WEBVTT - Are Super Bowl Ads Really Worth $30 Million?

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<v Speaker 1>Welcome to brain Stuff production of I Heart Radio. Hey,

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<v Speaker 1>brain Stuff, loring bog O bomb here. The Super Bowl

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<v Speaker 1>is literally the super Bowl of advertising. Super Bowl broadcast

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<v Speaker 1>drew a record breaking TV audience of a hundred and

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<v Speaker 1>fourteen point four million viewers. It's since dropped a bit

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<v Speaker 1>to point two million viewers as of twenty nineteen, but

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<v Speaker 1>still there is no other United States televised event that

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<v Speaker 1>even comes close to the drawing power of the Big Game,

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<v Speaker 1>making it the ultimate platform for advertisers to pitch their

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<v Speaker 1>pickup trucks, beer, and misogynist web hosting services. Exactly how

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<v Speaker 1>much is it worth to them? Up to five point

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<v Speaker 1>six million dollars. That's the highest going rate for a

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<v Speaker 1>single thirty second commercial during twenties Super Bowl fifty four

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<v Speaker 1>broadcast on Fox. But five million is only the tip

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<v Speaker 1>of the iceberg. Most Super Bowl advertisers drain their budgets

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<v Speaker 1>on c g I, talking animals and big name celebrity endorsements,

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<v Speaker 1>making a real cost of producing a Super Bowl ad

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<v Speaker 1>closer to thirty million dollars. But how is it possible

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<v Speaker 1>that spending thirty million dollars in thirty seconds is a

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<v Speaker 1>brilliant marketing plan? For that price, you could buy sixty

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<v Speaker 1>commercials at five hundred thousand dollars a pop during the

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<v Speaker 1>highest rated shows on television. Does the Super Bowl offer

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<v Speaker 1>a super return on investment that can't be matched by

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<v Speaker 1>mere mortal TV broadcasts? There's some serious math involved in

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<v Speaker 1>answering that question. Marketing Professor's Wesley Hartman of the Stanford

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<v Speaker 1>Graduate School of Business and Daniel Clapper of Berlin's Humboldt

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<v Speaker 1>University conducted an in depth economic analysis of the return

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<v Speaker 1>on investment of Super Bowl ads, and their results seemed

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<v Speaker 1>to confirm what Madison Avenue has been selling for years.

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<v Speaker 1>Super Bowl ads deliver a significant boost in revenue between

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<v Speaker 1>ten to fifteen percent per household in the eight weeks

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<v Speaker 1>following the broadcast. That's an r o I of a

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<v Speaker 1>hundred and fifty to a hundred and seventy. Hartman and

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<v Speaker 1>Clapper focused their research on beer and soda brands that

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<v Speaker 1>advertised during multiple re Bowls. The researchers compared TV ratings

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<v Speaker 1>information from more than fifty U S markets with detailed

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<v Speaker 1>beer and soda sales data from stores in those same

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<v Speaker 1>geographical areas. When Budweiser and Pepsi ran ads, during the

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<v Speaker 1>Super Bowl. It was like dropping a fat stone in

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<v Speaker 1>a pond, with the ripple effect boosting sales for weeks

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<v Speaker 1>to come. Some Super Bowl advertisers don't even have to

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<v Speaker 1>wait for the ripple effect. Remember go daddy dot Com,

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<v Speaker 1>the aforementioned controversial web hosting company. The Monday after running

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<v Speaker 1>its twelve Super Bowl ad in which a supermodel kisses

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<v Speaker 1>a nerd, Go daddy dot Com recorded its best sales

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<v Speaker 1>day ever. So case closed, five million or even thirty

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<v Speaker 1>million dollars on thirty seconds is money well spent, ah,

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<v Speaker 1>if it were only that simple. Like all good stories,

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<v Speaker 1>this one has a twist. It turns out that the

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<v Speaker 1>Super Bowl boost only goes into effect if a single

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<v Speaker 1>beer or soda brand advertises during the game. If a

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<v Speaker 1>competitor also places an ad, those gains become losses. The

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<v Speaker 1>researchers call it a class prisoner's dilemma. Here's how it works. If,

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<v Speaker 1>for example, both Coke and Pepsi do not advertise during

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<v Speaker 1>the Super Bowl, they will both still earn over a

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<v Speaker 1>billion dollars in profit over the eight weeks following the game.

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<v Speaker 1>If either Coke or Pepsi advertises but not both, the

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<v Speaker 1>brand that advertises gets a twenty seven million bump in profit.

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<v Speaker 1>But if both Coke and Pepsi advertised during the same game,

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<v Speaker 1>each brand earns eighty million dollars less than if they

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<v Speaker 1>hadn't advertised at all. So to advertise or not to advertise,

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<v Speaker 1>According to Hartman and Clapper's calculations, for industries with just

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<v Speaker 1>two or three major players, you might get a better

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<v Speaker 1>payoff by setting out the Super Bowl. But again, their

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<v Speaker 1>research focused exclusively on beer and soda, not trucks, insurance, shoes, restaurants,

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<v Speaker 1>and all the other stuff pedaled during the Super Bowl.

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<v Speaker 1>And let's not forget that advertising is not just about

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<v Speaker 1>immediate boosts and revenue. It's also about brand recognition. There's

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<v Speaker 1>no bigger stage to debut your brand. Then the Super

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<v Speaker 1>Bowl survey, secent of Americans said that they looked forward

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<v Speaker 1>to the Super Bowl more for the commercials than for

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<v Speaker 1>the actual football game. The ads not only played during

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<v Speaker 1>the game, but are reposted online and shared via social media.

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<v Speaker 1>A great Super Bowl ad really can make your brand,

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<v Speaker 1>and a bad one can break it. Let's take a

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<v Speaker 1>moment to appreciate arguably the worst Super Bowl commercial ever

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<v Speaker 1>in the Startups Shoe retailer Just for Feet hired ad

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<v Speaker 1>agencies ATTACHEE and SATTACHEE to produce an unforgettable spot for

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<v Speaker 1>the Big Game, and that's exactly what they did. The commercial,

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<v Speaker 1>which depicts four white guys in a humby hunting down

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<v Speaker 1>and drugging an African barefoot runner and then fitting his

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<v Speaker 1>unconscious body with shoes which he hates, is certainly unforgettable.

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<v Speaker 1>Just for Feet ended up suing's attache and Attache for

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<v Speaker 1>ten million dollars and then filing for bankruptcy a few

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<v Speaker 1>months later. While the discovery of accounting fraud was the

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<v Speaker 1>main reason, you can bet that Super Bowl ad didn't

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<v Speaker 1>help the bottom line, and that's whe a return on investment.

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<v Speaker 1>Today's episode was written by Dave Ruse and produced by

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<v Speaker 1>Tyler Clang. Brain Stuff is a production of iHeart Radios

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<v Speaker 1>How Stuff Works. For more on this and lots of

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