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As the sponsor of this year’s half-time show, Pepsi has created an ad and social-media campaign around Beyoncé.
As the sponsor of this year’s half-time show, Pepsi has created an ad and social-media campaign around Beyoncé.

Why companies pay big bucks to advertise during the Super Bowl Add to ...

Must-see-TV is largely a thing of the past: Very few of us gather around glowing boxes in our living rooms at an appointed time to see the same program any more. And that is why a tract of airtime during Sunday’s Super Bowl is such valuable real estate for advertisers.

Thirty seconds during the CBS telecast in the U.S. reportedly costs $3.8-million (U.S.) on average this year – up significantly from $3.4-million last year, itself a major jump from 2011. Every year this growth raises questions about whether such a massive advertising spend is worth it. But there is another question in the numbers: Why are Super Bowl ad prices seemingly in a bubble that never bursts?

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One quick explanation is the way audiences have changed. The predicted mass exodus from television in the tech age has not happened in force yet, but audiences have been fragmented. There is simply more TV out there – and that means fewer occasions when everyone gathers around to watch the same show. That makes the Super Bowl’s reach – more than 100 million viewers in the U.S. – even more mouth-watering for advertisers. (In Canada, it is still a major event but because football is not as popular here, the enthusiasm from advertisers has never matched the frenzy in the U.S.)

People watch it live rather than taping it and fast-forwarding through commercials, and a large proportion of those viewers actually want to watch the ads.

“The Super Bowl is countertrend,” said Alan Middleton, a marketing professor at the Schulich School of Business. “There’s very little on the networks these days that gives blockbuster audiences.”

The history

It wasn’t always this way. The Super Bowl’s immense popularity is nothing new, but observers say that 10 to 15 years ago, commercials were not as hyped up as part of the main event as they are now.

“Newspapers and magazines are talking as much about commercials as the game,” said Gary Carr, senior vice-president and executive director of national broadcast for media buyer TargetCast TCM. “Commercials weren’t the big thing [before then].”

The price of a 30-second ad rose slowly for years, Mr. Carr said – it was $500,000 in 1985 but took another decade to reach $1-million. But more recently – aside from the most recent economic downturn, which also hit Super Bowl ad prices – the cost has risen much more rapidly. In just three years, it has gone from roughly $3-million to $3.8-million.

“Marketers have decided, in turn, ‘if I’m going to spend all this on a spot, let’s make a really blowout commercial,’ ” he said. Witness, then, the use of celebrities – such as Korean pop star Psy, who will be featured this weekend in a commercial for Wonderful Pistachios.

There were some blowouts before the frenzy of more recent years. An iconic ad, which went a long way toward cementing the Super Bowl’s blockbuster status as a vehicle for water-cooler advertising, was of course Apple’s 1984 spot for the launch of the Macintosh computer.

The dystopian vision of an Orwellian future in the ad was disrupted by a woman hurling a hammer at a Big Brother figure on a vast screen. The tagline said that Apple would show “why 1984 won’t be like 1984.” The budget was big – especially for a commercial that only aired nationally once (now a norm for many big game spots.) But the investment was worth it: Apple recouped the cost of production and broadcast in its first afternoon of sales.

The digital relationship

For a few years now, advertisers have released either teaser videos or the full commercials online in advance of the big game broadcast, to help build buzz for the main (televised) event. This year is no exception, with spots from advertisers such as Mercedes, Volkswagen, Coca-Cola and Axe already attracting attention (both positive and negative) online. But there is a reverse relationship also on the rise: Televised ads are now used as conversation starters for wider campaigns online and in social media, that companies hope will engage consumers beyond a tiny slice of television on Sunday evening.

Coca-Cola is running a “coke chase,” asking fans to vote on their favourite team in a fictional desert race, for example. And PepsiCo is kicking off the first in a five-year deal this Sunday as name-brand sponsor of the halftime show, but began using that Super Bowl affiliation more than a month in advance, with a contest that asked viewers to submit photos that would help build a crowdsourced video to welcome Beyoncé to the stage. The pop singer also lent her own brand value, asking fans on social media to participate. Pepsi needed 1,000 submissions to make it work; it received more than 100,000 – all from people who have had their eye on Pepsi long before halftime.

“We look at social metrics and what’s driving communication,” said Eric Fuller, director of marketing for Pepsi in the U.S. “We’re looking to build real value. ... It was really, how do we get a lot of longevity out of the campaign?”

Supply and demand

Of course, some have questioned the value of spending so much on a single event. General Motors Co. is sitting out the game, and former chief marketing officer Joel Ewanick declared last year: “It’s getting to be too expensive, where enough is enough.”

But plenty of other advertisers, including many of GM’s competitors, are still in the mix. Those include some Canadian companies making their first foray into the U.S. broadcast: Research In Motion Ltd. is hoping to gain some American market share and build excitement for the new BlackBerry 10, and Montreal-based T-shirt manufacturer Gildan Activewear Inc. is trying to make its mark in sports apparel.

“It’s strictly supply and demand,” Mr. Carr said. Even though an advertiser could buy 40 spots in prime time over the course of a year for the price of a Super Bowl spot, the game continues to sell out. Pending a major dip in the economy, he predicts that will not change. “Advertising dollars follow the audience. As long as TV is what it is and the marketplace remains fragmented ... money will keep chasing it.”

For example, this Sunday will mark the ninth Super Bowl broadcast that GoDaddy has shelled out to be in the game (though this year is the first time the company is using an ad agency to produce a spot). Before it became known for Super Bowl spots that used adolescent humour, suggested nudity, and dippy sexpots to gain attention, its market share on new Web domain names was just 16 per cent; now it is over 50 per cent. Not all of that growth, of course, is attributed to the Super Bowl. But the commercials have been a big part of the expansion, said Barb Rechterman, GoDaddy’s senior executive vice-president and chief marketing officer.

“They’ve made us a household name,” she said.

Still, not everyone believes the price can rise at this pace forever.

“Is there going to be a tipping point downwards? Yes,” Prof. Middleton said. “Have we reached it yet? Probably not. But I think it will come.”

 

 

AVERAGE COST FOR A 30-SECOND AD

 

$2,385,365 2007

$2,699,963 2008

$2,999,960 2009

$2,954,010 2010

$3,100,000 2011

$3,442,752 2012

Source: Neilsen

Follow on Twitter: @susinsky

 

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