Mark Dieckelman
For many people, the Super Bowl is celebrated every year with friends, family, etc. Whether they are die hard fans, or just watching for commercials, the Super Bowl is surely not going to disappoint millions of viewers. Many people are eager to watch the game, but when it comes to breaks, that’s when many people start to get excited. The Super Bowl is a major way to get customers to buy into major businesses, but there is a cost to how much money businesses can spend in a thirty second time slot.
The favorite time of the year for many people is the Super Bowl. Because the Super Bowl is one of the major events, the spot for thirty seconds for advertising is pretty costly. In 2014, a 30-second spot is reportedly going for four million, up from 3.8 million in 2013(Killoran). As the Super Bowl is getting more and more popular, more businesses want to spend their money so they can get more business from viewers around the world. Due to this, the demand for that product goes up but the supplies for that product might go down. The Super bowl is so popular, companies are eager to buy a thirty second time slot so that they see their revenue and popularity go up.
Another factor that companies have to consider is how much the price goes up from year to year. Many big name companies are eager to buy ad space to sell their product, but the asking price may push away major companies because it is too much to pay for. In the last 14 years, the price of a Super Bowl ad has increased by an average 5.7% annually. At that rate, it would take another 13 years for the price to double to $7 million(Smith). This clearly shows that as the Super Bowl becomes more and more popular, the asking price for a thirty second spot becomes greater and greater, which may push companies away from that certain spot because it is too much to pay for enough though the demand is high during this time.
For companies to get their name out during this time, they have to pay a lot of money for a certain air time slot. Some companies spend more than others each year, which as a result may make the company have more leverage than the other. More well known companies will spend more so they can remain popular throughout the year. 
What this graph illustrates is that Anheuser-Busch leads the way with how many years they want their Super Bowl ad in a certain time slot, and how much they paid for 11 years. Because they paid so much, their product remains popular, and so they gain revenue from the Super Bowl, which helps them stay in business longer.
As the Super Bowl becomes more and more popular as time goes on, companies will have to spend more money because the cost of a thirty second spot goes up every year. Although the price might be too much for a certain company, they will have to budge into a spot so that they can stay in business and remain popular than those who dont. All in all, the Super Bowl is a very popular time, so businesses want to spend more so that the demand for their product goes up after their commercial airs during a break in the Super Bowl.
You made a good point with the supply and demand. When the companies want to see their adds on the commercials during the Super Bowl, some companies don’t care how much it would cost, therefore they can start to charge more per second of airing time during the commercials, and since the Super Bowl is only on for a few hours, that demand goes up while the supply does go down. Great connection! Also since they saw what they got from a 30 second commercial last year, they will try to raise the prices on the following year, but that’s only if the Super Bowl stays as popular as it is now.
ReplyDeleteI never really though about it, but as the Super Bowl gains popularity and the demand for the commercial slots increases, the price will increase as well. I think it would be interesting to see how the amount a company pays to have a commercial relates with their later profit. I also though it was interesting how some companies had to pay more for a slot in the Super Bowl than others.
ReplyDeletewhy do companies want commercials in the super bowl? Because, everyone watches the super bowl even if they don't like football they will watch it for the commercials. The marginal benefit that each company receives from having a commercial in the super bowl is greater than the benefit of having a regular commercial air on tv. Also the fact that we see the companies that sponsor the super bowl all for advertisement such as Coke, Mcdonalds, Subway, and many more. Interesting that there are certain companies that must pay more for their commercial to air during the super bowl but they can get away with charging more because the companies would not turn down such a great economic opportunity to invest in a resource that would help them extract resource. Good points with the supply and demand, demand will always be there for the super bowl and commercials and same with supply since companies want to get their advertising to everyone!
ReplyDeleteThat is really interesting to think about. I love watching the super bowl for the football but also for the commercials. Its crazy how much a 30. second time slot costs, and how these companies can afford that slot. I'm interested in their outcome of before and after the super bowl. Was the millions of dollars put into the 30. second ad, worth it? I want to know what kind of profit some of these companies made possible in the long run after their advertisement and is that why they continue to put the million dollar ad in every year?
ReplyDeleteThe Superbowl is a really great time of year, and it's really interesting to see all the commercials. However, it is so absurd how much companies pay to put their commercial on during the Superbowl. When looking at your graph I was surprised how much they paid. It stated that "Anheuser-Busch leads the way with how many years they want their Super Bowl ad in a certain time slot". Ten whole years spending around $248 million dollars. However, I question if these Superbowl commercials are worth the money companies are spending? Do people really want to spend money on a product just because they see it on a Superbowl commercials? It sure doesn't help when I plan on buying a product. The overall hype of Superbowl commercials will probably continue to increase in price, but will consumers also take in the hype of the product because they see a commercial?
ReplyDeleteIt is hard to imagine that companies would pay four million dollars just to get a 30 second slot in the Super Bowl commercial line up. Not only that, but many companies have more than one commercial showing, so they pay a lot more than four million dollars. Although the commercials are meant to encourage people to buy product, many people just watch the commercials because they are funny. The intent is to increase demand, and although for some products, this goal may be reached, it is not for other products. Just because consumers see a commercial advertising a car racing on top of a moving train will not make them go out and buy that car. Commercials are effective, but I do not know that they are effective enough to spend four million dollars or more on.
