industry thoughts from Clarteza

In the wake of the 2012 Super Bowl, which once again broke a record for the average cost of a 30-second ad spot, new stories will abound reporting the “winners” and “losers” from the Ad Bowl based on audience polls, expert critiques and cost-benefit analysis.  Regardless of which spot was the best or worst – no, wait, hold on, the GM commercials were unique and funny (http://www.youtube.com/watch?v=iuvoSw1TiJ8), but will it make me go and buy the car? Probably not.  There, I said it.

Ok, now…regardless of which spot gets ranked best or worst in today’s Facebook or newspaper poll, what’s the real payoff for spending obscene amounts of cash for 30 seconds of airtime?

Gray: “Super Bowl advertising costs are outrageous”

This year’s Super Bowl advertising costs set a record once again for the highest average price for a 30-second ad slot at $3.5 million.  The price tag increased 17% over 2011 rates, and is double the rate charged just 14 years ago.  According to Forbes, prices increase on average 5.7% annually, which means they should double again in thirteen years.  However, network pricing power and new rights agreements could speed up that timeline.

Clear: The Super Bowl is an inexpensive way to reach a lot of people

In the eyes of many marketers, Super Bowl advertising is actually a bargain compared to the ad costs to air during regular primetime shows and other big eyeball events.  Rather than focusing on the overall price tag, analysis based on the common metric of cost per mille (CPM) shows the Super Bowl is one of the least expensive methods of reaching a lot of eyeballs.  Last year’s game drew in 111 million viewers, setting a new record.  At an average price of $3 million, this translates to a CPM of $27.  Compare that to the average CPM of $35 for a primetime television show, and that high price tag starts to look a little cheaper.

Gray: “Successful advertising is measured by eyeballs”

As the CPM metric demonstrates, Super Bowl advertising can be one of the most cost effective ways for mass market advertisers to reach, well, the masses.  In an age in which fewer and fewer people watch live television, the Super Bowl is the holy grail of eyeballs.  Of course advertising reach matters; after all, how successful can an ad be if it doesn’t reach the core audience.  However, reach and eyeballs are a small part of the overall success of an advertisement.  After all, the point of advertising is to drive sales.  Super Bowl stalwarts like Anheuser Busch and PepsiCo have universal awareness, and are two of the biggest spenders on Super Bowl advertising.  But has it paid off?

Clear: Successful advertising is measured by return on investment

A study by 24/7 Wall St estimated the total amount spent over the last decade by major advertisers on Super Bowl commercials.  Anheuser Busch accounts for a full 10% of Super Bowl spending over the last ten years, placing an average of 8.7 ads per game for a grand total of $246 million.  PepsiCo takes the number two spot, having spent $210 million, followed by GM at $135 million.  All three reached a lot of eyeballs.  Yet, all three have lost significant market share over the past ten years.  Anheuser Busch has dropped 4 points in market share, and in 2011, lost its #2 position to Coors.  PepsiCo has lost 2 points in share over the past 10 years, while GM’s market share has declined 10 points.

Gray: “I need a lot of money to advertise”

Of course, the cost of placement is only one component to traditional advertising.  There are also the agency costs and the production costs of creating the ad, which only increases the price tag.  While figures are rarely released for the cost of developing and producing an ad, it’s safe to assume that most Super Bowl ads are not created on a shoe-string budget.  Except perhaps for PepsiCo’s Doritos commercials, which were consumer-generated For instance, “Men’s Best Friend” commercial was created by an individual who reportedly spent $20 on supplies to shoot the spot (http://www.youtube.com/watch?v=y3bqbJduK2w).

Clear: I need a lot of insights to advertise

While Super Bowl ads generate a lot of commentary, the investment doesn’t always translate into sales or market share growth over the long run, which tells us it’s not just money and eyeballs that lead to success in the marketplace.  In fact, sometimes the most successful advertising campaigns are the cheapest.  LuluLemon spends its tiny budget outfitting consumer ambassadors with its clothing, and lets them advertise to other consumers.  In a similar fashion, consumer products manufacturer Method, with a $200,000 annual marketing budget, produced a crowd-sourced commercial based on customer submissions of videos.  Upon release of the ad, Method’s fan count increased by 68%.  Even bigger spenders, like Absolut Vodka, recognize that the success of advertising is not about splashy, eye-catching commercials loaded with special effects and ‘creativity’.  While Absolut has a much higher marketing budget than Method, the company is famous for running essentially the same advertising campaign since 1980.

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The bottom line is that, while we can argue over the cost effectiveness of advertising during the Super Bowl, advertising success is not about money muscle and eyeballs.  For the company as a whole, success in advertising and marketing means growth in sales.  If sales aren’t growing, it is irrelevant if your ad was ranked number one.  And as small companies like LuluLemon and Method demonstrate, advertising that grows sales is advertising that engages the consumer.  The spread of social media and the growth in the number of channels further exacerbates this trend, as heavy spending on the standard 30-second commercial receives a lower and lower return on investment.

Not only are consumers no longer tuning into primetime television, but they no longer have interest in one-way dialogue with companies.  Rather, they want to be part of the conversation.  They want, and respond to, relevance, not just a catchy ad.  For marketers, this means focusing your marketing budget, whatever its size, on first generating insights and understanding how your brand fits into consumers’ lives.  The Super Bowl ad extravaganza is a lesson in what not to do in advertising strategy, which is emphasizing the execution.  Big or small, viral or mainstream, cheap or expensive, your ad is successful if it is based first on consumer insight and relevance, and then packaged in a way that resonates with those consumers with whom you most want to engage.

As a case in point, current rankings indicate the best Super Bowl 2012 advertisement was the Doritos spot “Men’s Best Friend”– created by a consumer as part of a multi-year contest in which PepsiCo solicits consumer submissions for its Super Bowl ads, which not only saves it costs on production, but generates consumer insights and results in relevant ads and an engaged consumer base.

 

 

Sources	URL
Forbes.com	http://www.forbes.com/sites/chrissmith/2012/02/01/super-bowl-ad-rates-can-double-within-ten-years/
Entrepreneur.com	http://www.entrepreneur.com/slideshow/222591
24/7 Wall St.	http://247wallst.com/2012/02/01/the-eight-brands-that-wasted-the-most-on-the-super-bowl/