Indiana Ag Connection - Super Bowl Ad Buy Can Be Good Investment

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Super Bowl Ad Buy Can Be Good Investment
Indiana Ag Connection - 02/04/2016

As the Super Bowl marks its 50th anniversary, deciding whether to spring for an ad is tougher than ever for companies. According to Ad Age, CBS is asking $5 million for a 30-second spot this year, an increase of 76 percent in a decade.

Despite the high cost of the spots, Frank Germann, an assistant professor of marketing in the University of Notre Dame's Mendoza College of Business, believes a Super Bowl ad can be a good investment for companies under certain circumstances.

"Advertisers often look at how much it will cost them to reach 1,000 people with an ad -- the cost of a thousand impressions -- as they assess different media types," Germann said. "Considering that about 100 million or more people will watch the Super Bowl, reaching 1,000 people with a Super Bowl ad will cost about $50. In comparison, running an ad in Bloomberg Businessweek costs an estimated $200,000 and the audience size is an estimated 1 million. Hence, the cost per thousand impressions is about $200. Also, a USA Today ad costs an estimated $250,000 and reaches an estimated 2 million. Thus, cost per thousand impressions is about $125.

"Bottom line: When one looks at the cost of a Super Bowl ad based on cost per thousand impressions, it's actually not bad at all. On top of that, people actually pay attention to Super Bowl ads and there is a lot of hype about them before and after the game. There are a few caveats, of course. Importantly, most of the 100 million plus people who watch the Super Bowl should be part of the company's target customer segment -- if not, the ad is probably not going to be effective from a return on investment point of view. In other words, if only 10 million of the folks who watch the Super Bowl would be interested in buying your advertised product, Super Bowl ads are likely not worth it. But if you make Coke or beer or something that most people who watch the Super Bowl would be interested in, and if you have the resources to pay for the ads, putting together a Super Bowl ad might be a great idea."

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