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Why a commercial during the Super Bowl is worth an unprecedented $80,000 a second 1/30/2005 07:00:00 PM Eastern

When it comes to advertising, no other TV event generates the sticker shock of a Super Bowl commercial. At $2.4 million per 30-second spot, Fox is charging its advertisers the equivalent of $80,000 per second of airtime on Super Sunday, the most expensive commercial inventory ever sold.

But as pricey as that seems, advertisers have once again lined up to buy more than 60 of the 30-second ad units available in this year’s game, begging the question: Is it worth it?

The answer, according to Madison Avenue, is an emphatic “Yes!” The real value of a Super Bowl ad buy, they say, cannot be measured by simple media-buying metrics, such as cost per thousand (CPM) or audience reach, but must also include a host of other factors that generate corporate esteem, employee morale, trade support, public relations and, of course, plenty of water-cooler talk.

Depending on the spot, a Super Bowl ad can generate twice the marketing value from the buzz surrounding the Super Bowl as commercial time during the game itself. In other words, a Super Bowl spot that sells for $2.4 million may be worth as much as $7.2 million when all the ancillary PR, media exposure and word of mouth are considered.

That may come as good news to advertisers, because the out-of-pocket cost of Super Bowl ads has been escalating much faster than the average rate of TV-advertising inflation—testament to the underlying value of the event to advertisers. Since 1967, when NBC charged a mere $37,500 per 30-second spot in Super Bowl I, the average cost of an ad in the Big Game has soared more than 6,000%—12 times the rate of the average network prime time’s inflation in ad cost between 1967 and 2004 (see table Ad Rates Soar, page 16).

Rationalizing the Cost

Still, the Big Game delivers better ratings than the average prime time show has over the same period. As a result, the actual CPM of a Super Bowl ad has grown only 1.5 times the rate of the average prime time commercial.

“I would make an argument that the CPM on the Super Bowl, as high as it is, is a better deal because you know what you’re getting when you buy it,” says Ray Warren, managing director of OMD, New York, the biggest media buyer of Super Bowl ad time. “I have a lot more certainty that the people I need to reach are watching the Super Bowl, than a lot of low-rated spots on Oxygen.”

Says Tim Spengler, executive vice president/director of national broadcast at media-buying giant Initiative Media, New York, “It’s a big number, but it’s a big event. Nothing else on television is even a close second.”

Despite its unparalleled audience reach, though, even true believers say a Super Bowl ad buy is difficult to justify purely on a CPM basis. To rationalize its hefty out-of-pocket cost, Spengler says, it has to be part of a “bigger plan” that can benefit from the buzz and attention that can be generated only by ads running during the game. Other media buyers agree, noting that a Super Bowl CPM is still three times that of network prime time and that, when lower-priced dayparts, cable and syndication alternatives are factored in, a Super Bowl ad buy simply cannot be reconciled on the basis of its audience reach.

To illustrate this, B&C asked Chicago-based media agency Starcom to see how it could beat a Super Bowl ad buy using a TV-reach “optimizer”—essentially a software tool that uses Nielsen data to identify the most efficient schedule of shows for an audience an advertiser seeks. The analysis by the system, called Tardiis, used the $2.302 million average rate CBS charged for a 30-second ad unit in last year’s Super Bowl to build a schedule of ads running in the other broadcast networks, on cable and in syndication opposite the Super Bowl to see just how good the Super Bowl stacks up on a pure audience-cost basis.

Beat the bowl

The agency found that, while CBS’ broadcast of the Super Bowl reached 29.5% of adults 18-49, a $2.3 million schedule of ads on competing networks could deliver 47.3% of adults 18-49, 60% more reach than an ad during the Super Bowl. But to do that, the optimized schedule would require an advertiser to buy ads on 381 different TV programs, mostly on cable networks (see table More Bang for the Buck, page 16).

“Essentially, this says you can beat the Super Bowl most definitely,” says Richard Fielding, vice president and director of the Insights & Analytics Group at Starcom. “But you have to buy hundreds of spots across a wide range of broadcast and cable networks to do it. At that point, it becomes a question of the quality of the reach and the quality of the exposure you are getting.”

Moreover, he says, such a buy would be impractical to execute because, unlike an optimizer using year-old data, media planners don’t actually know what audiences the shows they plan to buy will deliver in the future. They have to guess, says Fielding.

“If you go to a planner and say, 'Okay, here’s a $2.4 million budget. Go and beat the Super Bowl,’ they can probably do it, but it wouldn’t be as efficient as with an optimizer,” he says. Starcom’s optimized ad schedule generated nearly twice the reach among adult women. The Super Bowl was most efficient among adult men, but the optimizer still beat the reach among men by 40%.

“Engaged” viewers

Moreover, Fielding cites research showing that Super Bowl viewers are more likely to pay attention to a commercial and are far less likely to turn the channel or leave the room when the commercial breaks come on. These “engaged” TV viewers are the main targets of Super Bowl advertisers and agencies. According to Starcom’s research, 45% of the audience of a Super Bowl “pay attention” to the ads versus only 17% for the average TV program. Even big events like the Olympics (21%), the Academy Awards (14%) and the Seinfeld finale (36%) pale in comparison.

