Advertising

Super Bowl Ad Insanity Explained in Six Charts


A 2013 Super Bowl advertisement for PepsiCo's Frito-Lay's Doritos

Photograph by PepsiCo via AP Photo

A 2013 Super Bowl advertisement for PepsiCo's Frito-Lay's Doritos

Are you ready for the $5 million Super Bowl ad? Or the $10 million one?

Multiple sources are estimating a $4 million price tag for the average 30-second commercial at this year’s Super Bowl. That’s a pretty mind-bending number, but it probably won’t be in 2040, given the exponential growth in ad rates for the big game. Back in the 1980s, marketing mavens found it shocking when the $500,000 mark for Super Bowl spots was crossed. Today, that would get you only three seconds of airtime.

Here’s the history of Super Bowl ad rates:

If this average growth rate were to continue into the future, we’d see this extrapolated trend line down below. Rates approaching $10 million for a single commercial are going to happen sooner than you might expect.

If prices follow the historical growth pattern, we should expect to see $6 million in the 2020s, $8 million in the 2030s, and $10 million by 2040. By comparison, a Super Bowl commercial cost $1.6 million in 1999—indicating a growth rate of 150 percent in just 15 years.

What is it about the Super Bowl? Why does a single broadcast consistently command ever-increasing prices from advertisers?

1) Viewers don’t change the channel when a commercial break comes on, compared to any other type of programming. The audience levels for the commercials are actually higher than for the on-field play itself. And we are talking big audience: Last year’s match-up attracted 109 million viewers.

2) Super Bowl commercials in particular have staying power from all the pre-game and post-game discussions about them.

3) The cost-per-viewer (CPMs) is still competitive and in-line with with normal TV programming.

Super Bowl viewership has risen since the first game, more than tripling since 1967.

However, the growth in ad sales has far outpaced the growth in viewers:

This has caused CPMs (commercial cost per thousand viewers) to continually rise.

The proliferation of TV choices and competition have made live sports a big draw for ad buyers who want to reach an audience that will stick around. This trend has helped Super Bowl demand. But compared to other live major-sporting events, Super Bowl ad pricing continues to show strong growth—much stronger than the modest gains for the World Series and college basketball’s final weekend.

Eric-chemi
Chemi is head of research for Businessweek and Bloomberg TV.
Gambrell is a contributing graphics editor for Bloomberg Businessweek.

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