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Return on investment is only one metric that companies consider when they decide to spend millions for a 30-second spot during the big game.
By Jabari Young
The number of Americans who watched the Super Bowl on TV last year fell 13% from the peak in 2015, but the average cost of a 30-second advertising spot has just kept climbing. This year, the retail price is a record $7 million. For Stacy Taffet, vice president of brand marketing for PepsiCo’s Frito-Lay, there’s a limit to what she’s willing to pay to run a Doritos commercial.
“But I don’t know what it is,” she told Forbes. “We haven’t gotten to it yet.”
For roughly four hours on a given Sunday every February, the time-tested rules of sound economics slide down the corporate priority list and the level-headed decision-making processes of marketing departments are tempered by the fear of missing out. It doesn’t matter if a company has to eat cold beans the rest of the year. The Super Bowl is the prom, and everybody wants to go.
“It’s something you look forward to all year,” Taffet said.
That doesn’t mean everybody should go. Deep pockets are strongly recommended. Forbes, with the help of analytics firms Kantar Group and Neilsen, has collected data for every Super Bowl since the beginning — which was 1967, before the name Super Bowl was even coined — and the ad rate has fallen year over year just four times in 57 years. The last instance was 2007, when the Colts beat the Bears. (That’s right, children, the Bears played in the Super Bowl.) In 1993, the average rate for a 30-second commercial, adjusted for inflation, was $850,000. By 2016, it was $5.4 million.
SUPER BOWL EYEBALLS
The number of TV viewers that advertisers reach per dollar spent, adjusted for inflation.
One arcane figure that accurately measures the growing cost against the declining audience is the number of Super Bowl TV viewers that advertisers reach per dollar spent. In other words, how many sets of eyeballs do the ads buy? Thirty years ago, in 1993, when the Cowboys beat the Bills, a single ad dollar, adjusted for inflation, paid to reach 52 people. In 2022, the same dollar bought 15 viewers.
The NFL and Fox Sports declined to comment for this story.
Some of the reason for ad rates rising despite this erosion in value, according to Peter Daboll, chief strategy and insights officer at iSpot, which measures the effectiveness of TV ads, has been the effectiveness of TV ads, or “image advertising.” At least on an emotional level. If that adorable little shelter puppy hadn’t made friends with the Budweiser Clydesdales, putting a lump in the throat of many a macho NFL fan, maybe the ad rate wouldn’t have jumped 16% between 2021 and 2022.
In the context of persistent puppies and empathetic horses, it seems almost ridiculous to talk about an advertiser’s return on investment, or ROI. For some companies, it matters. For others, vanity packs a stronger magnetic force. But on Monday morning, after the last “Did you see our Super Bowl ad?” phone call ends, the numbers tell the tale.
For an established brand like Pepsi, which uses the occasion as a “launching pad” for new products, the traditional measure of unit sales will determine ROI, according to Jenny Danzi, PepsiCo’s senior director of future brands. Automakers track things like website visits, Daboll told Forbes. And relative newcomers to the world’s biggest economy, such as Japan-based cash-back marketing firm Rakuten, will monitor website signups and customer retention, according to chief marketing officer Dana Marineau.
Rakuten, which said it enjoys 98% brand awareness in Asia, used last year’s Super Bowl to more or less introduce itself to North American shoppers, Marineau told Forbes. Rakuten had bought U.S. website Ebates for $1 billion in 2014 and rebranded the site to its name. The decision to spend ad money on the big game wasn’t hasty. Marineau said she started pitching billionaire CEO Hiroshi Mikitani in May 2021. Its February 2022 Super Bowl ad resulted in a sales increase over the next two quarters, a jump in brand awareness and an uptick in customers renewing their accounts, she said. Flush with that success, Rakuten is returning this year with a commercial that features characters from the movie Clueless.
What worked out well for Rakuten, however, didn’t deliver any mojo for cryptocurrency exchange FTX, which advertised during last year’s big game as a way of saying, Hey, we’re big, we’ve arrived.
FTX’s collapse since then wasn’t the result of its lavish spending on advertising on the only day of the year when a sizable chunk of the population tunes in just to see the commercials. It simply meant that when FTX imploded in scandal and bankruptcy, a lot more people had heard of them.
Fox Sports said no cryptocurrency-related companies will be advertising this year. Even without them, the ad spots are sold out.
Prices vary. Rakuten’s Marineau said she took advantage of a bargain that Fox Sports was offering — sign up for a spot in June and get a discount on ad time. The cash-back company got cash back.
The $7 million average figure makes Marineau giggle. “Not what we paid,” she said. “Not even close.”
If Rakuten had to shell out the full freight of $6 million to $7 million for 30 seconds, Marineau said that wouldn’t be money well spent. “That’s not thoughtful, sophisticated media and marketing planning,” she said.
Thoughtful? Sophisticated? This is the Super Bowl we’re talking about here. As former CBS Sports president Neal Pilson put it, there’s no other way to reach so many sets of eyeballs, and even if 15 viewers per ad dollar spent is historically low, that’s just one consideration in a company’s decision whether to dance at America’s prom.
“The number crunchers,” Pilson told Forbes, “they don’t make these decisions. They just provide the information. It’s your leaders in the industry who decide whether it’s worth it or not. People say, ‘The numbers don’t support it.’ The leader of the company says, ‘Yeah, but I was on the Super Bowl and you weren’t.’”
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Source: https://www.forbes.com/sites/jabariyoung/2023/02/12/super-bowl-ad-rates-are-rising-viewership-is-falling-yet-advertisers-are-still-spending-like-crazy/