As much as the NFL's Super Bowl is about drinking -- and football -- it’s also about business. Companies spend a small fortune to get commercials on television during the big game, an investment that guarantees not only that hundreds of millions of people will see it but also that the 30-second spot will become part of the media conversation.
This year, CBS charged between $3.8 million and $4 million for every such spot that will be shown during the game between the San Francisco 49ers and Baltimore Ravens on Sunday. While that price -- a new record -- sounds astronomical to the average football fan, or small business, the major advertising companies are only expecting the fee to rise in the future.
“Everybody almost likes it when the market comes out and proclaims a new price,” Tim Calkins, professor of marketing at Northwestern University’s Kellogg School of Management, told Forbes. “For advertisers, it says that what they are doing is exciting. For brands, it sends a very strong signal to their partners and competitors that they are invested and committed in their brand.”
The price tag has driven away some big names -- Dr. Pepper Snapple Group Inc. (NYSE:DPS) pulled out of the race years ago, while the privately held CareerBuilder LLC and the General Motors Co. (NYSE:GM) did likewise this year -- but industry experts agree that even at $4 million the Super Bowl publicity is a bargain.
Ads are now discussed on social media and ranked in best/worst countdowns online in the days before and after Super Bowl Sunday. Companies such as privately held Go Daddy Group Inc. have taken advantage of the notoriety by leaking their commercials early, launching a viral discussion that has the ultimate result of getting potential customers familiar with the company name. Formerly a one-day event, Super Bowl advertising has morphed into a multiday or -week campaign.
“The quantitative argument for Super Bowl ads being reasonably priced would proceed with some simple math,” wrote Derek Thompson, a senior editor at the Atlantic. “More than 100 million people watch the Super Bowl. Compare that to 20 million people, on average, watching 'Sunday Night Football' in 2012; or 12 million watching 'The X Factor'; or 4 million watching '30 Rock.' On a per-person, per-30-second basis, those numbers suggest that a Super Bowl viewer is worth twice as much as somebody watching 'The X Factor' or '30 Rock' (which can be DVR'd, so the ads can be skipped) -- or 33 percent more valuable than somebody watching a 'Sunday Night Football' game.”
Executives were shocked when the price of a Super Bowl ad broke $500,000, but now some suggest the $10 million barrier is as plausible as a 50-yard reception by the 49ers' Michael Crabtree or a 50-yard interception return by the Ravens' Cary Williams on Sunday.