Recession raises stakes for Super Bowl advertising
NEW YORK/CHICAGO – The Super Bowl is always high pressure for advertisers — but this year expect more nail biting, pacing and hand wringing than ever before from chief marketing officers.
They have good reason to be anxious. A recession that has companies closely watching expenses — and cutting everything from staffing to travel costs — makes the $3 million price tag for 30 seconds of commercial time during NBC’s broadcast of the National Football League’s championship game on February 1 even more conspicuous than usual.
“The Super Bowl remains this incredibly unique advertising opportunity because you get all this focus and all this attention and all the PR buzz around it,” says Tim Calkins, a professor of marketing at Northwestern University.
“That’s huge and that’s still the case. The hard part now is it’s a tough year to justify the spending and it is a tough year to hit the right tonality on the game,” he added.
Commercial prices for the Super Bowl are always eye-popping, far above what is paid for any other TV event, partly because it draws more than 95 million U.S. viewers. Ads during the Academy Awards, another major advertising event which pulled about 32 million U.S. viewers last year, run about $1.8 million for a 30-second spot.
Still, NBC sold most of its advertising time for the Super Bowl by the end of the summer at prices around the $3 million mark. At the moment, it has about 10 percent of its commercial time left to sell.
Seth Winter, senior vice president of NBC Sports Sales & Marketing, said that the broadcaster has not “compromised” its rates to draw in last-minute advertisers.
Sources nonetheless say that NBC, which is majority-owned by General Electric Co (GE.N), has shown more willingness in recent weeks to reconsider its stance on pricing to draw interest from advertisers.
“The context of the economic recession that we’re dealing with is going to impact the Super Bowl as it impacts every other form of television advertising,” said Neal Pilson, head of his own New York-based sports consulting firm and also former president of CBS Sports.
“I don’t think it’s unrealistic to think that the last few units may be sold at numbers below the current ask. It’s all supply and demand,” he said.
This year, General Motors (GM.N) and Fedex (FDX.N) decided against running commercials during the Super Bowl, citing the recession.
But other major advertisers like Anheuser-Busch InBev (INTB.BR), PepsiCo (PEP.N), Hyundai Motor (005380.KS) are still committing millions to air ads regardless of the downturn.
“This is not a business for the fainthearted, but we just think the opportunity is all that much greater this year,” said Scott Keogh, Chief Marketing Officer for Volkswagen AG’s (VOWG.DE) Audi of America, which will run a 60-second spot early in the broadcast.
“If a number of our competitors are locking on the brakes, we feel we can make a lot more brand gains,” he added.
Advertisers cite a host of reasons that spending millions for a single commercial still makes sense in a downturn: The press coverage, the water-cooler chatter, the size of the audience and the fact the most viewers watch the game live, rather than recording it and zipping through later.
And they spend heavily to create their ad campaigns. DreamWorks Animation Inc and Pepsi on are airing what they are billing as the first-ever Super Bowl commercial in 3-D for the “Monsters vs. Aliens” movie.
“We tend to focus on the gross amount of the advertising, but the fact is a lot of advertisers consider it an efficient way to put their product or service in front of virtually half the homes in the country,” said Pilson.
Even so, executives said that advertisers would be wise to avoid appearing over-the-top in Super Bowl commercials this year, with consumers easily offended by companies paying to run expensive commercials even as jobs disappear.
“I think you’ll see a little bit of change in tone,” said Robert Boland, professor of sports management at New York University. “You’ll see a change in tone for advertising in the coming year probably, at least from some companies trying to be more affordable or more understanding of people’s problems.”
That will only increase the scrutiny of chief marketing officers — who must justify the commercials while making certain the spots are in tune with consumer sentiment.
“They will be under more pressure than ever this year,” said Fran Kelly, chief executive of advertising agency Arnold. “The more headwinds your sailing into, the more pressure on marketing captains.”