Market Overview

The Economics Of A Super Bowl Ad

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The Economics Of A Super Bowl Ad

It’s rare that a company will watch $5 million hard-earned dollars disappear in a matter of 30 seconds and be happy about it. However, that’s exactly what will happen Sunday when dozens of advertisers watch their 30-second TV ads air during the commercial breaks of the Super Bowl.

Super Bowl LI

The New York Times estimates that the average cost of a 30-second ad at this year’s game will be roughly $5 million, up 4.1 percent from last year. Of course, it’s no big secret why companies spend an insane amount of money for Super Bowl air time. Last year’s Super Bowl audience for CBS Corporation (NYSE: CBS) was the third-largest in television history at 111.9 million. This year’s ratings should easily once again eclipse the 100 million mark.

But the value of a Super Bowl ad extends beyond the number of viewers the big game draws. Over the years, advertisers have frequently used the Super Bowl as a platform to air their best, newest, most unusual and/or most powerful commercials. While TV viewers may largely ignore commercials during a typical telecast, many Super Bowl viewers consider the commercial breaks as entertaining as the game itself.

Finally, a Super Bowl commercial makes a strong statement about a brand’s legitimacy. If a company can afford a Super Bowl ad, it projects an impression of success and quality.

The Ubiquitous Controversies

Of course, no Super Bowl is complete without its fair share of advertising controversy, which can also be an opportunity for advertisers. The GNC Holdings Inc (NYSE: GNC) ad that the NFL rejected due to GNC’s use of banned ingredients may generate more media attention than the original advertisement would have.

In addition, controversy over whether or not halftime performer Lady Gaga will comment on President Donald Trump during her performance may put more eyes on halftime advertisements than usual.

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Image Credit: By U.S. Customs and Border Protection (Ozzy Trevino of U.S. Customs and Border Protection) - 170131-H-OT911-0011, Public Domain, via Wikimedia Commons

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