How Much Does a Super Bowl Ad Really Cost?

by Jonathan Berr | February 1, 2013 11:49 am

The Super Bowl is one of the few televised events that millions of people of varying demographic backgrounds watch, and advertisers pay a pretty penny to reach this massive audience.

Some, though, pay less than others.[1] pointed out something that has been well known to advertisers for years. Not everyone pays the reported rate of $3.8 million for a 30-second spot. People should think of those figures like the sticker price on a new car, which, as many consumers know, is largely theoretical.

Some long-time advertisers, such as Anheuser-Busch InBev (NYSE:BUD[2]), probably pay a good deal less than the posted rated. Exactly how much less is closely guarded secret. Other marketers, particularly those that are buying multiple spots and those buying longer commercials are probably getting advantageous rates as well.

New York-based CBS (NYSE:CBS[3]) may earn about $220 million from Super Bowl ads. For a company analysts expect to net $14.76 billion in revenue this year, that’s decent but not spectacular business. CBS lucked out this year because the battle between the head coaching Harbaugh brothers — Jim of the San Francisco 49ers and John of the Baltimore Ravens — will surely attract casual sports fans.

This family drama will sell, but it sure comes a high price. In 2011, CBS, News Corp’s (NYSE:NWS[4]) Fox and Comcast’s (NASDAQ:CMCSA[5]) NBC forked over $28 billion for the broadcast rights to NFL games from 2013 to 2022, a 63% increase over the rates they had been paying.

Buying spots on the big game isn’t a sure thing for advertisers, either. Research In Motion, now named BlackBerry (NASDAQ:RIMM[6] — note: on Feb. 4, the ticker will be BBRY), bought its first-ever Super Bowl ad this year to tout its new line of BlackBerry 10 phone[7]s[8]. One problem — and it’s a huge one — is that they won’t be available in the U.S. until March. Such a gap between product launch and availability is an eternity in the smartphone world. Apple (NASDAQ:AAPL[9]) and Samsung, the two market leaders, wouldn’t have made such a blunder.

BlackBerry may become  a cautionary tale to wannabe Super Bowl advertiser. So might GoDaddy. Every year, the Internet domain service releases several raunchy Super Bowl ads. Unfortunately, they don’t seem to have done its underlying business much good. The company pulled a planned initial public offering a few years ago, and a consortium of private equity players acquired GoDaddy for $2.25 billion in 2011, roughly half of which was debt.

Though GoDaddy may be a presence at the Super Bowl for years to come, with its core business becoming increasingly commoditized, it will stay out of the game for investors for a while.

Nonetheless, advertisers aren’t going to abandon the Super Bowl anytime soon. The NFL, for one thing, is by far the most popular sport in the U.S., which breaks the heart of this baseball fan to admit. According to 2011 poll conducted by Marist, roughly 60% of Americans considered themselves a sports fan.

Not many things unite us so much as a people these days, except maybe hatred of all things Kardashian — but that’s another story.

Still the networks can’t count on the Super Bowl to sell itself. Advertisers are going to continue to ask for and receive special considerations for buying commercials in the big games. The media companies will have no choice but to cut deals to keep their customers happy. In today’s increasingly fractured media environment, they have little choice.

As of this writing, Jonathan Berr is long CBS. Follow him on Twitter @jdberr.

  2. BUD:
  3. CBS:
  4. NWS:
  5. CMCSA:
  6. RIMM:
  7. new line of BlackBerry 10 phone:
  8. s:
  9. AAPL:

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