It got me thinking… let’s try and understand the factors behind the ad slot pricing and the justification for the high price. Essentially, to have their ad play during a commercial break, companies have to buy a slot from the TV channel that is airing the game. When looking at Super Bowl ad costs over time, we can see that there has been a drastic increase in price.
In 1967, during the first Super Bowl, a 30 second ad slot cost $42,500. However, that was more than 50 years ago, so to understand today's pricing, we will have to examine a couple of different factors. This includes inflation, increased reach and viewership of the ads, and the advertiser demand for ad slots.
Let’s briefly look at these factors, starting with inflation. In simple terms, inflation is an overall increase in the price level of goods or services in an economy. In other words, this means that the purchasing power of money, or the value of a single unit of currency, decreases. The US economy today has seen significant inflation as compared to 1967, so each dollar today is worth less than it used to be. When adjusted for inflation, the price of an ad in the first Super Bowl was approximately $383,400 in today’s dollars. This means that the 1967 cost of an ad slot is only around 5.5% of today’s $7 million price tag. Why are companies willing to pay so much?
To answer this question, we must look into viewership and advertiser demand. Viewership has consistently increased every year, and this year, in 2023, it reached 113 million people. This is a lot more than the 24.4 million people who tuned in to the first Super Bowl in 1967. Television channels know that there is an established audience for the big game that translates to guaranteed viewership for the ads too. This allows them to increase the price for each slot, as they know that companies will pay to reach that audience. Studies have found that the Super Bowl ads have a direct correlation to a 68% increase in online searches and a 16% increase in word-of-mouth impressions, which demonstrates the incredible value these ads have for companies. The viewership and impact of the Super Bowl compares very favorably to, for example, the efficacy of morning news and other national channels, that on average cost $350,000 for a 30 second slot, with an audience of 2 - 4 million people.
Further, given that the companies know about the vast public audience they can reach during the game, there will be several that compete to buy the slots that are available. This increase in advertiser demand allows television channels to increase the price even more.
It is clear that marketing teams will have much work to do as the 2024 Super Bowl rolls around next year. Without a doubt, Super Bowl ads are a great way for companies to increase their brand awareness by reaching a large and diverse audience. However, with ad slot pricing showing no signs of decreasing, it will be interesting to observe whether or not these businesses choose to buy slots at such a high rate.
