The Super Bowl may be the only televised program in which viewers enjoy the commercial breaks as much as the football itself. A 30-second spot in America’s most viewed television program will cost $4.5 million this year. Last year’s airing of the Super Bowl drew a crowd of 168 million potential consumers. This year’s Super Bowl XLV is projected to surpass its predecessor with over 170 million views, which would make it the most viewed program in U.S. television history. The massive viewership perhaps justifies the purchase of one of these expensive advertisement spots, but what makes a Super Bowl ad worth the price?
The major benefit of advertising during the Super Bowl is establishing a connection between a brand and the viewership of the Super Bowl more broadly. Budweiser is a prime example of a firm that realizes the potential of viewership and brand identity. Budweiser has purchased exclusive advertising rights in the Super Bowl for more than 20 years and appears to be receiving long run returns from their marketing ownership of a sports association. This relationship with the NFL is physically reflected on the special edition Bud Lite can released every year depicting NFL team logos on special packaging.
While Budweiser enjoys a monopoly on beer commercials during the Super Bowl, most firms are forced to compete with their rivals. In a study analyzing the dynamics of Super Bowl ads, Hartmann, a California based economist, discovered an interesting consequence arising when two major firms in an industry release competing ads. The Stanford professor studied two competing soda brands that both released 30-second ads during the Super Bowl and the trends in their revenues the weeks following the game. Unlike Budweiser, who experienced a noticeable growth in sales following the Super Bowl, the advertisements of the two major soda brands returned little to no profit to offset the cost of their investment. This suggests that competing brands don’t necessarily split the “viewership market.” Rather, neither soda is able to establish itself as the soda affiliate of NFL franchise and thus fails to generate any profits.
When you sit down on your couch this week to watch Peyton Manning beat up on the Carolina Panthers, remember to pay close attention during the breaks. The competition on the field is just as real as the one off; instead of touchdowns, though, firms are fighting to win you–the consumer.
Works Cited:
Hartmann, Wesley R., and Daniel Klapper. Super Bowl Ads. No. 2139. 2014.
http://www.statista.com/statistics/216526/super-bowl-us-tv-viewership/
http://www.beer-universe.com/beer-education-article/2011-01-21/Bud-Locks-Up-Superbowl-through-2014/
15 Comments
It’s interesting that firms are still willing to spend millions of dollars on a 30-second ad that doesn’t seem to generate any noticeable extra revenue. Is it possible that the reason Budweiser appears to be receiving long run returns because of other marketing techniques such as product licensing with their cans rather than just due to their monopoly on commercials during the Super Bowl?
I feel like companies are investing in the Super Bowl Ads to send a signal to their rivals that they are committed in their brands. As the post mentioned, Pepsi and Coca-Cola (I assume) made little profit to cover the advertisement cost; however, it is worth noting that in 2010 Pepsi skipped Super Bowl Ads to invest in its social media campaign, but eventually returned to end the monopoly of Coca-Cola in 2011. Another example would be Dannon vs. Chobani. On top of that, with the rise of streaming service, TV audiences have become more fragmented, so this makes Super Bowl seem even more lucrative for companies with no specific target audiences.
So … we may find the answer by standing the question on its head: what happened to Pepsi sales relative to Coke sales when they didn’t advertise? You pay not to gain sales, but to keep from losing sales.
It’s interesting that you mention a Dannon v. Chobani ad war because those two companies don’t strike me as your typical Super Bowl advertisers. When I think of the Super Bowl, the typical companies are beer, potato chip, and soda ads. However, due to the increasing diversity in the viewer base that the Super Bowl draws it’s not uncommon to see non-stereotypical Super Bowl companies buying ad spots. Data collected by Nielsen Media shows that female viewership has increased from 43% to 46% from 2001 to 2011. Also, families with household income greater than 100,000 dollars have increased their viewership from 16% to 30%. This household income viewership shift could explain increasing amounts of service ads like E-trade with their famous talking baby commercials. With the increasing amount of Super Bowl viewers who just watch for the ads, it shouldn’t be surprising to see companies like Chobani or Dannon trying to acquire a spot. This increased demand of course can only lead to a higher price for that precious 30 second ad.
Source: http://www.sportsbusinessdaily.com/Daily/Issues/2012/02/01/Research-and-Ratings/SB-demos.aspx
Brian, it is interesting you note the 16% to 30% increase in Super Bowl viewership among households with income over $100,000. To relate this back to your note of the seemingly non-traditional Super Bowl ad war between Chobani and Dannon, Mintel shows us that the demographic you mention is a heavy consumer of Greek yogurt, making the Super Bowl a great place to reach these consumers given their increased viewership. It’s also interesting to note here that Chobani, arguably the company that started the Greek yogurt boom in the US, is struggling right now – making it critical that it asserts its company over Dannon at every opportunity. This could be the reasoning behind its latest advertising campaign, one that disparages Dannon and Yoplait yogurts for unhealthy, unnatural ingredients. Unfortunately for Chobani, a federal court has already ordered a stop to this campaign.
While its branding issues may be at fault for part of its business problem, strategy could also play a role. Chobani’s quick growth and increased economies of scale proved problematic when its yogurt was recalled in 2013 due to mold issues. Should Chobani have stayed within its means and not expanded faster than it knew how/was ready to, maybe it could have avoided its business drop off in recent years. Maybe this goes to show that increased economies of scale may not always be the best strategy for a firm, but it also brings up questions about the basic models we discussed towards the beginning of class. In this case it could be interesting to look at Chobani on these models as an example of the losses incurred by producers, consumers, and society when it is unable to maximize its productivity and profit.
