Interviews & Articles
Millsport's senior sports business executives are available for interviews, commentary, and analysis on a number of sports marketing and sponsorship topics. To arrange an interview, please contact Chris Anderson at (214) 259-3290.
Super Bowl ad tab: $30 million for 30 seconds
Jan 19, 2009
$3M for 30 Secs: Recession Weighs on Super Bowl Ads
by Matt Egan
FOXBusiness
In addition to high-stakes drama, heroic performances and funny ads, each year the Super Bowl provides Americans a window into their economy -- for better or worse.
This year is no different as the recession has forced some companies to balk at the $3 million asking price for a 30-second commercial in next month’s Super Bowl, which will be televised by General Electric’s (GE) NBC.
“I think there’s no question that [the economy] affects the Super Bowl and it decreases interest in being in the game. This year it’s a lot harder for companies to step up and make the commitment,” said Tim Calkins, a marketing professor at Northwestern University’s Kellogg School of Management.
To put the Super Bowl ad price tag in perspective, NBC charges advertisers about $435,000 to run a 30-second ad during Sunday Night Football and $110,000 during ER, according to Advertising Age.
Several mainstays to the Super Bowl ad lineup, including General Motors (GM) and FedEx (FDX), have opted out this year and thus will miss the opportunity to reach the game’s 95 million U.S. viewers.
"As a country, we are in unprecedented economic waters," Steve Pacheco, FedEx managing director of advertising, wrote in a recent corporate blog. "A Super Bowl ad buy is not where we should put dollars at this time although, in the past, the value of doing so for FedEx has been indisputable.”
GM echoed that sentiment as spokeswoman Kelly Cusinato said: “We just didn’t want to do one this year because we didn’t feel the return on investment was significant enough.” Cusinato noted the decision was made months before the auto maker needed to be rescued by the government.
At the same time, many other companies, some of them less battered by the recession, have shrugged off the $3 million price tag. Pepsi (PEP), Anheuser-Busch InBev, Hyundai, E*Trade Financial (ETFC), Monster (MWW), Bridgestone and Cars.com have all said they have purchased ads in the Super Bowl.
“What we don’t know is how many of them made the decision in the summer and now wish they could get out,” said Calkins.
Web hosting company GoDaddy.com certainly wouldn’t include itself in that group.
“We’re not apprehensive at all. The Super Bowl for us has sparked new business. We looked at it as if we have to do it,” said Barb Rechterman, executive vice president and chief marketing officer at GoDaddy.com. Then again, Rechterman noted the company is still growing despite the recession, saying: “We are at a point where we’ve never even considered layoffs.”
NBC Universal did not respond to requests for comment but the company recently told Reuters it has not been forced to compromise its rates to entice advertisers. At the same time, NBC reportedly has 10% of its commercial inventory remaining. FOX, which had the rights to televise the Super Bowl last year, was already sold out at this point, sources said.
(News Corp. (NWS) is the parent company of FOX and FOX Business).
“Nothing is easy to get approved these days in marketing or ad budgets,” said Darin David, an account director for Millsport, a Dallas-based sports marketing firm. “A lot of people are just waiting to see what’s going to happen in the next six months to a year with the economy.”
The Super Bowl is “always a little window into the state of the economy and the prospects of different companies because if you are going to buy a Super Bowl spot you have to be a little bit optimistic about the future,” said Calkins, who noted the 2000 game featured a number of dot-com companies ahead of the bursting of the tech bubble.
In addition to economic factors, companies must be cognizant of the public-relations impact of splurging on high-profile advertising while simultaneously laying off thousands of workers.
“The Super Bowl makes an enormous statement to the world. That can be a very invigorating statement, but it can also go the other way,” said Calkins, pointing to the PR concerns. “There’s a little bit of a double-edged sword on it.”
While it’s clear that the economy has impacted the composition of this year’s Super Bowl advertisers, it’s not yet apparent if it will hurt NBC’s bottom line, as networks are generally tight-lipped about how much their ads sell for. Experts said just because NBC asked for $3 million (and received it, at least in the early going), it’s possible the price could have dropped as the economy deteriorated.
“You have to take the $3 million [price tag] with a grain of salt. It’s a little bit like buying a car. There’s the sticker price but then there’s a lot of negotiation going on,” said Calkins.
If prices come down enough, it could provide an opportunity to new advertisers looking to make a splash.
“My guess is that there might be some deals that could be made as we get closer to the game. Certainly it’s an opportunity for companies to jump in that haven’t been there in the past,” said David.
Despite the advertising environment, it’s clear that the Super Bowl offers a captive audience that advertisers can’t find anywhere else. For example, the Academy Awards drew only 32 million U.S. viewers in 2008 and fetched about $1.8 million for a 30-second spot.
“The reach is incredible. The Super Bowl is the greatest product out there hands down,” said one network exec.
Thanks to the economic gloom and doom, next year’s product could become more affordable.
“I can’t imagine we’ll see the cost going up next year with the economy on its current trajectory,” said Calkins.
