5 Takeaways From Super Bowl Commercials

Super Bowl 50 will be played this weekend, whether or not you are a football fan, a large buzz revolves around the Super Bowl commercials.  At a whopping $4.5 million for a single 30-second spot, companies are shelling out serious cash for an advertisement with no guaranteed return on investment.  Or is there?

The “Super Bowl” Of Commercials

Super Bowl CommercialsThe Super Bowl is the largest live event watched annually.  People who can careless about the teams on the field or (potentially) Peyton Manning's last game will watch the game.  For the commercial junkies not near a tv, CBS will also live stream the commercials on the internet.

Buts, is the Super Bowl as lucrative for commercials as it once was?  Certain companies are already streaming certain commercials on the internet ahead of the big game.  I've also read that there are an abnormally high number of new advertisers this year as previous advertisers have shied away from the $4.5 million price tag.

Anytime we stream a free video or show on the internet, we have to watch a series of commercials.  So there is a lot of exposure through venues like Youtube & Hulu.

Takeaway #1: Product Placement

I'm not in the advertising business so I cannot fathom spending $4.5 million for 30 seconds, but why do companies pay so much money for a commercial?

One answer is product placement.  If you have watched any NFL game through the season, you have probably seen Bose headsets on all the coaching staffs & quarterbacks reviewing the interception on the previous play with a Microsoft tablet.  Both of those companies literally pay tens of millions of dollar each season to have these products on the sidelines.  I personally didn't even know that Microsoft was making a tablet until the football season started, so I did take a few minutes to research their products.

If Bose didn't have this product placement, would you buy a pair of Beats headphones instead?  Because Microsoft Surface is the official tablet of the NFL, will you buy one instead of an iPad or another competitor?

Commercials make us associate certain brands with certain wants & needs.  If you are looking to buy a web domain, you might go to GoDaddy.  Want a cold beer, Budweiser of course.  If you are hungry for a candy bar, grab a Snickers.

If you solely go off of commercials and don't do a lot of research, these expensive spots can be very persuading.

I haven't personally bought a specific product because of a Super Bowl commercial, but they are great sources of pop  culture and brand awareness.  I associate Clydesdales with Budweiser & child-sized Darth Vaders with Volkswagen automobiles, but their commercials haven't made me buy their product.

Although one of my high school teachers did buy a new pickup truck on the spot because of a commercial they saw while watching tv one night.  So commercials do work.

Takeaway #2: Does Expensive Advertising Raise Product Prices?

It is very hard to find conversion rates for television commercials.  The best source of advertisement is still word of mouth, in my opinion.  If Joe says the new restaurant is good, guess where we are going for date night next month for a change.

So do all these commercials raise the price of certain products?

The short answer is possibly.  Think of all the discount retail establishments that do minimal advertising.  Dollar Tree & Aldi come to my mind, they distribute weekly circulars but don't sponsor many organizations or functions.  This is one way they are able to keep costs low.  They do not need to earn a couple extra cents per product to offset advertising expenditures.

On the flipside of the argument, advertising can keep costs low.  Advertising allows you to scale your business so prices are lower because you can produce products in mass quantities.  A 1975 case study on eyeglasses supports this side of the argument.

My question is if commercial advertisement costs are built into the price of certain products.  For example, the window sticker on some new automobiles will show part of the total cost is to pay for an advertisement campaign from the manufacturer (i.e. Ford, Chevy, Dodge).

Going back to Bose, they pay the NFL $50 million+ for the exclusive use of their headsets.  They need to sell a lot of headphones to actual consumers to offset that annual sponsorship cost.  It might be a chicken & egg question, but could they sell a pair of awesome noise-cancelling headphones for less than the current retail price of $250 on Amazon if they didn't pay so much for sponsorship deals?

Takeaway #3: Advertising Is A Double-Edged Sword

The Super Bowl is the epitome of 20th century sports commercialism.  Whether we like it or not, professional athletes get paid a lot of money for entertainment.  They make more than our lawmakers, educators, and first responders that have a daily impact on our lives..  The emphasis placed on Super Bowl commercials underscores how much money is spent & to be made from professional sports.

Commercials, whether during the Big Game or streaming an episode of Shark Tank on Hulu, help pay the tv stations and companies that provide us this entertainment and content for free.  Yes, we indirectly pay for it as we purchase products throughout the year as no company can remain profitable with unsuccessful advertisements.

Takeaway #4: Can $4.5 million be more wisely spent?

While I'm not trying to sound altruistic, as I watch college & professional football and therefore in the target audience for advertisers, I do question if $4.5 million could be more wisely spent in the community.  Or a lot of the money spent on sports for that matter.  Most commercials focus on consumer purchases, although Colgate has one this year that is like a public service announcement for water conservation.

I argue that most people watching the commercials already have preferred brands they are going to purchase.  Remember what I said earlier about word of mouth advertisement.  If I don't like Budweiser beer or Pepsi Cola, I'm probably not going to try it again because of a nifty commercial.  I might try it again if my friend says they changed the recipe and it tastes better.

If even half the amount charged for a single commercial ($2.25 million) for the 58 commercial spots air during the Super Bowl  was spent on charity, that's $130 million that could go towards domestic and/or international charitable causes.

Instead of only talking about conserving water, maybe more wells could be drilled abroad or bottled water shipped in to ensure adequate supply for a year!

This commercial will be aired during the 2016 Super Bowl & is the primary source for this takeaway.

Takeaway #5: Super Bowl Commercials Push The Envelope

This is my final takeaway & might make me appear like I'm on a moral high horse.  I will let you make that call.

Certain Super Bowl commercials are notorious for pushing the envelope.  Cue GoDaddy.  Certain commercials for this year are no exception, the ones that have been released so far.

The boundaries of what is publicly acceptable on television has greatly changed in a decade or two.  There are commercials that I don't want my child exposed to.

I remember growing up and Baywatch was considered racy & certain four letter words were reserved for sailors.  Now practically every show “pushes boundaries” with beauty or foul language to attract & retain viewers.  Although I do not want to find out, I wonder what “I Love Lucy” would look like today if it was filmed?

To relate this takeaway to personal finance, do viewers like racy commercials or have advertisers gone too far?  Will you avoid or support certain companies because of the content advertised? 

Has the high amounts of money required to produce & air a commercial during the Super Bowl made us reckless financially & socially?  As this is a personal finance blog, I try to inspire financial responsibility in every facet of life.  Like living a wild life can lead to financial ruin, are Super Bowl commercials condoning a lifestyle of financial imprudence?

I don't have the answers to these questions, but I give them to you as food for thought.

Summary

Whatever your opinion on professional sports or expensive tv commercials is, I hope these takeaways have made you think.  Advertisers spend big bucks for a particular Sunday in February to capture the attention of 114 million television viewers.  Not to mention all the money spent through the football season & other sports like baseball & soccer.

I enjoy watching the game (depending on the teams playing) & enjoy seeing some of the witty commercials during the breaks.  Though I do think it is crazy to spend so much money for a commercial that will be aired countless times afterwards.

We might have a family get together this Sunday, as it's an American tradition of sorts, but not to specifically watch the commercials.

Are watching Super Bowl commercials your past time tradition?  Have they ever made you buy a product? What's your opinion on Super Bowl commercials or commercials in general?

Thanks For Reading,

Josh 

 


Josh founded Money Buffalo in 2015 to help people get out of debt and make smart financial decisions. He is currently a full-time personal finance writer with work featured in Forbes Advisor, Fox Business, and Credible.