In many ways, Super Bowl 50 has begun.
Spoofing the election, the Bud Light Party has this Schumer/Rogen teaser:
And here is a longer version of the Pokémon 30-second spot:
Where are we going? To why Super Bowl ads are so expensive.
Super Bowl Ad History
Wanting to convey more of a story, firms are airing 60-second ads. Last year 37 percent of brand ads were 60 seconds or longer, slightly less than 2014.
The $6 million Ad
At $5 million this year, the 30-second rate is 11 percent more than last year’s highest price. Meanwhile CBS says that by holding back several spots, it expects to charge a last-minute $6 million.
The Big Spenders
Ads from the top 5 have become a Super Bowl tradition (but GM did skip last year).
Judging the Ad Rate
While a Super Bowl 30-second ad is $5 million, the average cost for a 30-second prime time TV spot is $112,000 and for “The Big Bang Theory,” $344,827. Maybe we could say though that more than 114 million viewers make Super Bowl ad rates reasonable?
So, the Super Bowl attracts more viewers, some of whom (like me) are more interested in the ads than the game. For businesses, the Super Bowl is a unique opportunity to build brand awareness, increase sales and buoy their stock price.
Yes…stock price. A University of Wisconsin study actually concluded that from the Monday before the Super Bowl to the Friday after, the stock price of firms with Super Bowl ads outperformed the S&P by 1%.
But still, why $5 million?
Our Bottom Line: Monopoly Pricing
Saying its Super Bowl TV ad inventory for the game is sold out (except for ad time it is holding back for a last-minute sale), CBS can behave like a monopoly, become a “price maker,” and implement monopoly pricing. However, as with all monopolies’ demand curves, there is some price elasticity. Doritos is running one “Crash” ad instead of two.