Rafi Mohammed

$2.6 million for a 30 Second Super Bowl Advertisement…The Best Bargain in Marketing!

Posted on January 24th, 2007 (1 Comments)

With online advertising booming and demand lightening for traditional television spots, a friend of mine recently called in a tizzy – he needed to “vent” about the price of Super Bowl advertising spots (my friends rarely call to see how I’m doing, instead they tend to start off their conversation with “here’s a pricing idea for you”). A 30 second spot on Super Sunday will cost as much as $2.6 million, with the average commercial being $2.2 million. My friend could not believe that anyone would pay so much for a 30 second commercial. His sentiment is echoed in an annual media ritual. Every year around this time, the media blasts the price of a 30 second Super Bowl commercial in bold headlines and we all shake our heads in disbelief and think “that’s crazy.” I’ve done a little investigation and guess what, Super Bowl ads may well be one of the best bargains in advertising today.

The Super Bowl has done an incredible job of getting viewers to watch, even enjoy, commercials. What other television event has hooked viewers into actually wanting to watch commercials? Commercials are a part of the Super Bowl – we actually look forward to them and talk about them the next day with our co-workers. A 2004 HarrrisInteractive survey found that 92% of Americans that watch the Super Bowl “like” the commercials. To my friends at the National Football League…Bravo! Brilliant! As Pat DeGraba, my “economists’ economist” friend, pointed out – why haven’t other major television events like the OSCARS made a play at being the place to broadcast and watch innovative commercials? As always, Pat asks a great question.

I know many of you are thinking, “Rafi, Show Me the Advertising Money, Show Me the Advertising Money!" Okay, here we go. Let’s use online advertising as a base to gauge the value of a Super Bowl commercial. According to industry sources, the cost to reach 1,000 viewers for a banner ad on a major portal like Yahoo is roughly $35. Last year, 90 million people watched the Super Bowl in the United States. Let’s say 2/3 of these viewers (60 million) actually watch the commercials. To reach these 60 million people via a banner ad on a major portal, the cost would be $2.1 million (priced at $35 per 1,000). We are just starting our analysis and we’ve practically covered the cost of the Super Bowl commercial!

Value Decoder Analysis for a $2.2 million Super Bowl Commercial

1. Reach 60 million viewers: $2.1 million (relative to online).

2. Reach viewers interested in watching a commercial vs. the blasé of another Internet banner: Very Valuable.

3. More effective commercial (30 second television spot vs. banner): Very Valuable.

4. Other television shows (e.g., NBC’s Today Show) may feature your spot in their “Best of Super Bowl Ads” segment: Very Valuable.

5. Media stories about your company advertising in the Super Bowl: Very Valuable.

6. Web sites, like USA Today, may show your commercial to their readers: Valuable.

7. Water cooler talk about your commercial: Valuable.

8. Viral marketing: friends e-mail your web site link to others to check out your commercial: Valuable.

9. Improved company morale from advertising on the Super Bowl: Valuable.

10. Tickets to take your best clients or employees to the Super Bowl: Valuable.

In all fairness though, the production costs of a Super Bowl commercial are high (relative to other television or Internet spots). But even with these increased costs, when you take into account all of the benefits of advertising during the Super Bowl, the $2.2 million price seems like a real bargain! CBS, you ought to really start doing a Value Decoder Analysis…I think you have hidden profits.

Of course some things associated with the Super Bowl may be a bit over the top. To the guy that is hoping to buy a 30 second Super Bowl advertisement to propose to his girlfriend…I hope she says “YES!”

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Readers' Comments on This Blog Entry

From Ron Stair on January 19th, 2009
This year you will not reach 60 million viewers. Who wants to watch Arizona and Pittsburgh? People who live in AZ or Pitt - and only half of them will be interested at best. So you will reach 2 million viewers. Thus, you are spending over $1 per person to get word out on your product. Furthermore, most of these viewers are unemployed or worried about becoming unemployed so they are not going to spend money on your product. Further food for thought: If the auto industry is paying this kind of money for ads then congress really needs to reconsider whether they needed the bailout.