Super Bowl ad costs rise; DVRs give sports bigger share of overall ad buy

The New York Times reports that Anheuser-Busch, Coca-Cola, FedEx, General Motors, PepsiCo, Proctor & Gamble, and Toyota are among this year’s Super Bowl advertisers, paying an average of $2.7 million per 30-second spot. One footnote for those of you not in advertising: this represents the cost just to place the ad. It doesn’t include production costs, which can range from about $12 (see last year’s user-generated Doritos ad) to as much as $2 million. All of this begs the question: is a Super Bowl ad worth the cost?

The answer is a resounding “maybe.” As the Times points out, it offers the advertiser a mass audience that just doesn’t exist elsewhere:

The Super Bowl is one of the few so-called big events that remain available to marketers eager to reach tens of millions of consumers at the same time; more than 90 million Americans typically watch each game.

“It’s the last bastion of mass marketing, with incredible reach,” said Jim Nail, chief strategy and marketing officer at Cymfony, a research company that is part of the TNS Media Intelligence unit of Taylor Nelson Sofres.

“If you’ve got to sell a lot of beer or chips, or you have something big to announce, it’s a great venue,” he added, despite steep costs that otherwise may be “really hard to justify.”

And, as the Times notes, the ads have become as much a part of the show as the game itself.

[R]ather than change the channel or leave the room for a beer when the selling starts, the audience sticks around, talks about the spots the next day and even goes to Web sites like AOL and YouTube to watch them again.

At every Super Bowl party, there is usually someone “who says, ‘Shhhhhhh! Here comes this cool commercial,’ ” Mr. Nail said.

Indiana advertisers have an additional challenge in deciding whether to run a Super Bowl ad, since the asking price will rise every time the Colts move closer to defending their title. (A local slot doesn’t cost $2.7 million, but if the Colts make it to the big game a six-figure rate in Indianapolis is not out of the question.) And even if the hometown team bows out early, an unprecedented number of viewers may tune in to see if the Patriots can cap their undefeated season with a Super Bowl victory. One thing’s for sure: Indiana Fox affiliates won’t be cheering for the Jaguars or the Seahawks this weekend.

While the Super Bowl remains the biggest ad orgy of them all, it’s reflective of a trend that’s making many sports a more attractive ad buy. As the Los Angeles Times explains, this is a product of both the writer’s strike and the likelihood that viewers will watch games live instead of recording them, watching them later, and fast forwarding past the commercials:

With digital video recorder use on the rise and the Writers Guild of America strike in its 10th week, "sports is the only thing that's fresh," said David Lubars, chairman and creative director of ad agency BBDO North America...

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At Fox, demand for advertising time during baseball games and NASCAR events is stronger than usual this year, Mulcahy said, and prices for commercial time during college football's just-completed Bowl Championship Series selection show were 15% higher than in 2006.

And it's not just Fox. Spending on TV sports was up 26% in 2006 from the previous year and 44% from 2003, according to TNS Media Intelligence, which doesn't have 2007 numbers yet.

"Live sports are 99% TiVo-proof and advertisers are guaranteed to get the ratings they signed up for," Mulcahy said.

As products like this make TV viewers even more difficult to reach, look for sports and other see-it-as-it-happens programming to get more attention from advertisers.