Is $5M per 30 seconds worth it?

George Cook - Guest Column

CBS has indicated that most of the Super Bowl 50 ad time is nearly sold out — at an astonishing $5 million for a 30-second spot, or $ 166,667 per second. The cost of the 30-second ad has been spiraling upward from $37,000 in Super Bowl I to $5 million for this year’s ad extravaganza.

But do the companies running these ads — and in some cases using their entire yearly ad budget — really understand the R.O.I. (return on investment) associated with such lavish spending?

Is it worth it? It depends on your objective(s) and how you measure success. Super Bowl 50’s estimated audience is projected to be upward of 115 million. This is clearly a “world stage” for advertising, attracting a very diverse audience .

Objectives of ad time on the Super Bowl include introducing a new product or brand or introducing a new ad campaign. But it is extremely hard to prove that sales are initiated directly from a Super Bowl commercial.

Some advertisers like to measure R.O.I. for their commercials in terms of cost per viewer — pulling in the vast audience that watches the Super Bowl both domestically and internationally. For last year’s Super Bowl, the Television Bureau of Advertising estimated that a 30-second spot cost of $4.5 million, not including production costs, equated to 2.5 cents per viewer. OK, low cost per viewer, but does that translate into eventual sales and market share for the firm?

Many of the Super Bowl ads do receive a longer life as they have been extended to a regular or primetime TV spot post-Super Bowl as well as a life extension on social media.

Another look at the R.O.I. question, based on a study for the NFL, has claimed that sales data from several of the big game’s advertisers see an average sales improvement of more than 11 percent the following month. This allegedly generates an ROI “250 times” greater than ROI from the normal TV ad.

Yet another study indicates that “major brands” often see big returns with their Super Bowl ads, like Budweiser, in the area of 172 percent!

But the real measure of a Super Bowl ad surely isn’t to determine how much it makes you laugh or cry, but whether it enhances the brand with an improved R.O.I. There are many doubters. In fact, some studies indicate that as many as 80 percent of Super Bowl ads do not increase sales and that viewers even have a hard time in recalling the commercial itself.

Professor Ira Kalb, University of Southern California previously wrote in the Huffington Post, “They cost a lot and produce questionable returns to those that pay for them!”

Over the past 2-3 years, with some exceptions, the Super Bowl ads have been a bit underwhelming. Many of the ads would have been more appropriately placed during regular TV time. Marketers are not normally considered to be entertainers, and while highly rated Super Bowl ads, due to their entertainment and creativity, may long be remembered, the end goal has to be: Did it end up having a positive impact on the firm’s sales, profits, market share and ROI goals?

But certainly few can forget the classics: Budweiser Clydesdales, and the Frogs; Chrysler, “Imported from Detroit”; the Xerox ad “It’s a Miracle!”; The Doritos consumer-developed ads “Crash the Super Bowl”; and who can forget VW’s “The Force” ad with a younger Darth Vader!

For Super Bowl 50, we can expect many of the regulars to return: Anheuser-Busch/In Bev; Coca Cola; Doritos; Pepsi; and several of the automotive companies. But will it be significantly different from the most recent Super Bowls in terms of quality, entertainment and fun? We will have to wait for USA’s Ad Meter evaluation following the game and the overall ad rankings by viewers.

Will there be buzz and PR value? Probably, but in the final analysis, companies and those keyed in on the firm’s annual ad budgets will be looking at business results – sales, market share improvement and perhaps most important – R.O.I.!

After all, isn’t this the set of metrics that we should use to determine the return to the business on our business expenditures?

Author’s note: Some of the information contained in this column came from various recent articles on the Super Bowl.

George R. Cook, a Wilmington resident, is former Executive Professor, Marketing & Psychology, Simon Business School, University of Rochester.

George Cook

Guest Column