Super Bowl advertisers crowd the field in hopes for big returns
Friday, January 27, 2017
As the Super Bowl has grown in its significance as a sporting event, it has emerged even more as a national and cultural attraction. Where you draw a crowd, you can draw business.
The NFL has learned this lesson well, as have its television partners. But they're not the only parties making money off what has become America's biggest undeclared national holiday. The return on investment might not always add up, but that doesn't prevent firms from attaching themselves to the big game.
Players on the winning team will get nearly $100,000 each for a victory in the Feb. 5 contest between the Atlanta Falcons and New England Patriots, but that's chump change compared to some of the other payouts involving Super Bowl LI.
The league's three network TV carriers (CBS, Fox, NBC) and cable network ESPN paid at least $1 billion each per season when they negotiated their nine-year deals that run through 2022. The networks get the Super Bowl on a rotating basis, with Fox carrying the game this season.
The price for a 30-second commercial on this year's broadcast is about $5 million, more than doubling the $2 million per 30 seconds that it cost to appear on last year's broadcast of the Academy Awards, another iconic presentation. If the number of ads compares to those in the 2016 Super Bowl broadcast, Fox could reap nearly $250 million, according to Sports Illustrated.
On AdWeek Magazine's website, an entire webpage — called The Big Game — is dedicated to advertising attached to the game, with links to articles on topics ranging from the content of commercials to advertising strategies.
One of the groups that makes big money off the first Sunday in February is advertising agencies. Companies can spend millions to get their message out to a television audience that easily tops 100 million viewers each year. In fact, the Super Bowl holds 19 of the top 20 places in the list of most-watched network TV broadcasts of all-time, with only the final episode of the comedy series "M*A*S*H" breaking the NFL's stranglehold.
That's an audience that advertisers crave.
The game has come a long way as a commercial entity when you consider that CBS and NBC, which simultaneously aired Super Bowl I between the Green Bay Packers and Kansas City Chiefs in 1967, erased the tapes of the game.
There's money to be made outside of advertising and retail, though, with even research tapping into the game. Studies have been conducted in areas such as viewership and advertising.
Three researchers at the University of California — Seth Stephens-Davidowitz, Hal Varian and Michael D. Smith — undertook a study to determine whether companies bought ads without knowing which teams would play in the game, and whether more viewers came from competing teams' home cities than from other places.
Stanford University researchers Wesley R. Hartmann and Daniel Klapper took on the effect of Super Bowl advertising in a study released in 2015. In it they determined that "Super Bowl ads can generate significant increases in revenue per household." They also took into account competing brands, concluding that "when two major soda brands both advertise, much of this gain is lost."
For major brands, staying on the sidelines isn't an option, in part because of the notice that competitors could gain. For executives at companies in highly competitive fields such as beer maker Anheuser-Busch or soft drink manufacturer Coca-Cola, the decision to link with the Super Bowl keeps their names in the game, so to speak.
That way, competitors can't get a leg up, Fluent CMO Jordan Cohen told Fortune. "You don't want to take that risk," he said.
First-time advertisers face a different decision, though. With the number of ads climbing to 96 for nearly 50 minutes in 2016, brands can get lost in the shuffle, according to a report by Kantar Media. But that doesn't stop rookies.
Last year, 23 percent of parent companies were represented in the Super Bowl for the first time. Among first-time advertisers over the past decade, though, 60 percent skipped the Super Bowl the following year, Kantar reported.
Regardless of who wins the game, money is changing hands in early February. The advertisers are hoping it's headed their way from viewers' wallets.
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