Fielding says the Super Bowl boosts the “effective” reach of an ad roughly three times over that of a regular TV commercial because three times as many viewers are likely to pay attention to the Super Bowl spot. “It’s much more of a movie-theater environment. People are engaged as much by the ads as by the event,” says Initiative’s Spengler, adding that Super Bowl viewers tend to watch in a group of people, which increases the commercial effectiveness as people discuss the ads.

“There’s about 10 million people in America who are going to watch the Super Bowl just because of the ads,” estimates Charles Tomkovick, a professor of management and marketing at University of Wisconsin–Eau Claire, who has been studying Super Bowl advertising by movie companies for five years.

Super seller

His conclusion: “Super Bowl ads sell.” Specifically, his research found that movies advertised in the Super Bowl generated twice as much first-weekend, first-week and total U.S. box-office revenue than non-Super Bowl-promoted movies. The effect is so powerful, that it even works for summer movie releases that advertise in the Super Bowl six months before they premiere.

Tomkovick chose the movie category, he says, because it is the “cleanest way of looking at the effect of a Super Bowl ad, because there is no product prior to the Super Bowl.” While sales-effectiveness data is harder to find for other Super Bowl categories, he believes the effect is similar: “What is the residual effect of a Super Bowl ad? It’s hard to say precisely, but it is a mass multiple. Something on the order of 1.5 to 2.0 times the value of the commercial time.”

Initiative found that, during last year’s Super Bowl, the average rating for Super Bowl commercials was only about 3% less than that for the game, indicating that there was relatively little channel-switching during commercial breaks. A few commercials, including ones for H&R Block, Microsoft and Anheuser-Busch, actually generated marginally higher ratings than the game itself.

Spots live on

But the most striking element about the drawing power of Super Bowl ads is that they generate audiences before and after the game. Advertisers routinely release preview copies of new Super Bowl ads on their Web sites, as CareerBuilder.com is doing with the two spots it will be running this year. And the NFL Network, a digital cable and satellite channel, plans to run a 30-minute prime time special following the game, rebroadcasting all of the ads and will repeat that program on the Monday following Super Sunday. The ads will also live on for anyone interested in seeing them rebroadcast online via scores of Web sites, as well as blogs issuing running commentary on the ads themselves. About 25% of Super Bowl viewers were likely to visit a Web site to view a Super Bowl ad, according to research conducted last year by InsightExpress, a market-research firm based in Stamford, Conn. Indeed, one company, New York-based VMS, is offering this year’s Super Bowl spots delivered “on your desktop Sunday night” for $749.

“Effective Super Bowl ads are likely to deliver additional reach and frequency even days after the game’s last whistle,” says Lee Smith, president of InsightExpress, whose research estimated that 25% of last year’s Super Bowl viewers were likely to visit a Web site to view a Super Bowl ad.

Super Bowl ads continue to live on TV viewers’ hard drives, too. Research conducted during last year’s Super Bowl by TiVo found extraordinary recording, playback and pausing of Super Bowl spots. Although TiVo did not break out the specific activity of the commercial-recording, it said the Super Bowl spots were the major reason for TiVo activity during the game. “In fact, the halftime show during the Super Bowl is now running a close second to the commercials as the most compelling content for viewers. The actual contest on the field continues to be the secondary event,” says TiVo President Marty Yudkovitz.

Day-after buzz

A major factor driving this commercial replay is the buzz surrounding the ads themselves. According to Insight­Express research, 28% of viewers who replay a Super Bowl spot on the Web said they do so because they “wanted to see what everyone was talking about.”

There is so much buzz that some experts believe marketers may be focusing on the wrong part of the media event: the audience they’re generating off-air, where a brand’s reputation can be made or destroyed depending on the day-after buzz.

“The vast majority of Super Bowl advertisers fail to take advantage of this,” says Pete Blackshaw, chief marketing and customer satisfaction officer at Intelliseek, a company that specializes in measuring the buzz generated by marketers. According to its research, consumers already have high expectations for Super Bowl spots, particularly for such mainstay advertisers as Budweiser, Pepsi, McDonald’s and Visa. To measure the talk those ads generate after the game, Blackshaw says, Intelliseek has created a panel of blogs that regularly discuss advertising.

“Viral” marketing

It is just such “viral” marketing that Richard Castellini, vice president, consumer marketing, at CareerBuilder.com, is banking on. In fact, you might say his job depends on it. It was Castellini who persuaded CEO Matt Ferguson to plunk down nearly $5 million to air two 30-second spots in this year’s game, as part of a $200 million effort to position the company as the leading job-search site in the business.

While the Super Bowl’s high ratings were a big part of his decision, Castellini says, the deciding factor behind the buy was all the ancillary exposure and intangibles like corporate esteem and employee morale.

“Certainly, when you look at doing a Super Bowl buy, you have to be willing to spend the money for the TV audience in its own right, but knowing there’s going to be all these other benefits is a big part of it,” he says, noting the enthusiasm internally from his employees and sales force. “Externally,” he says, “it’s a great way to tell our story to the world.”

 

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