Will it be the Rams or the Patriots? That’s anyone’s guess, but the one sure thing heading into Super Bowl LIII is it will generate record advertising revenues.
A 30-second spot cost $37,500 at Super Bowl I in 1967, then $2.2 million in 2000, and rose almost every year afterward to a record $5.05 million in 2018. An estimated 103.4 million Americans watched last year’s Super Bowl, many of them tuning in just for the ads and the halftime show. Millions more from around the world viewed ads from the likes of Amazon, Hyundai, and Groupon on YouTube.
The data on advertising spending only takes into account what companies paid Super Bowl broadcaster NBC. It doesn’t even include the millions spent producing the ads. Amazon alone must have paid a fortune to get Anthony Hopkins, Rebel Wilson, Gordon Ramsay, and Cardi B for its 2018 ad.
Companies are spending more and more on Super Bowl advertising every year, even though they know full well that these ads are money-losing exercises. According to advertising consultancy Communicus, some companies spend more than $20 million on Super Bowl ads, but only 1 in five see a return on investment.
A 2017 Communicus survey found that only 10% of consumers remember the average Super Bowl commercial; 80% of Super Bowl ads fail to change consumer intentions regarding a brand; and only 33% of consumers can remember seeing a typical Super Bowl ad in the first place.
What’s the Point of Super Bowl Advertising?
Given the consistent lack of ROI for the vast majority of brands, why do they keep spending more on Super Bowl advertising year after year?
Last year’s advertisers can be split into broadly 2 groups: well-established multinational corporations like Amazon, Mars, Coca-Cola, and Toyota; and emerging players like Wix, Squarespace, and WeatherTech.
Obviously, all these companies are large enough to afford a Super Bowl ad. The first group of companies can absorb the hit to their bottom line simply for the prestige of being there. With the second group, a Super Bowl ad is a way of showing off to shareholders that their business has made it, and introduces them to consumers who haven’t heard of them.
Both groups include a high concentration of companies from certain industries. Carmakers Toyota, Hyundai, Jeep, and Lexus advertised last year. Likewise, Wix and Squarespace are the two biggest web-building platforms and neither would want to let the other steal all the glory of the big day.
But for most companies, a Super Bowl commercial isn’t the most effective way of spending their advertising budgets. There are cheaper ways to acquire new customers.
Traditional Advertising Can’t Measure Intent
One problem for Super Bowl advertising—and traditional television advertising in general—is that it’s not personalized. During any ordinary regular season NFL game, advertisers target what they perceive to be the typical football fan. These viewers are 41% more likely to be male than female, with the largest cohort comprising males aged 50-59. Unfortunately, advertisers have no way of knowing if an individual viewer that fits the demographic profile—let’s just call him Bill from Minneapolis—is actually interested in their product.
The Super Bowl is one of the few—perhaps the only annual TV event—that engages the entire demographic spectrum. Eighteen of the last 33 Super Bowls have had 90 million-plus viewers. The last non-Super Bowl program to manage that feat was the M*A*S*H finale in 1983. In 2018, the Super Bowl attracted more than double the total viewers of the State of the Union Address. It attracted around 3.5 times as many viewers as the wedding of Prince Harry and Meghan Markle.
With such a broad audience, Super Bowl advertising is really only for companies with broad-based appeal, like Amazon. The only consumer-finance provider to place an ad in 2018 was Quicken Loans (for its Rocket Mortgage brand).
Here are the facts about mortgages. There were 7.74 million originations in the 12 months to July 2018 (the Consumer Financial Protection Bureau publishes data at a 6-month lag). That’s 2.3 mortgages for every 100 Americans. Taking into account that most mortgages have 2 signatories, and assuming that people only start thinking about a mortgage 6 to 12 months before getting one, we can estimate that up to 3-4% of Super Bowl viewers are thinking about mortgage lenders on the day of the big dance.
Okay, that’s just an estimate. And we’re not casting judgment on Quicken Loans’ decision to advertise on the Super Bowl – by their internal metrics, they may well judge that it’s worth it. But what we can conclude is that for most companies, spending on the Super Bowl doesn’t add up. It costs millions to advertise to more than a hundred million people, but the proportion of viewers that are interested in your product is likely to be minuscule.
Intent Marketing Would Be a Game Changer
Thanks to big-data analytics, digital marketers can use intent marketing to target consumers with personalized ads and offers. But TV networks are notoriously slow at embracing new technologies, and television advertisers can’t really personalize their ads in any meaningful way. If you and a friend sit in the same room, on separate laptops, and go onto Google, YouTube, or Facebook, you’ll see different ads. But when you watch the Super Bowl, you see the same ads as the other 100 million people watching it.
If and when television networks enable personalized advertising, it’ll be a game changer. Putting aside the potential privacy issues, consumers, advertisers, and broadcasters would all benefit. Consumers would see ads for things they’re actually interested in and actively searching for. Advertisers would get a higher return on investment. And NBC, or whoever owns the broadcasting rights, would be able to sell ads to a much broader group of companies than they do at present.
It’d be crazy to predict the winner of the Super Bowl 10 years from now. But it’s a good bet personalized advertising will have made inroads into TV by then. If it doesn’t, brands may eventually start investing less in Super Bowl advertising.