Are Super Bowl Ads a Good Deal?
This year’s Super Bowl spots are going for a cool $5 million for 30 seconds. An all-time high that has some advertisers wondering if the value is still there. This year, NBC will broadcast Super Bowl LII from the U.S. Bank Stadium in Minneapolis on February 4, 2018. At roughly $167,000 per second of airtime, advertisers are definitely trying to make sure they squeeze every ounce of production value from the spot.
The Super Bowl has been watched for the last few years by between 110-115 million people, so a commercial will have a cost per thousand (CPM) of roughly $45, or 4.5 cents per viewer.
Big advertisers with multiple spots during the big game will plop down $30 million on that February Sunday, and that is before production costs on these high-end commercials, which can run into the millions also.
There have been discussions about the rising costs from some of those big players, even suggestions of sitting out the Super Bowl in lieu of some other more cost-effective options. Chief marketing officer for Anheuser-Busch’s U.S. operations, Marcel Marcondes, has said, “We do get concerned whenever we see prices going up.” Viewing habits have changed over the years and streaming has become a big factor for sports fans. “The context has changed,” says Marcondes. “People’s behavior has changed, and therefore the negotiations about the price should change as well.”
There are some additional benefits outside of the on-air, in-game spots for Super Bowl advertisers every year. Many publishers get an early release of the spots and display them for days or weeks before the game and there is always a YouTube “best of the SuperBowl ads” video reel so people can vote for their favorites. These offerings tend to generate another 7-8 million views for the spots, but the question still remains. Is the total investment of $30 million+, in Budweiser’s case, a sound investment for such a short-lived campaign?
You could, for instance, put a quarter page ad in every Sunday newspaper in the U.S. four times during February for an average of $25/CPM or about $950,000 per week. The Pew Research Center says that the estimated total U.S. daily newspaper circulation (print and digital combined) in 2016 was 38 million for any given Sunday, so for about $3.8 million ($950,000 x 4), you could have a reach of 38 million and a frequency of 4.
Another option is going “Russian” and spending it all on social media. A Facebook ad targeting a mass audience, for instance, all 18- to 54-year-olds will have about a $5 CPM. An impression “counts” when an ad is called from a server to appear on a webpage. The majority of Facebook ads are bought in an auction style, so demand does affect price, but the $5 CPM is a solid average. Even though some types of ads are more expensive than others, it doesn’t affect the overall average price that much.
Given this CPM, the math works out so that for a spend of about $100,000 you could buy between 15 and 25 million impressions for a mass audience.
That doesn’t mean you’ll reach up to 25 million people. Effective ad campaigns balance how many times people see the ad and the kinds of people who see them. If you’re trying to reach as many people as you can with that figure, you’ll get a lower frequency with about 75 percent of your audience seeing the ad one time. Most advertising agencies and media buyers operate on the presumption that an ad needs to be seen five to seven times over an eight-week period in order to be effective. With those parameters and $100,000 spent, you will most likely reach 3 million to 5 million people in a general audience, with that average person getting the same ad five times.
Extrapolate these number to the same spend as the cost of one Super Bowl ad, and you are looking at reaching 150,000,000 people five times!
It is no wonder that digital advertising has grown tenfold in the last 16 years. A quick look at this graph, courtesy of The Wall Street Journal shows the media share of the global $400 billion ad spend.
TV, radio and outdoor seem to have held their own, digital is exploding and print is in serious decline.
So what is the bottom line? Is a Super Bowl ad worth $5 million? I will tell you EXACTLY what it is worth. It is worth whatever someone is willing to pay for it, and right now, that figure is looking to go north of $5 million. So buckle up and hang on for the ride. Some experts say it will reach $10 million by 2022, and it will unless advertisers decide they will not pay that … and then it won’t.
Paul Evans is Director of Agency Services at The Ad Buyer, Greenville, SC