The Economics of a Super Bowl Ad
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Re: The Economics of a Super Bowl Ad
#2This has always bugged me. $7 million for a 30-second-long ad. What do they get out of it? Well, presumably, a change in peoples' concrete behaviors that is more than $7 million. They expect that (otherwise they wouldn't buy the ad in the first place).
At the same time, we're told that all the sex and violence on TV doesn't matter, because it doesn't change peoples' behavior.
So, which is it? Does what we watch on TV change our behavior, in concrete ways, or doesn't it? I suspect that it does change our behavior, that the advertisers are right. (They're betting a lot of money on their position; I'd expect them to have some basis for doing so before committing that kind of coin.) But if so, then the rest of what we watch also changes our behavior.
And, obviously, so does our social media feed...
Re: The Economics of a Super Bowl Ad
#3This has always bugged me. $7 million for a 30-second-long ad. What do they get out of it? Well, presumably, a change in peoples' concrete behaviors that is more than $7 million. They expect that (otherwise they wouldn't buy the ad in the first place). At the same time, we're told that all the sex and violence on TV doesn't matter, because it doesn't change peoples' behavior . So, which is it? Does what we watch on T…
It's not just a single run of the ad. The same ad is run many times over, on other TV programs. It's promoted on social media. People see it and think "Oh yeah, that was a super bowl ad" and that makes it more memorable, and they associate it with the fun they had watching the game.
Re: The Economics of a Super Bowl Ad
#4This has always bugged me. $7 million for a 30-second-long ad. What do they get out of it? Well, presumably, a change in peoples' concrete behaviors that is more than $7 million. They expect that (otherwise they wouldn't buy the ad in the first place). At the same time, we're told that all the sex and violence on TV doesn't matter, because it doesn't change peoples' behavior . So, which is it? Does what we watch on T…
There is the cache for everyone involved in creating the commercial. So, nice feather in the cap for the hundreds of people who get to touch it.
I have no doubt advertising has some effect on consumer preferences. However, I am a skeptic that one more Coke Cola ad aired at the Super Bowl meaningfully changes sales relative to the billions they already spend elsewhere.
Re: The Economics of a Super Bowl Ad
#5This has always bugged me. $7 million for a 30-second-long ad. What do they get out of it? Well, presumably, a change in peoples' concrete behaviors that is more than $7 million. They expect that (otherwise they wouldn't buy the ad in the first place). At the same time, we're told that all the sex and violence on TV doesn't matter, because it doesn't change peoples' behavior . So, which is it? Does what we watch on T…
approx 300 million eyeballs.
Re: The Economics of a Super Bowl Ad
#6This has always bugged me. $7 million for a 30-second-long ad. What do they get out of it? Well, presumably, a change in peoples' concrete behaviors that is more than $7 million. They expect that (otherwise they wouldn't buy the ad in the first place). At the same time, we're told that all the sex and violence on TV doesn't matter, because it doesn't change peoples' behavior . So, which is it? Does what we watch on T…
And of course the influencing on media networks doesn't stop at the 30 second slot when the money is spent by the million ;)
Re: The Economics of a Super Bowl Ad
#7This has always bugged me. $7 million for a 30-second-long ad. What do they get out of it? Well, presumably, a change in peoples' concrete behaviors that is more than $7 million. They expect that (otherwise they wouldn't buy the ad in the first place). At the same time, we're told that all the sex and violence on TV doesn't matter, because it doesn't change peoples' behavior . So, which is it? Does what we watch on T…
Sorry, I didn't realize we weren't supposed to be having sex.
Re: The Economics of a Super Bowl Ad
#8This has always bugged me. $7 million for a 30-second-long ad. What do they get out of it? Well, presumably, a change in peoples' concrete behaviors that is more than $7 million. They expect that (otherwise they wouldn't buy the ad in the first place). At the same time, we're told that all the sex and violence on TV doesn't matter, because it doesn't change peoples' behavior . So, which is it? Does what we watch on T…
There is the cache for everyone involved in creating the commercial. So, nice feather in the cap for the hundreds of people who get to touch it. I have no doubt advertising has some effect on consumer preferences. However, I am a skeptic that one more Coke Cola ad aired at the Super Bowl meaningfully changes sales relative to the billions they already spend elsewhere.
> I am a skeptic that one more Coke Cola ad aired at the Super Bowl meaningfully changes sales
It actually might. Coca Cola had $48b revenue last year, or in other words, 4800 millions. Spending 7 of those millions to put your product in front of 100 million people seems like a reasonable bet. If even a couple percent of those people are (sub)consciously influenced to pick up a 12-pack the next time they stop by a store when they might otherwise not have, it would likely be a profitable endeavour given the profit margins on their sugar water.
I think there's also a longer-term status play at stake. If only one of Coca Cola or Pepsi engaged in flashy advertising to this degree, it might give them a slight edge in status perception. In the long term, even an 0.1% shift in consumer preferences between Coca Cola or Pepsi would shift significantly more than 7 million in value. So if one of them engages in this, the other is obliged to follow, in a classic prisoner's dilemma. At any rate, given that 4800 millions in annual revenue translates to 13 million in sales per day, the number paid for that advertisement is a rounding error and doesn't have to move the needle very much at all to be successful.
Re: The Economics of a Super Bowl Ad
#9The author keeps saying, over and over, that the reason this is a good bet is because "the downside is capped and the upside is asymmetric" as if that's some ground-breaking realization.
Sorry, but obviously the downside is capped. The downside of virtually any marketing investment is capped at the cost of the media buy...And, the upside being "asymmetric" isn't some saving grace. What matters is the likelihood that you actually realize that asymmetric upside. And, nowhere in the article does he talk about Ro's estimated success likelihoods or actual outcomes.
In short, he's basically saying:
- I made a bet
- It costs me something ("capped downside")
- There's a potential payout ("asymmetric upside")
- I have no idea whether this is positive expected value
Re: The Economics of a Super Bowl Ad
#10This has always bugged me. $7 million for a 30-second-long ad. What do they get out of it? Well, presumably, a change in peoples' concrete behaviors that is more than $7 million. They expect that (otherwise they wouldn't buy the ad in the first place). At the same time, we're told that all the sex and violence on TV doesn't matter, because it doesn't change peoples' behavior . So, which is it? Does what we watch on T…
>This has always bugged me. $7 million for a 30-second-long ad. What do they get out of it?
Super Bowl ads are about brand building. They're not conversion ads. Their direct impact is to reduce CPC (cost per conversion) on other advertising.
Say you have to pay $100 per instagram conversion. Users see your ads cold and need a lot of convicing. Most won't pay attention long enough for your ad to convert. You need them to see a lot of ads.
But after they've seen your brand plastered all over the Super Bowl (and other brand opportunities), those same instagram ads might start converting at $90 per conversion. Users see your ad and go "Oh yeah I remember that brand, lemme check this out"
The brand effect is so strong that displaying a Visa (or Mastercard or Amex) logo near checkout literally increases consumer spend. Study from 1986: https://academic.oup.com/jcr/article-abstract/13/3/348/18224...
Another study from 2015 showing that credit card logos increase estimates of item value: https://www.semanticscholar.org/paper/Effect-of-Credit-Card-...