Everyone knows that in addition to the junk food, halftime show, and actual game itself, the commercials are some of the more anticipated aspects of the Super Bowl. It’s usually fun and entertaining for football fans, but for brands, it’s a very expensive investment to get in front of them.

In 2017, Fox generated $419 million in advertisement revenue for  Super Bowl LI. The average price for a 30 second spot was $5.05 million. No, I didn’t mistype, the cost to show one commercial was about $5 million, which is 87% higher compared to the average rates 10 years ago. For comparison, a 30 second ad during Game 7 of the World Series raked in $500,000, while the same length commercial during the Oscars commanded $2.3 million.

However, the costly price tag makes sense. The Super Bowl is one of the most viewed TV programs on the planet; over 114 million people tuning into last year’s game. It might put a huge dent into a company’s annual marketing budget, but if executed effectively, a commercial during the game can generate significant brand awareness wit consumers. I’m sure that’s strategy to buy placements over several Super Bowls helped them grow brand recognition, especially by leveraging provocative commercials. It was reported that among the brands that advertised in 2017, 22% of them invested more than 10% of their annual marketing budget.

Networks pay the NFL over $1 billion a year to air games, including the Super Bowl, so it makes sense that they’ll try milk this cash cow for all its worth. In 2017, 51 minutes of the broadcast was dedicated to commercials, which is a roughly a 20% increase from a decade ago. So over time, viewers are being force fed more and more ads each year, but these networks have to eat somehow.

Ultimately, the interest behind Super Bowl commercials keeps us peeled to our TVs during timeouts versus flipping channels. But are the high costs really worth it? Brands need pay for a time slot in addition to the creation of an attention grabbing and memorable spot that hopefully leads sales. However based on prior research, 90% of people say that they were unlikely to buy anything tied to a Super Bowl ad, while 75% said they couldn’t remember ads from last year. So why spend? Relevance. Sometimes its important to simply be part of pop culture conversation.

If trends hold steady, Super Bowl LII should generate an enormous amount of revenue for NBC (this year’s broadcaster).  Commercials should top $5 million per spot, which is crazy when realizing that this year’s game MVP Nick Foles of the champion Philadelphia Eagles made only $1.7 million in salary for the season.

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Rex Pham

Originally from the Bay Area, who then moved to Los Angeles, then out to New York City. NYU Stern MBA c/o 2014. Inspired by the grind of NYC to create something that has value. Lover of all things digital, culture, and brand strategy.

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