a challenge and it'll be very successful at driving traffic to their site.

If your're not, you're not the target, if your are, you'll feel all the better about it.

Either I live in a world where a startup is being stupid and flagrantly spending millions on an ad during superbowl, or they'll be a raging success....by spending millions airing ads which appear to insult their potential customers and pandering to base exclusivism...

Its like a social desirability Catch 22...either way, we lose.

Exclusivity is a common marketing strategy.

The US Marines or the British Parachute Regiment heavily promote their status as an elite corps. Advertising for theme parks and even toys often uses the "Are you tough enough?" trope. The Hermes Birkin bag has become one of the most sought-after items in fashion, precisely because Hermes won't sell them to the 'wrong' sort of people.

http://www.npr.org/sections/money/2015/12/25/460870534/episo...

often uses the "Are you tough enough?" trope

But there's a world of difference between "are you tough enough?" and "you're probably not tough enough".

I agree with the GP poster, condescension won't play well.

Tim Arnold pointed to one such success: his own advertisement for GoDaddy.com in the 2005 Super Bowl. The ad generated 5 million Web hits in 48 hours and doubled the company’s market share in the months that followed. Writes Arnold, “It was an outrageous spot that arguably stayed on the right side of the line of good taste and political impropriety. Viewers gave it mixed reviews, but GoDaddy’s business went through the roof as a result of it.” http://www.adweek.com/news/advertising-branding/super-bowl-a...

Despite all of the critical comments on here, mass marketing does work for some products. Especially high margin products with a general mixed-income user base... such as a financial loan company.

The company is run by someone experienced in running big corp financial loans:

> SoFi is run by CEO Mike Cagney, a former Wells Fargo executive and specializes in refinancing student loans for qualified millennials as well as personal loans.

So I'm sure he's at least somewhat familiar with the ROI from this type of ad. Although I fear he's playing big corp marketing game with a small-time company. $5m in the right hands could be much better spent elsewhere but some companies lack the creativity/talent to do that effective hit-the-streets type of startup marketing.

So why not write a single big pay cheque to solve a big hard problem?

>So why not write a single big pay cheque to solve a big hard problem?

It certainly is lacking in imagination. If this is the best you can come up with to target your niche then this is a bit of a warning sign that not all is right inside the company. But then again what do I know :)

SoFi's last funding round was a $1 billion Series E. They have money to burn for marketing.

https://www.crunchbase.com/organization/social-finance#/enti...

Well we need to distinguish between debt raised to lend out to customers vs equity financing.

Right, it seems like the terms on a series like that for a loan company would have terms much more like buying the debt they're going to issue to their customers than buying stock in the company.

Series E? Haven't you pretty much failed as a company if you have to go back to the water fountain that many times?

Not necessarily. Funding can be used by profitable companies to speed growth or invest in moonshot experiments as well as make up for lack of revenue. And if you don't need it, the money is cheaper; sometimes, if you're offered good terms, it can be hard to turn down having that much cash on hand.

https://www.crunchbase.com/organization/uber/funding-rounds

Your common stockholder (a.k.a employees) certainly have. Series E investors tend to ask be at the front of the pack if/when there is any down valuation.

looks like they bought an ad on qz.com too...

Obligatory submarine link

http://paulgraham.com/submarine.html

I think it's pretty hard to believe that his vision for Reddit was anything other than what it is today.

/r/hailcorporate.

You think that's bad, checkout the buzzfeed 'article': http://www.buzzfeed.com/h2/bfam/sofi/swears-you-can-use-when...

Bill Gurley just tweeted:

"Why burn $5MM in a quarter or a month when you can do it in 30 seconds?"

Didn't we learn in the nineties this sort of thing doesn't work?

But this time is different.

You would assume the board will have approved something like this so the investors have to take responsibility.

I wonder how fast you could burn through $5MM in Facebook ads...

There is something a bit distasteful with a lender splashing out so much money on an advertisement. You know in the end its the customers that end up paying for it with interest.

I suspect most {Product.Name} customers end up paying for {Product.Name}'s advertising by purchasing {Product.Name}?

Isn't that kinda the point! ;)

This is true of all advertisements. The customers (or investors) end up footing the bill through higher prices.

Holy cow- their mortgages: "Afford more than you imagined with as little as 10% down on mortgages up to $3M."

Yikes. :-/

More read on Sofi, if you are interested:

http://www.bloomberg.com/news/articles/2015-12-03/this-lende...

Looks like Martinis are the modern day toasters.

Oh look, it's 1999 all over again!

SoFi?

Let's seem them beat the ad for So Fine.[1]

[1] https://www.youtube.com/watch?v=io53QMwHZ48

The last "startup" that I saw an ad for in the Super Bowl was salesforce with an ad for Chatter. How did that work out for them?

Wix had an ad last year and a friend inside the company told me that they were thrilled with the ROI.

First of all that ad was something like 5-6 years after their IPO, so hardly a startup. But anyway their stock price is up ~120% since then.

I don't think these ads are as powerful as they used to be. The ads aren't as novel or interesting, and people are generally catching up with their smartphones during commercial breaks rather than focusing on the ads as entertainment.

I disagree. That may be true for your crowd, but I know my parents and their friends will be glued to the ads.

Eventually everyone will be bored, but I don't think it's this year.

Your parents aren't SoFi's target market. Their target market are the people most likely to be looking at their phones.

I agree that it's probably easy for the HN crowd to think mass TV advertising is over, when it actually isn't. I just think that for certain audiences it makes a whole lot more sense than others. If I were running a startup looking to cash in on the huge numbers of boomers entering their senior years then a Super Bowl ad might make sense. For one targeting not just millennials, but relatively affluent millennials it makes a lot less sense.

I think the smart college kids that can refi their student loans already know about SoFi. For mortgages I think credit unions are still cheaper for the well qualified.

Yikes.

The one sure way to blow through a million bucks (plus) with little payback. Terrible decision for any organization - let alone a startup.

Try $5m. $1m is so 1999...

You have data to back this up? Seems like the exposure for a mass-market product like sofi might be great in terms of ROI, rather than wasting time in the tech news circle that most startup PR efforts operate in.

Yes. See the tech companies advertising in the 1999/2000 superbowl.

I'm not sure that is a quality data point. This company is a fin-tech startup aimed at student loan consolidation. I could be wrong but I would be surprised if the Super Bowl was not a very good target for them in terms of ROI.

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