Why Super Bowl Ads Are So Expensive

mag813 January 24, 2017 0
Why Super Bowl Ads Are So Expensive

The Super Bowl is the world championship of American football, but it’s also US culture’s premier marketing opportunity. Nine of the top 10 most-watched American television broadcasts of all time are Super Bowls, a list that is composed of the nine most recent games plus a M.A.S.H. special from 1983. That makes the game a unique chance for brands to put their message in front of a wide audience, a level of exposure that comes at a steep price — $5 million for a 30-second spot this year, a 76 percent increase over a 10-year span.

This naturally leads to the question: Is it worth it? Ad buyers consistently answer yes, but their enthusiasm for the big game is increasingly difficult to square with the basic math of audience growth.

Ad prices are growing much faster than audience

The $5 million Fox is asking for a 30-second spot during this year’s game is the same as last year but still represents a 10 percent hike from two years ago, while the audience has grown for years at a bit less than two percent. That’s no knock on the NFL’s appeal; it simply goes to show that pro football has already saturated the American marketplace and can’t really grow much faster than the national population.

The tendency for ad prices to outpace audience growth, however, isn’t remotely new.

As Eric Chemi showed several years ago for Bloomberg, viewership has essentially tripled since the first Super Bowl in 1967, while ad rates have grown a hundredfold.

The case for Super Bowl ads rests on the game’s unique mass

This means the case for spending money on Super Bowl ads can’t rest on the size of the audience alone. Once upon a time, the big game may have been a good buy in terms of price per viewer, but those days are past us. Today, the argument for Super Bowl ads rests on the idea that the game’s large audience is unique. It’s not just the most-watched thing on the annual television calendar; it’s the most-watched thing by a large margin.

In the first couple of decades of the Super Bowl’s existence, mega audiences for television were common.

There were only three nationwide commercial broadcast networks, so any hit television show would, by definition, reach a very large fraction of the public. Finales of beloved series or widely publicized special miniseries (Roots, for example) would obtain especially vast viewership. Then, starting in the 1980s, along came cable, Fox, audience fragmentation, and the ability to record a show at home rather than watching it live.

Over the course of the 1990s these trends all continued, and they were joined in the 2000s by user-friendly DVR technology, on-demand video, and competition for attention from gaming and the internet.

The Super Bowl is the king of live events

The result has been an enormous structural decline in the audience for television programming, especially anything that doesn’t demand to be watched live. The industry has responded, in part, by producing more live spectacles, but the main beneficiary has been live television events that were already popular — mostly sports, and especially the Super Bowl.

An ad that premieres during the Super Bowl will be seen simultaneously by a huge swath of the public in a way that simply nothing else will. That’s not a value proposition that appeals to every company, but a critical minority of companies are interested in it, and those who do have only one place to go to buy it. And each year they’re willing to pay more and more for it.

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