Is a 30-Second Super Bowl Ad Really Worth $4 Million?

Americans will gather 'round the replacement for a family hearth this weekend - their flat screen tvs - in order to celebrate their most popular secular holiday: the Super Bowl.

The numbers are powerful: 85 percent of Americans will watch, mostly with family and friends. Police report that crime rates decline precipitously during the telecast. Pizza-makers and other home delivery businesses report that it is their single highest volume business day of the year. Every year.

And 78 percent of Americans polled - an all-time high - report this year that they look forward to watching the associated commercials for which this televised event has become famous.

Advertising rates have increased dramatically as a result. Growth of as much as 38 percent in the last four years - a time during which the economy suffered through the worst economic downturn since the 1930s.

But as the accompanying chart shows, there is a downside to the upbeat news: just about every American who wants to watch - or can watch - is doing so. The US National Football League is well aware of the demographic trend and is attempting to increase foreign interest. Curiosity is high, but building sustained viewership is slow.

The question this raises is whether the game can continue to justify the prices charged for a typical 30 second spot, which costs $4 million this year. The pessimists argue that though viewership has tripled, ad rates are up a hundred-fold since the first Super Bowl in 1967.

The law of large numbers dictates that it may be difficult to justify this and future years' potential increases because growing viewership is going to be challenging and the quality of the audience measured in terms of ability to purchase what is being advertised has already suffered serious adulteration.

The optimists remind us that in an age of competing technologies, consumer attention deficit and unreliable loyalties, this remains the largest human (or perhaps we should say primate, given the number of ads designed around animals) gathering focused on one event.

The answer may be that the intangible benefits of building long-term name recognition and reputation far outweigh the traditional metrics associated with ad-driven sales of products. But audience growth may become a self-limiting factor at some point - unless the NFL is willing to underwrite NASA's space exploration efforts in search of new markets. JL

Lucy Farey-Jones comments in Fast Company:

In adland there’s been a lot of hand-wringing lately that Super Bowl advertising is a waste of millions. The average cost for a 30-second spot has risen 38% from 2010 to a gut-punching $4 million
However, I’d like to argue the exact opposite; there has never been a better day in history to spend your marketing dollars. And here’s why.
Critics simply aren't taking into consideration the new age of media consumption. As we are all aware, collective viewing experiences overall have taken a nosedive. Breaking Bad made headlines for its season finale that attracted 10.3 million viewers--the highest viewership of any show in 2013. But a look back in time shows the demise of collective viewing. The 1983 M*A*S*H finale? 105.9 million viewers. Seinfeld's 1998 swan song? 76.3 million viewers.
As the chart below shows, there has been a precipitous decrease in collective viewership of major network events (even the Oscars). The Super Bowl stands apart in sharp contrast.

With a Super Bowl spot, brands are buying a rare opportunity to address the nation. My agency Venables Bell & Partners has witnessed this first hand in our experience creating Audi’s seven consecutive Super Bowl spots and our Super Bowl study (which has annually polled 1,000 Americans) quantifying the growing appetite for big game ads over the past five years. In 2011, our survey indicated 59% of Americans were looking forward to ads, but in this year’s study we hit an all-time high of a heady 78%. This year our study also indicates the ads will take center stage, as viewers are just as likely to talk about the ads as they are the plays.
The psychology behind this collective viewing event makes the potential for brands even greater. With 85% of Americans gathering with friends and family to watch the Super Bowl, the conversation about ads is a hot topic and many want to arm themselves to be "in-the-know." We found that 70% will pay attention to ads before the game, with almost half (45%) actually seeking out ads before kickoff--marking a 350% increase in our study since 2010. This goes to show that pre-releasing ads pays off. In fact, YouTube just announced that ads for the Super Bowl were watched on that platform more than 80 million times before the game was played, and overall, ads uploaded to YouTube before the game generated about 3.4 times more views on average.
Not only is it about pre-game excitement, this media buy is one that keeps giving--Super Bowl ads leave behind an increasingly massive digital footprint. In fact, Facebook announced that “Super Bowl” was the most talked-about term in 2013. Furthermore, in our study more than half of America said they would re-watch their favorite ad (another all-time high), thus proving the value of the buy. 36% of survey respondents told us they will share their favorite ads this year, with 77% sharing via Facebook. Which, if you do the math, means with 108.7 million viewers and the average Facebook user having 130 friends, this could have the potential to yield an additional 3.9 billion impressions for advertisers.

The idea that marketers are paying $4 million for a mere 30-second commercial misses the point. While it’s virtually impossible to measure the immediate sales impact of one spot, $4 million now buys you the attention of a nation willing to listen, and waiting to share, which is really remarkable when you consider that almost half of homes have DVR. Can adland really put a price on that?