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Winning at the Ad Game
The Super Bowl, the championship game of the National Football League, has long been synonymous with high-profile advertising.
Perhaps the most renowned Super Bowl ad of all time, Apple’s (AAPL) “1984” introduced the Macintosh and helped to kick off the personal computing revolution. Ridley Scott directed the ad, which aired during the third quarter of Super Bowl XVIII on January 22, 1984, and presented the Mac, symbolized by an unnamed heroine, as a means of saving humanity from conformity. The ad harkens back to George Orwell's dystopian novel "Nineteen Eighty-Four”, with International Business Machines Corp. (IBM) cast in the role of Big Brother. A watershed moment in not only the history of Apple, now one of the largest and most influential consumer electronics companies in the world, “1984” also transformed advertising. Indeed, the buzz generated by this commercial has caused advertisers to flock to the Super Bowl ever since.
It is easy to see why the Super Bowl would be so attractive for companies looking to increase awareness of their brand. Few broadcasts regularly average over 90 million viewers. Indeed, the last two Super Bowls were the second and third most watched events in television history, behind only the final episode of “M*A*S*H”, which drew 106 million viewers in 1983. NBC, which is in the process of being sold by General Electric (GE) to Comcast (CMCSA), boasted that 147 million viewers sampled at least six minutes of 2009’s title game. This number is important to advertisers as it is assumed that you will run into an ad break if you watch at least six minutes of the broadcast.
With such a broad reach, it should come as no surprise that the average 30-second spot during the big game sold for about $3 million in 2009, grossing NBC $206 million during the game’s broadcast alone. After the Super Bowl ends, broadcasters typically follow it with a special episode of one of their top programs. Last year, NBC drew 22 million viewers to its hit comedy “The Office”, which was more than double the series’ previous high. This strategy enables networks to not only capitalize on increased advertising revenue during the Super Bowl, but also has the potential to draw additional fans to its top programs, boosting ad rates the company may charge during those broadcasts, as well. CBS Corp. (CBS) has already sold the majority of the spots for 2010’s game, with companies spending close to $3 million for a 30-second advertisement, though final numbers will not be available until after the game. CBS, News Corp.-owned FOX (NWS), and NBC take turns broadcasting the Super Bowl.
There are some hidden costs associated with this type of advertising, though. In light of the high cost associated with advertising during the Super Bowl and the recent recession, many long-time sponsors have felt compelled to reduce spending or even pull out of the event altogether. General Motors announced in September 2008, at the low point in the financial crisis, that it would not be purchasing any television advertisements for Super Bowl XLIII last February. GM had spent more than $77 million to advertise during the previous 15 Super Bowls, third only to Anheuser-Busch InBev NV (BUD) and PepsiCo (PEP). In light of the billions of dollars in bailout money GM and the automotive industry have received, to continue spending lavishly on advertising probably would have created a large backlash that the struggling carmaker could not risk at a time of weakness. Competitors Chrysler and Ford (F) have not bought a Super Bowl ad since 2004 and 2007, respectively.
Pepsi, which spent $33 million on Super Bowl advertising in 2009 alone, will not air an ad for the first time in 23 years. Instead management has decided to shift its investment towards the Internet in hopes of engendering good will for the brand. Pepsi will continue to market its snack food business during the Super Bowl under its Frito-Lay subsidiary, however. Its socially conscious “Pepsi Refresh Project” will pay at least $20 million toward various projects that will have a positive impact in communities around the globe. It remains to be seen if this type of cause-related marketing can have the same impact that Super Bowl advertising has had for the company over the years. It seems risky to leave the field open to Coca-Cola (KO), which will have a marketing presence in the big game. How the move works out for Pepsi could play a big role in how other advertisers plan for the Super Bowl in future years.
We are likely to see a continued shift toward the Internet, though. Social media helps companies to build a buzz leading up to the game, as well as to maintain it afterwards. By extending the shelf life of the ad campaign, companies maximize their advertising dollars and better engage their customers. Doritos, which is owned by Pepsi, has done well at this the past couple of years by running contests for fans to create ads that ultimately will air during the game. Votes online help determine the winners, who receive cash prizes. This type of viral marketing allows customers to feel more connected to the brand, while providing them with a financial incentive. Campaigns such as this tend to energize consumers and increase traffic to the company’s website.
With resources like the Internet at their disposal, more and more advertisers are going to use every tool possible to engage viewers in real time. With about 100 million viewers likely watching this year’s Super Bowl, and probably just as many collective online views following the game, it is important to leave no stone unturned to find new ways to connect with potential customers. The companies that are best able to do so will be the real winners this Super Bowl Sunday.