Basic Economics Driving Super Bowl Ad Buys

This year the focus of Super Bowl advertising has been more on who is not in the game, then who is. Annual stalwarts Pepsi and FedEx are out, and major US car companies will obviously take a back seat. It’s easy to point to the economic recession causing major companies to reassess internal spending, but a better reason is that $3m for 30-seconds only makes fiscal sense in specific situations.

What the recession has forced companies to do is assess ROI (or some measure of impact) of its marketing spend. In doing so, some major brands have come to the realization that all the theatrics and hoopla surrounding the Super Bowl don’t necessarily add up to sales increases. In fact, if a brand drops the ball during the big game, it may actually hurt sales, while a good commercial may find itself into the highlight reels for all of the following week but not necessarily into the next 10-Q. It raises the age old question if someone is going to pick Coke vs. Pepsi based on which commercial they like better.

The Super Bowl is great for smaller or start-up brands looking to emerge into the mainstream and announce themselves. It also benefits more established brands launching a new product line, attempting to reposition within the marketplace, or putting out a specific call to action with the goal of capturing market share. E-Trade and Monster successfully pulled off the former, while Denny’s was hit using the latter strategy with its popular offering last year. Denny’s returns with a similar spot this year, which they can easily measure the success of by counting customers who use the offer, and is a smart ploy since once you have customers in the restaurant you have a greater chance of retaining that customer.

While E-Trade and Monster continue to use the Super Bowl to build their brands, many first-timers will attempt to catapult themselves into the public eye, including Qualcomm’s FloTV, Boost Mobile, and tru TV (a Turner network). The Super Bowl makes sense for all of them as they are announcing themselves and their products to a broad audience, or in the case of truTV, introducing a show related to football that will attempt to capture new viewership for the channel.

On the other hand, does it really help AB-InBev to continue putting up Bud and Bud Light ads every year, or Coke to come up with a new creative and spend close to $6m for one-minute? That’s why Pepsi and FedEx made smart decisions not buying time. They have nothing new to say, no new products to launch, they are already well-established brands that everyone watching the game is familiar with, and to be honest, they may actually receive more hype leading up to the game by deciding NOT to advertise than some competitors who do decide to advertise, an interesting reverse psychology.

In the end, it should not be a big story that FedEx and Pepsi are out, and the likes of kgb and Motorola (desperate to push its new phone) are in. It marks the natural evolution of Super Bowl ad economics. Established brands buying simply to showcase a new creative and be the talk of Ad Week is not worth $3m+, while new brands and new products can use the game as their introduction to the world since it’s the broadest reach it can achieve in one spot all year. However, given the cost relative to the marketing spend and revenue for some smaller, growth companies, a Super Bowl ad buy can be make or break – as many found it during the dot come era.