Super Bowl ads expensive and in high demand, but are they value-priced? (2/3/2008)

Being king of the superbowl ads doesn't win you a fancy trophy, but it will put your ad in front of 100 million viewers

This is not your typical year for Super Bowl ads, according to John Antil, University of Delaware associate professor of business administration who tracks advertising for the big game. Antil said Fox television has most likely sold all of its available ads for Super Bowl XLII to be aired on Sunday, Feb. 3, adding that the network sold out of most of the inventory much earlier than is typical and at record prices--up to $3 million for a 30-second spot.

Normally, a network will have some ad units available during the week prior to the big day and often these can be bought at bargain prices, Antil said.

This year, Antil said, several factors came into play that made the Super Bowl highly desirable to many advertisers. "The writers strike, for one, meant much less original programming was available and repeats or substitute programming has not attracted the larger audiences characteristic of this time of the year," he said. "The Golden Globes were canceled, and there is considerable uncertainty about what will happen to the Academy Awards. Advertisers simply have far fewer options to reach large audiences this year, and the Super Bowl is the granddaddy of reach with 100 million plus viewers."

Antil said "higher ratings should be expected this year given how well NFL games have attracted viewers this football season." Although the game features two teams from the northeast, there is considerable national interest in the undefeated New England Patriots, who are seeking to crown their season with a Super Bowl triumph. Also, the New York Giants are a big market team with a huge national following and there is considerable interest in the up and down play of their quarterback, Eli Manning.

"Unlike most other sports, the teams playing in the Super Bowl tend to have less effect on TV ratings," Antil said, "with the main reason being the Super Bowl has become an icon of American culture and has assumed the status of a national holiday characterized by social gatherings centered around watching the Super Bowl. And unlike any other TV broadcasts, viewers actually want to watch, critique and even debate over which are the best and worst ads. Surprisingly, more than half the viewers would rather miss the game than miss the ads. Essentially, sponsors are trying to impress 100 million ad critics, all of whom believe they know the difference between a good or bad ad."

The bottom line, Antil said, is that the 2008 Super Bowl has become the ideal environment for selling ads during the big game. Fox has been able to charge even more than the typical $100,000 increase in cost from the previous year for a 30-second ad. This year, he said, the reported asking price started at $2.7 million, but with the demand so high for only about 63 national spots, there are some companies who may have paid as much as $3 million for one of the few remaining spots.

Is $3 million a bargain?

Why would a company pay upwards to $3 million for a 30 second ad? Even though the most common reason given by companies for not buying time on the Super Bowl is the high costs, it may actually be a very fair price, according to Antil. "With media fragmentation, the Super Bowl is now the only way a company can reach a truly mass audience with one ad," he said. "We can expect more than 100 million viewers, whereas the highest rated prime time TV show will reach only about 40 million. Add to that a diverse demographic audience, very little channel changing during the ads, little recording for later viewing when ads are very often zapped, far fewer bathroom and kitchen breaks during the ads, and additional ad viewing online, the result is vastly larger exposure in comparison to any other broadcast."

If you add in the attention from media and all the ad-related discussion during and after the broadcast, the number of ad-induced impressions becomes extremely large, so large that even at $3 million, Super Bowl ads could be considered bargain priced, Antil said.

Measuring return on investment

Recent developments make it a bit easier to try to measure the financial return one gets from a Super Bowl ad, as return on investment for marketing expenditures has become an important measure to justify large marketing budgets, Antil said.

Nielsen will be using its new rating system that reports the number of viewers who actually watch the ads and not just the program, a system that had been used in the past. With losses of around 10 plus percent during ads for normal programming, the viewer rating for the Super Bowl will no doubt be much better, he said.

Also, Antil said increases in Web site activity related to advertising are easy to measure and a visitor can be tracked as they request product information, make repeat visits or even make a purchase.

Media coverage of an ad can also be tracked. Given that many companies run various types of promotions tied to their Super Bowl ad buy, a company can compare responses to similar promotions not tied to the broadcast. Nationwide Mutual Insurance, for example, estimated that the media attention and increased viewing of their Kevin Federline ad in 2007 gained them $7.2 million in ad value.

Salesgenie, a first-time advertiser during last year's Super Bowl is back again, but bought one pregame and two ads during the game. Why? Last year's ad attracted 25,000 prospects to its Web site and its ad had been viewed 31,000 times on YouTube. Interestingly, Antil said that by the company's own admission, the Salesgenie ad was considered by far the worst ad in the broadcast last year. He added the company would not mind being worst again this year if the ad positively impacts business like it did in 2007.

