Tuesday, January 20, 2015

The Sense in Super Bowl Advertising

Now that the teams are set for this year's big game, let's take a look at the reason the Super Bowl exists at all.

The single reason, simply put, is to assemble a large audience for advertising. People don't just field professional athletic teams for fun, or for the glory of sport. It is a business, and this business is largely based on advertising revenue.

Today, it is becoming increasingly difficult to assemble large audiences for advertising. When it comes to mass media, members of the public have a great many interests and an increasing plethora of what to view.

Indeed, continuing advances in information technology are amplifying this trend with an ever-increasing range of delivery systems and increasing efficiencies of operation. As a result, audiences for mass media programming are becoming increasingly fragmented.

When it comes to advertising, large businesses seek the quickest ways to inform and influence the greatest numbers of people. After all, the very purpose of advertising is to make things happen faster in the marketplaces of goods and ideas.

The pre-eminent metric for advertising audiences is the cost per thousand households. This metric is known as CPM. The "M" in this advertising industry abbreviation is for the Roman Numeral for one thousand, otherwise the concept would of course more simply be "CPT."

Today, in the United States, the average CPM for commercials placed on prime-time television network programs is about 25 dollars per 1,000 households. According to the Television Bureau of Advertising (TVB), the current average cost of a 30-second network prime-time commercial is about $112,000 and the audience consists of about 4.5 million households.

Now, if your goal is to reach a substantial proportion of the public, you quickly come to the realization that 4.5 million households is only about 4 percent of the total 115 million households in the United States.

So, to reach a greater proportion of US households, large-scale advertisers put together plans to use more media in more places to reach more people. For example, with about a $4 million budget, an advertiser could place a 30-second commercial on a selection of local television stations throughout the top 100 markets in the United States to assemble a prime time total audience of about 100 million households. The CPM for such a plan would be about 37 dollars per 1,000 households.

However, one limitation of such a so-called "spot television" schedule is the considerable range in the programming contexts for the commercial in the many markets across the nation and the varying degrees of audience attention levels.

Enter the Super Bowl. With the wide-spread public interest in sports programming, the Super Bowl provides an efficient opportunity to reach almost half of the households in the United States at the same moment of time and when they have a high degree of interest in both the sports event and the advertising.

The 2014 Super Bowl reached about 48 percent of the households in the United States, and with 115 million total viewers this amounted to the largest ever US television audience. Accordingly, with a cost of about $4.2 million for a 30-second commercial, the CPM for the 2014 game was about $80 per 1,000 households (or about $39 per 1,000 viewers).

Now, it is apparent that $80 per 1,000 households for the Super Bowl is over twice the $37 level of a comparably priced spot television plan targeted at the top 100 markets in the US. But, the Super Bowl is the most widely watched program in any given year, and the differential is a premium advertisers are willing to pay for immediate reach to such a substantial proportion of the nation.

Indeed, during the Super Bowl the audience sometimes views the advertising as more interesting than the game. And, there is all the hoopla and social media hype leading up to the game that can set the stage for highly productive marketing promotions in connection with the sponsors' commercials.

Bottom line, sports programming currently provides a productive means of assembling mass media audiences. So, when it comes to scoring big as a national advertiser, the Super Bowl means "game on."

In 2015, investing $4.5 million in a 30-second Super Bowl commercial can still make a lot of sense.

  Copyright © 2015 by John Eighmey. All Rights Reserved.

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