Sources:
http://academic.mintel.com/display/745708/
http://adage.com/article/cmo-strategy/court-rules-chobani-halt-ads-stopped-running/302421/
http://nypost.com/2015/01/05/chobani-ceo-being-replaced-may-be-stripped-of-chairman-role/
I think it would be interesting to consider what other reasons a company may have to invest in a Super Bowl Ad other than increasing their profitability. Certain companies such Coca-Cola, Budweiser, Doritos, Honda, and Nike may invest in a Super Bowl Ad simply to further emphasize their brand image. Companies such as these have a strong association with the viewers of the Super Bowl and they may simply be investing in solidifying their brand versus competing for more of the market share.
Brian Morgan’s response below focuses on the social media aspect associated with companies advertising during the Super Bowl. I think your points here, Kelly, can also explain the larger presence of social media this year. Companies are not hoping on all platforms of social media to explicitly boost sales, but rather to solidify their own specific brand. It would be hard to exactly quantify the effects of a celebrity appearance on Vine with a company’s product with the sales of that product. I don’t believe many firms have employees looking at those data trends, but rather they know that advertising on social media is another way to solidify their brand.
Also it would be interesting to see if there is a domino effect in SuperBowl/ social media advertising. When one company starts tweeting their product, how likely is it and at what level will other companies begin to tweet.
Just to comment from a less than substantive point of view, I think that the Anheuser-Busch advertisements from the Super Bowl tonight really did just hone in on solidifying their brand image. The two that I found especially captivating were both for Budweiser – the first reminding viewers of Bud’s rich American heritage and the second giving a more serious, compelling anti drunk driving plea. The emphasis here would be that Bud is America’s most responsible beer.
However, on the other side of the argument, Bud Light did use their time slots to focus on their new logo, which seems to be a more boxy, less flashy block letterhead. I do wonder why Bud Light felt the need to change their logo, especially considering they doubled the sales of the nearest competitor in 2015 (Statista). So from the marketing side, though the Super Bowl provides a great medium to strengthen brand image, it also provides an equally as useful playing field to go bold and try something new. I guess only time will tell how Bud Light’s new logo works out.
Source:
http://www.statista.com/statistics/188723/top-domestic-beer-brands-in-the-united-states/
There have been a couple rebranding trends during the past 40 years, a great way to build a consulting business, a way to make your mark as a CEO, and safe too because it will be years to know if the decision was a disaster, a success, or just irrelevant. That is, this seems to reflect managerial discretion, not profit-driven strategy. I’m cynical that this narrower issue is amenable to the sort of economic analysis we do this term.
Do we really know how much an ad really costs? A company such as InBev AB has a multi-year contract for multiple “spots”, not just one ad of 30 seconds. I assume that they pay much less per 30 seconds (but buy a lot more than 30 seconds). In addition, some of these ads are elaborate plus employ celebreties – my hunch is that the production costs are much greater than the price that the NFL charges. Surely we should take that into account as economists (or as executives trying to decide whether to advertise).
very true. The $4.5 million cost was probably the base cost for a 30 second add ass set by the CBS. It would be interesting to see if AB InBev pays less per each of their slots as a part of their contract. The use of celebrities in production as another great example of brand identity at work. Their are a couple iPhone applications broadcasting TV advertisements recently portraying Arnold Schwarzenegger and Kate Upton as apparently avid participants of whatever game that is being advertised. In fact, I know the app promoted by Arnold Schwarzenegger had a full 1 minute ad during the super bowl. It’s just another case of a brand making an association between a entity or a person in order to improve the image of their brand.
Another important area that can be overlooked during the SuperBowl are social media platforms. The SuperBowl in 2015 was the most tweeted SuperBowl in recent history and there was an incredible amount of discussion (over 265 million SuperBowl related posts, comments and likes) on FaceBook. People want to know what their friends think of the game, who they’re watching with, who they’re rooting for, etc. Also, a lot of companies like McDonald’s and Ab-InBev included hashtags or encouragements in their ads for people to use during the game. This is essentially free promotion for these social media platforms and big events like the SuperBowl can help them gain members as well as make their companies part of the SuperBowl experience. While this promotion might not necessarily translate into revenue, if you show investors that you are growing and becoming more relevant that might influence your stock price and overall business sentiment. While the focus is mainly on companies who have ads, it may be useful to turn to the platforms where these ads are being discussed.
Source: http://www.marketingcharts.com/television/super-bowl-2015-advertising-viewer-attitudes-and-spending-trends-50857/
SuperBowl advertising, and all advertising, I suppose, has definitely become more social media focused in the last five years. I personally see social media as a greater means for smaller brands to grow product awareness, but I have noticed larger brands increasing their social media presence of late. However, measuring how much revenue is generated specifically from social media may be more abstract and difficult than measuring how much revenue is generated from television advertisements.
So how do you track the impact of an ad dollar when it’s no longer just direct viewers that you reach? Are those receiving tweets the same people who are watching the game? So is what matters the ad itself, or that through social media the same ad is seen and referred to again and again, keeping the brand name fresh in consumers’ minds?
If someone has taken a marketing class, please provide feedback!!
While maybe not as reputable as the study published by the Stanford Professors, in 2014, Communicus, a research based advertising consultancy in Arizona, studied the effectiveness of the 2012 and 2013 Super Bowl Ads.
Communicus found that Super Bowl Ads do better than other ads with similar gross-rating-point exposure in that the average consumer remembers the average Super Bowl ad better than the other ads.
Moreover, Communicus found that Super Bowl ads do better for newer products. However, it might be more difficult for new firms to afford the $4.5 million necessary for a 30-second time slot.
Source:
http://adage.com/article/special-report-super-bowl/study-80-super-bowl-ads-sales/290907/
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