The Super Bowl From Business Side
The cost of a 30-second commercial spot during the Superbowl has risen to a record high of $5.6 million. Despite this exorbitant price, ad space for the Superbowl is in continued demand at a time when the television advertising industry as a whole is slumping.
More than 100 million Americans are expected to be glued to their televisions on February 2 when Superbowl LIV kicks off at the Hard Rock Stadium in Miami, Florida.
In recent years, the commercials that occur during the Superbowl have become almost as big as the game. Brands of all types spend millions of dollars in the weeks and months leading up to the Superbowl in hopes of seeing their Superbowl ad separate itself from the pack and be identified as a Sunday’s best.
Doug Gould is an advertising veteran who spent more than 30 years working in the industry. He is perhaps best known for his work as a creative director for the Budweiser brand and the two award-winning Superbowl Ads to which he contributed. Gould says the industry itself has propelled the explosion of the Superbowl ad phenomenon. Gould explains that advertisement professionals realized at some point the number of eyes that were on the Superbowl and decided it was a must to be included in the event.
The power of the captive audience delivered by Super Bowl programming is evident in the constantly growing cost of advertising during the program. Fox charged at least one company $5.6 million for a half a minute advertising spot for this year’s game. This number is seven percent more than the cost of the most expensive commercial spot for the Super Bowl a year ago.
Bucking the Odds
The rise in the cost of Super Bowl advertising goes against the norm for an industry that has seen the increase in streaming platform popularity negatively affect its advertising revenue. In fact, the four largest television networks saw a decline in the demand for advertising on 62 percent of the series they produce.
Gould says that while the number of eyeballs provided by the Super Bowl is the main reason for its popularity with advertisers, another factor is something that is a little more human in nature: The need to be seen. Gould says many brands on the brink have decided to pay the cost for Super Bowl advertising due to their willingness to pay for the right to say “they were there.”
With many companies transferring a bit of the money they previously spent on television advertising to the internet, expenditures on television advertising fell three percent in 2019 and for the first time represent less than 30 percent of total advertising spending in the country.
The decline in total sales for television ads has not affected the Super Bowl. All spots of ads during the NFL’s biggest game are usually sold out by either Christmas or not too far past the new year. This year, Fox was able to sell all 77 Super Bowl ad spots that were available before Thanksgiving.
Gould says that the changes in the way Americans search for entertainment is making it more and more difficult for advertisers to find the “looks” they desire with television advertising. The exception to this rule is when there are major sporting events or disasters like earthquakes, hurricanes, or mass shootings.
This fact, along with a strong economy, makes the prices being paid for Super Bowl ad spots possible.
Making the Ad Count
The first part of the equation for companies is to purchase Super Bowl ad space. These companies then employ some of the best creative minds possible to help ensure the price paid for advertisement pays dividends.
Gould is now a professor at Boston University. He knows a little about crafting successful Super Bowl ads after collaborating to craft the 2002 “Respect” ad for Budweiser that AdAge Magazine named the third best Super Bowl commercial ever. Gould says the key is creating something that will stand out among the many great efforts by advertisers for the Super Bowl program each year.
The following is a sample snippet from an interview with Doug Gould:
Tell me about your experience in the industry, and with Super Bowl ads in particular?
I’ll give what I can without taking too much time. So I spent 34 years, agency side, with nearly 16 of those years at an agency in Boston by the name of Hill Holliday. I moved up through the ranks there and wound up ultimately as an SBP creative director before I left in about 2011, I think. So I’ve been at big agencies, small agencies, and agencies in the middle, and Hill Holliday was the biggest that I worked at. It was there that we worked on – the agency worked on – the Anheuser-Busch as a client. And my creative partner and I produced two consecutive Super Bowl spots for them as members of Hill, Holliday. One of which was known as the 9/11 spot, but that’s not the title of it. And that is on AdAge’s list of the top 50 spots in the 50-year history of Super Bowl advertising, and it’s in the top 5 of that list. And then the second one we did was a comedic one – so the first one was serious the second one was comedic – and that one was the zebra as a referee – it’s called ‘Replay.’ That one won the USA Today poll so that one took the first spot in the competition. And that one actually wound up on USA Today’s list, which was consumer generated – that wound up in a competition, they had this sort of play-off for the best Super Bowl spot of all-time, and that one wound up in the top five. So both spots are on two different lists, but neither on the same, isn’t that something?
What is it about the Super Bowl that makes it so much more expensive?
The eyeballs are primary. Again – it’s a guaranteed audience of X million – whatever that number is going to be this year. So that is the primary. The business of the business is the more eyeballs you get the more you should pay. So that part makes sense – that’s the technical answer. What’s the non-technical answer? What else drives price? The same thing that makes us buy $150 jeans or pay $100 for a hamburger that’s made of a particular cow that nobody’s heard of before that comes from Japan versus one that costs $15 – and you can’t tell a huge difference, other than someone says this is better. So the other thing is the human element, which is the desire, the need to be seen and paying for the most important real estate for the sake of saying you were there. So, those two things – the tangible and the intangible.
What kind of returns will people be expecting from their $5.6million?
Boy, I’ll give you a bit of a nuanced answer there. There are companies that have blown their entire marketing budget on a single spot, and the returns on that better be dynamic as hell. In other words – if you’re spending that kind of money as a CMO, and you’re rolling all the dice on one play, you better have your measurables in order in advance. In other words, if we’re going to spend all our money on this, if we’re going to spend X, then Y is the results that we have to have. That puts an awful lot of pressure on a single commercial. So today, where there are so many measurable metrics of success, if you’re doing it you should guess those out in advance and be conservative. Don’t overplay your hand – I’ve heard way too many clients think they have the greatest commercial ever only to find out that the rest of the world doesn’t care, and then quite the opposite. So the second half of that is, if you’re a company like Anheuser-Busch who puts money all over the table and, you know, I think at the time we did our commercials they were running as many as 10 spots. They’re putting so much money on the roulette wheel that the chances of them winning were significant. So if you have that kind of money it’s less important which one everybody loves, it’s just important that people love some. So it depends on who you are.
Joseph is a long-time sports betting enthusiast based out of New York. He loves the Jets and is happily married with 2 kids.