The real reason Super Bowl ads are so expensive

Business, Money, News, Sports

[Note: This article has been updated since original publication]

The Super Bowl is the ultimate American sporting event—a culmination of 16 long weeks of regular play and several more weeks of nail-biting playoff action. Accordingly, advertising during one of the top broadcasts of the year has long been pricey, if not downright exorbitant. But, at $5 million for one 30-second spot (or even going all the way to $5.5 million), and with viewership for NFL games down this year, many wonder if the price tag is finally getting a little out of hand.

However, given the larger value of Super Bowl exposure, there’s a reason companies pay such a ransom for airtime: it’s worth it.

Breaking it down

The situation is pretty simple, really. Ask any Economics 101 teacher, and they will relay this equation: limited supply + high demand = higher prices. Clearly, when it comes to Super Bowl advertising, that equation applies. Supply (commercials) is limited to just a handful of spots—roughly six or seven at most—during each TV timeout. Demand (viewership) is at record highs, with over 111.9 million viewers tuning in last year for the Broncos-Panthers matchup.

Hence, with the limited number of spots available, and the potential brand exposure enormous, networks know they can charge a massive premium.

But there’s something else going on. By comparison, extremely popular prime time shows—think The Big Bang Theory or Empire – also command a hefty advertising price tag. But they are nowhere near the Super Bowl. Take a look at some of the 2016 advertising rates for 30-second spots during America’s most-watched programming for a bit of perspective:

  • Sunday Night Football – $717,375
  • Empire – $437,100
  • The Big Bang Theory – $289,136
  • Modern Family – $224,571
  • The Voice – $214,079

Those shows attract lots of eyeballs too, and yet they are relative bargains based solely off of viewership rates. Plus, one could argue the audiences for those shows are more loyal, tuning in week after week. The Super Bowl crowd is far more mixed, composed of half-curious onlookers, distracted partiers, and a relative few who are truly engaged (by team affiliation and/or betting investment).

So is it worth it?

According to many advertisers, the Super Bowl price tag is a tactical investment that reaps generous rewards in the long run. Exposure to one-third of the American population can quickly result in an immediate influx of business. But the investment gets additional mileage from leveraging the free exposure and additional brand buzz shows like Good Morning America and Today generate in the ensuing days, particularly for the most thought-provoking, controversial, or just plain hilarious spots.

Marketing geniuses go all out to come up with the next big thing. The Budweiser Clydesdales got their start during the Super Bowl, for example, and now-familiar brands like gained crucial traction with their provocative approach, using the old “sex sells” adage to make viewers ponder what scantily-clad, bouncing models could possibly have to do with domain names.

In the end, brands like Chrysler and Skechers report sales increase up to 40 percent or more following the Super Bowl, while other advertisers enjoyed the view as their stock shares doubled and tripled the Monday after the broadcast.

We might not remember which referee made that bad call—or even which team won the game—but some Super Bowl ads are just too creative to quickly forget, and that makes it all worth it.

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