In 1981, Schlitz gambled with a live Super Bowl ad. Called the Great American Beer Test, 100 Michelob beer drinkers participated in a blind taste test. Schlitz got 50% of the vote.
Where are we going? To how firms try for product differentiation.
The Super Bowl Ad Market
Saying it will present the first live Super Bowl commercial (but what about the 1981 contest??), Snickers has purchased the first ad slot in the third quarter. As a pre-game teaser, Snickers released this video:
https://www.youtube.com/watch?v=-nM32jrBITA
While “hunger satisfaction” is reputedly how Snickers wants to brand its ad, below Ford has the “Go further” tagline.
https://www.youtube.com/watch?v=HhtHflDrnAU
Market History
During the past 10 years, the price of Super Bowl ad minutes has skyrocketed. Doubling since 2007, this year it will cost firms $5 million for 30 seconds. (The BLS Inflation Calculator tells us that $1 in 2007 is $1.16 now.)
Market Demand
Looking back, we would see that Anheuser-Busch spent the most for Super Bowl ad time. As an industry though autos have the top spot:
2016 Spending on Super Bowl Ads
Market Supply
Thinking of the law of supply, it makes sense that as the price rose, commercial time increased. Since 2007 ad time rose by 15%– from 43:05 minutes to 49:35. At $5 million for every half minute, an extra 6.5 minutes are a whopping $65 million dollars.
Our Bottom Line: Oligopoly
As a large firm that mass produces, has many customers and few competitors, an oligopoly needs to differentiate its product from everyone else. With its audience of more than 100 million, the Super Bowl is the perfect event.
As we move to the right along the following competitive market structure continuum, the power of the firm accelerates, market entry and exit become more difficult, and price competition is less likely.
Sounds like Snickers?
My sources and more: Always good for learning about Super Bowl advertisers, Kantar Media has the facts and the summary. Meanwhile, Bloomberg and NY Times articles have the 2017 up-to-date facts. and Adage had the Snickers story.