ReplyDeleteThis was a very interesting read, it perfectly explained idea that companies will pay through the roof in order to make a larger profit. Sure they pay millions to have their product displayed in a Super Bowl commercial but if it is successful, that money should easily be made back thanks to the publicity and increased popularity of the product. The more you spend usually means the more you make. This also goes the other way around: if someone is getting paid more, then they contribute more to the economy because they can afford to. The whole idea behind Super Bowl commercials in genius in the sense that it is a company spending money in order to make their customers do the same. Its a cycle in which the economy benefits greatly from.
ReplyDeleteJust because they put 4 million dollars into a commercial doesn't mean that businesses will actually gain customers. It might even be harmful to your business because customers might not take you seriously after. During this year's Superbowl, there was a commercial for a Robert-Haack Diamonds that was upside down. It was the most stupid thing ever. I don't think they've gained a single customer since. You have to think things through before you pay millions of dollars to have it aired for many to see. I understand if you do something like this if you are a well known company, but not one like Robert-Haack who isn't well known at all.
ReplyDeleteFor all the companies backing out of paying for the slot i say shame, because although it is most likely too much money to pay for a small time slot of only 13 seconds, this can be great advertisement for a company. Being in so that so many people are starting to watch the superbowl, the mere thought of that many viewers means the demand is definitely going to go up and your supply better go up t meet the demand. Although a company may pay a vast amount of money, and maybe pay more money than other companies, the amount of money they will make in return won't even compare, so in full paying money to have your ad be televised during the superbowl is in my opinion simply genius.
ReplyDeleteI try and watch the super bowl every year, although it sometimes doesn't happen, I do try. And the one thing I love seeing is the funny commercials that they play. I knew that companies had to pay a lot of money for the station to broadcast their commercial but I had no idea that it would be $3.8 million! You would think that putting this much money into one commercial on the day that most Americans are watching the Super Bowl that that company would get more consumers. And it is unfortunate that as time does go on, these companies will have to pay more just to show a 30 second video. It's unfortunate, but it keeps the company afloat.
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ReplyDeleteThe Super Bowl Ads are literally the only reason why I care about the big game, unless the Packers wrestle their way to the championship of course. I do think Joe H. brings up a good point: companies won't actually receive any new customers for simply putting their brand on your screen for 30 seconds unless their marketing strategy is actually effective. Ellen said she watches commercials that are funny; that's a strategy for many companies as well. Gaining popularity and demand for your product isn't vapid, and it would be inane to believe that. We're constantly talking about demand and how the consumers are the ones who primarily determine what will sell. The thing with advertisements, however, is that a company can spend capital to forcefully increase that demand if they're smart about it. It adds a whole new algorithm to the supply and demand logic that we've been taught. That's what I think we should take away from this. There's a reason why Pepsi and Coca-Cola gain separate pertinence in our American consumerist minds: they convince you to think one is better.
ReplyDeleteAgreeing with Patrick, my reason for watching the game has always been the commercials unless the Packers are playing. The amount of money it takes to only possess a 30 sec time slot of commerical is rediculous and a big risk. International Business Times told me that only 1 out of 5 companies project greater sales when putting one of their 4 million dollar commercial ads on during the Super Bowl. They also mentioned that the commercials are more for logo and company name exposure than bigger profit. I never thought that was the risk of having a commerical in a Super Bowl but considering the fact that so many companies still want their commerical out viewed, show that the real reason for the commerical is in fact exposure. Awesome post Mark!
ReplyDeleteMy dad always talked about them paying "1 Million a minute". I guess he wasn't that far off. It must have an advantage though to risk that 4 million dollars. The only reason it would work is if it increased you income and sales, and to keep doing it every year with the price increasing. That exposure must really put worth it to have such a demand for it and to have the price in increase so much for a tiny amount of time.
ReplyDeleteObviously, the more "trafficked" something is, the more valuable it will be, such as a piece of real estate near a very frequented highway. Companies air their best commercials during the Super Bowl because they know that the profit will make up for the high budget they use to create commercials of high enough quality for the Super Bowl.
ReplyDeleteIt’s crazy that thirty seconds of airtime during a Super Bowl game cost around $4 million dollars. I know that a lot of people only watch the Super Bowl for the commercials, so it all works out anyway. The demand for commercials must be high, or else the companies wouldn’t be willing to spend $4 million dollars on thirty seconds of advertising. It almost makes people who don’t watch the Super Bowl or the commercials at all (like myself) want to start watching them, just so the companies can get their money worth.
ReplyDeleteThe Superbowl is indeed a big event and the Superbowl commercials are a large part of that event. There are many people who watch the Superbowl only for the commercials. Because so many people watch the Superbowl and the Superbowl commercials it is a really great time for companies to get word out their products increasing their sales.
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