ROI of Super Bowl ads
Koen Pauwels, Feb 6, 2021
It’s that time of year again: in 2021, I find some comfort in watching Tom Brady win another Super Bowl, and in watching the ads, this time without marketing friends around me, and wonder about their ROI.
But what is ROI?
But what is ROI? It’s the extra profit your action makes, divided by the investment. Say you spend $ 8 M on your Superbowl ad ($5.5 for the broadcast, $2.5 for the creative and the fees). If you make $32M extra revenues because of it, and your profit margin is 50%, you have made $16M extra gross profit. Subtract the $8M for your net profit, and divide by $8M: your ROI is 1. Cheers!
But how to you calculate these extra costs and revenues? Aye, there’s the rub.
The extra costs are not just what you pay to outsiders (the NFL and agencies), but also involve the time you spent conceiving, planning, deciding and negotiating on the ad. After all, you are an amazing executive that would have spent that time productively elsewhere (opportunity cost of time). Reddit surprised this year by probably the most efficient spot: just 5 seconds in select markets. Moreover, declining NFL viewership and rising rates mean the average cost per viewer has increased from 50 cents in 1967 to over $4 in recent years. However, that does not mean ‘the returns on Superbowl advertising have dropped’. For that, we have to consider the benefits.
The extra revenues (or benefits) are the hardest to quantify. In my book I discuss the many ways of doing so, starting from the organization’s goals (see last week’s blog ‘Start with Your Vision’). These goals will vary greatly, with large brands focusing on maintaining their position of leadership, salience and market share, smaller brands aiming to grow consumer market penetration and investor market salience (for IPO or takeover), new brands acquiring recognition (which increases click-through on lower funnel ads), and old brands aiming to shift their image. For example, ‘Amazon’s expectations for its 2018 Echo campaign will have a completely different ROI expectation than 2017’s 84 Lumber campaign regarding recruitment and company values.’ (Jeff Nicholson, Chief Media Officer at VaynerMedia). Advertisers care about reach as well as consumer engagement,” Nicholson said. “The purchase of a Super Bowl ad is not just the 15 seconds it airs, but the entire build up, halo impact of the content across all mediums and the ability of the brand to capitalize on that attention. Doing a one-off for the Super Bowl is a waste of money and time.
So do Superbowl ads provide these benefits?
Indeed, Amazon’s “Alexa Loses Her Voice,” Echo ad was the most popular 2018 Super Bowl ad from last year, the most-viewed ad on YouTube for the entire year. Compared with the previous Super Bowl weekend, Amazon Echo sales increased by 300%. The perception that the device has “many uses in everyday life” also increased by 5%. The key difference to others was that Amazon’s ad was funny and related back to the product, according to Nick Mangiapane, CMO of measurement and optimization platform Commerce Signals. Traveling to Norway often, I find No Way Norway funny this year….but is it relevant for GM?
Your benefits also depend on your product category: research shows that Super Bowl ads are more effective at boosting movie ticket sales vs. large ticket items, like cars and trucks: ‘Brands selling large-ticket items may be purchasing Super Bowl ads not as a short-term sales strategy, but as a long-term strategy for building and maintaining brand awareness and brand equity’ (prof Stephanie Tryce, J.D.)
How about this year, 2021?
Despite the many challenges of Super Bowl ads in the pandemic, Mediaocean found that brands booked for 2021 had a combined TV social lift of 74 % vs. 67 % for brands that are not participating this year. The company indicates that this shows a halo effect around Super Bowl ads, as brands generate buzz on social media in anticipation of their participation in the game. Mountain Dew earned the top spot in pre-game and overall digital SOV, while Amazon saw its 2 spots get second and third place in digital SOV, measured by iSpot. According to Mediaocean, Amazon generated 146 % social lift and Pizza Hut saw 126 % lift. Audi is not participating this year and only netted 77% lift. Budweiser got 86% lift staying home, while Sam Adams is freeing its Clydesdales :
However, many brands have good reason to sit out this year’s Super Bowl, especially if they didn’t get their own house in order – getting any positive return from marketing communication depends on this, as we showed across brands and categories. Robinhood is an obvious case this year, and its ‘We are All Investors’ ad is already lambasted on social media. In the broader picture of #MeToo and #BlackLivesMatter, ‘If we say ‘the future is female’ or it’s driven by Black people, you need to invest more money that openly supports those communities, and that’s not going to be done when you waste $5 million for media buy and a million or more to shoot a commercial’.