Tuesday, January 31, 2012

Super Bowl Ads: Are They Worth It?

With more than 100 million people expected to watch live, the Super Bowl presents an incredible opportunity for marketers.  With that opportunity, however, comes a cost. This year, 30-second commercials in the game averaged $3.5 million, with some spots reaching as high as $4 million.

The multimillion-dollar question is are the ads worth it.  From a stock market perspective, the answer is yes.  According to a study by the University of Wisconsin-Eau Claire, Super Bowl advertisers from 1996 to 2010 outperformed the S&P 500 by more than 1% on average in the week before and after the game.  The boost in share price is attributed to the hype associated with advertising in the Super Bowl.  The longer a company hyped their ad during the year, the longer they outperformed the market.  Public companies advertising in this year’s game include Best Buy, Coca-Cola and GM.

Nevertheless, given how critical fans are of the ads, corporations need to make sure they can afford to fall flat.  $4 million for 30 seconds is more than some companies’ entire ad budgets.  One of the most prominent examples of a Super Bowl ad gone bad was Just For Feet.  The shoe retailer aired a racially insensitive ad during the 1999 game and filed for bankruptcy by the end of the same year.

The moral of the story? Advertiser beware…