Why are Super Bowl commercials so expensive

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Are Super Bowl commercials worth it

When tuning in to the Big Game on Sunday we are pretty much just as excited for the game itself as we are for the Super Bowl commercials. Over the years, they have become an integral part of every Super Bowl weekend and something worth looking forward to.

When looking at the Super Bowl commercials costs though, I wonder if its entirely justified. Shelling a couple of millions for a 30-second slot seems like a whole lot of cash. Companies do get to see their ads displayed in front of over 100 million viewers in the US and a couple millions abroad though.

Are Super Bowl commercials still valid marketing tools that net sales or have they become more of a status symbol for a particular company or brand?

Premium price tag for Super Bowl commercials

We’ve seen all kinds of commercials during the Big Game. We remember them for different reasons too.

We all remember the iconic 1984 Mac ad. The same goes for the Bud Super Bowl commercials. And it’s not all about the big brads too. The Super Bowl commercials from Old Milwaukee featuring Will Ferrell made quite the ruckus two years back, even though it ran only in Nebraska.

There were also a couple of Super Bowl commercials famous for the criticism they got. One of the recent examples in this category is the melting pot Coca-Cola commercial from last year that got slammed for showing people performing the patriotic “America the Beautiful” in multiple languages and not English only. However, it still turned out to be a pretty good move for Coca-Cola as it got twice as many positive reactions as the negative ones, with people defending the message behind the ad.

There are also the GoDaddy Super Bowl commercials, especially the one from 2013 featuring Bar Refaeli and Walter as the two sides of the service that got a lot of flack for an extreme close up of the pair making out. In spite of the negative comments, GoDaddy’s sales skyrocketed after the ad was aired.

No matter the reason these Super Bowl commercials were popular, all of them share some common ground – the ridiculously high price tag.

The costs associated with Super Bowl commercials have been steadily going up with each following game. As of 2014, Fox, who hosted the Big Game last year, was asking for around $4,000,000 for a 30-second commercial. A one minute spot went for double that prize.

This year, the price will go even higher. NBC has set a price tag of $4,500,000 for the 30-second Super Bowl commercials. And all that just for the spot.

Add a couple millions for production, a couple more for stars to perform in the commercial and it might dip well into double figures.

A necessity or a necessary evil

Is it wise to spend so much on a single event?

Some people believe that Super Bowl commercials directly increase the bottom line. A company should simply sell more. Apple is an example of a company that did just that: they sold 90 percent more product after airing their 1984 commercial.

A company can still benefit from well-executed Super Bowl commercials even if they don’t result in more direct sales. The thing that benefits the most in this case is your brand image, something that has no immediate effect on sales but impacts them in the long run nonetheless.

What’s the verdict then? Are the ads worth their cost? It all comes down to competition.

It appears that tough competition can lead to a loss on Super Bowl commercials. Wesley R. Hartmann from the Stanford University and Daniel Klapper from Berlin’s Humboldt University prepared an in-depth analysis of the the effectiveness of Super Bowl commercials. In the study, they concluded that the Big Game ads can lead to considerable gains if the competition opts out of showing their ads.

When two or more brands compete with similar products like, for example, Pepsi and Coca-Cola, they are expected to lose more from airing a Super Bowl ad than from opting out of the competition.

On the other hand, when there is no competition, the return on investment of a Super Bowl commercial from a soda company can range from 20 percent to as much as 258 percent.

One way of dealing with competition is becoming the exclusive advertiser in a particular category. For example, Budweiser has been the exclusive beer advertiser for over 20 years. Hartmann and Klapper estimate that the ROI for Budweiser Super Bowl commercials may be as high as 172 percent.

No matter what the companies end up earning, it’s always a win for the consumers. Even if the ads won’t sway them to buy something, the Super Bowl commercials are always fun to watch. And it seems that the 2015 Super Bowl commercials won’t be an exception. Have a great game everybody!

Photo courtesy of Kevin Schraer via Creative Commons.


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