Internet and marketing strategies

The Internet has become one of the best ways for companies to leverage their Super Bowl buy, Antil said. Because more and more consumers are using the Web to help with their purchases, as well as using it for entertainment, more companies are adding a site to their ad or even creating a "microsite" specifically for their Super Bowl ad. Last year, the highly controversial ad by Masterfoods for Snickers candy bar created a very popular site [afterthekiss.com] that included alternate endings to their ad. "The fact that so many people actually want to see a company's ad over and over is obviously very valuable," Antil said.

Supplementing YouTube, several companies set up special sites just so people could watch their favorite Super Bowl commercials, Antil said, noting that AOL's site [aol.com/superbowlads] had more than 15 million views in only three days after last year's Super Bowl.

More companies interested

Demand for ad time may also be heating up because of more companies starting to show interest in using the Super Bowl as part of their marketing strategy, Antil said. "This year we will see one of the largest numbers of first-time advertisers. Some of the newbies are Under Armour, cars.com, Sunsilk shampoo, Procter & Gamble's Tide, Bridgestone Tires, Audi of America and Dell," he said.

Antil said Super Bowl advertising rookies have shown, however, that experience counts when it comes to developing winning Super Bowl ads.

"The dot.com bowl of 2000 was a perfect example of the problems new companies have in this intensely competitive ad stage," Antil said, adding, "Actually, more of these dot.coms went out of business than managed to survive. Much of what can make a Super Bowl ad buy a great idea, can also work against those that make mistakes and first-timers seem more likely to fall short of success or even worse, make a major mistake."

Not only are more companies showing interest but also companies with different product categories are using Super Bowl advertising, airtime that was long dominated by beer, soda, cars and movies. Antil said a new trend is for ads by companies that sell packaged consumer goods, such as soap and detergent, and products for women. Also, relatively small businesses are getting in the game, as are nonprofit organizations.

Super Bowl XLII ad highlights

Antil offered these observations on Super Bowl XLII:

• Companies often try to take advantage of the Super Bowl buzz without paying the hefty price for being officially associated with the game. Often called "ambush" marketing, it can be a very cost effective method to obtain publicity as well as exposure to the Super Bowl audience. This year, Yum! Brands' KFC has offered to pay $260,000 to any scoring player that does a chicken dance in the end zone, with the money donated in the name of the player to a company charity. This is something that the NFL does not like at all, as the league is very protective of the commercial rights to the Super Bowl.
  
  
• Another form of ambush marketing is to do an end around by buying ads on a network's local affiliates. Each network station is compensated for carrying the game by getting commercial time to sell, and viewers most often cannot tell if the ad is a network or local ad.
  
  
• Risk can be very high when you get involved in Super Bowl advertising. An unprecedented decision by Careerbuilder.com was to fire its agency because neither of their two ads made it into the top 10 of the USA Today ratings. It was the same agency that put Careerbuilder on the map with their clever monkey ads, also shown the previous two years on the Super Bowl.
  
  
• Coke will again challenge Pepsi in the cola wars. For several years Pepsi had been purchasing so many Super Bowl ads that it gave them an exclusive for the broadcast. But they have more recently cut back the number of units purchased, giving Coke a better opportunity to get into the game. Normally a perennial winner in their ad ratings, Pepsi has had less luck recently. Last year they did not even advertise any of their cola brands and Coke did fairly well with all four of the spots they bought.
  
  
• Fox has added an additional benefit for this year's advertisers. Each sponsor can place their ads on the popular social-networking site MySpace, which is most popular with young consumers. Fox will be running in-game promotions to convince viewers to go to the site.
  
  
• Last year consumer-generated ads were used for the first time and GM, the NFL and Doritos received considerable pregame publicity for offering amateurs the chance to become famous. Madison Avenue no doubt took notice of the results. The winning Doritos ad, "Live the Flavor," was widely considered one of the best ads during the broadcast. The ad was created in four days on a total budget of $12.
  
  
• Though it is hard to tell for sure at this point, but it does appear that Fox has added one or more spots to the pool of ads available for national broadcast. It would certainly make sense financially, given the high demand this year. They may be offering 63 spots this year whereas in the past the number is usually around 58 to 60.

Note: This story has been adapted from a news release issued by the University of Delaware

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