Certified Online Casinos Guide

By Jane Eagle

Level: Apr 10th 2007
By Ron Geskey CEO, 2020:Marketing Communications LLC

Last year we asked, "Is the Super Bowl a Good Media Investment or a Management Ego Trip?"

This year, we follow up, "Are Super Bowl advertisers good stewards of shareholders' dollars? Do they care about ROI?"

"Are the articles and speeches calling for greater ROI just corporately correct posturing? Or do some advertisers have such large budgets that they have forgotten that they are spending shareholders' dollars?"

"Can Media Analysis 101 (and a little common sense) teach us anything about achieving better ROI from advertising media investments? Or is a sponsorship of the Super Bowl actually worth it?

You decide.

ANA to Members - Improve Advertising ROI Now!
A few months ago, the ANA called for increased ROI and accountability for advertising investments. The ANA recommended reducing the use of television (because of its perceived declining effectiveness), along with greater utilization of non traditional media.

Yet, a cadre of elite advertisers ignored the ANA's recommendations by spending an estimated $200+ million on Super Bowl XLI activities (Bears vs. Colts), an investment which, in our opinion, has little (or no) chance of payback.

At up to $2.6 million per :30, plus very expensive commercial production, talent, and promotion costs, the smallest total investment in the Super Bowl likely averaged around $4 million, while large sponsors shelled out a total of $20-30+ million.

Fiduciary Responsibility to Shareholders?
No responsible corporation would intentionally waste millions of dollars of shareholders' money. However, responsible corporations do need to evaluate marketing investments in terms of likelihood of maximizing payback. (If their budgets are larger than they need or can spend, shouldn't the excess just fall to the bottom line and be returned to shareholders via dividends?)

It is also worth mentioning thatt, despite the Super Bowl's mega price tag (and despite multi billion dollar losses in 2006) at least one major corporation delegated creative work to students in a contest to see who could come up with the best ideas for Super Bowl ads. (Remember, these are $2.6 million spots, not $260,000 or $26,000 or $2,600 spots!) The winner's commercial, with production assistance from the agency, ran in the Super Bowl (by the way, the spot, in our opinion, was pretty mediocre).

Using $2.6 million spots as toys for management's amusement is not, in our opinion, demonstrating a fiduciary responsibility to the shareholders. (If there is a lack of confidence in their agencies' creative, that's another matter, and should be dealt with in other ways.)

Nevertheless, with emotion and egos set aside, what are some of the more important ROI related considerations for deciding whether to Super Bowl or not to Super Bowl?

Basic ROI Considerations

In the absence of real ROI data, Media Analysis 101 and common sense can help spot good and bad media investments. Here are some important considerations:

  1. What is the TOTAL Super Bowl Investment?

  2. The first step is to figure out the total cost of the Super Bowl sponsorship. The time cost of $2.6 million per :30 (Anheuser Busch had 10-:30s) is only part of the cost.

    Most advertisers also produce expensive new commercials brimming with special effects and celebrity talent to run in the Super Bowl (often costing $1-2+ million each). (And these spots sometimes run only in the Super Bowl.) Talent-wise, all of those celebrities in the ads come with a very high price tag. And finally, we can't forget the cost of promotions, POS materials, and other communications developed to leverage Super Bowl sponsorships.

    So the question is simply whether the total cost is justified from an ROI perspective.

  3. Rating Size - Not Related to ROI

  4. At least 90% of the media hype about the Super Bowl telecast touts its ratings and numbers of viewers.

    Duh, yes, the Super Bowl normally generates the largest audience of anything on the air-- a 41.6 household rating in 2007. That translates to each commercial, on average, going into about 42 million homes with 100+ million potential viewers.

    But, so what? Reaching all those folks at the same time might make good media and cocktail party fodder, but, alas, the existing research finds no correlation between rating size and advertising effectiveness.

  5. 500% Cost Premium Makes ROI Difficult

  6. At the risk of offending those who prefer not to be reminded about what something costs (especially if if conflicts with what they want to do), cost is the basic problem with the Super Bowl -- both the magnitude and the cost premium required vs. alternative media.

    For example, if we assume that the minimum average cost of a "sponsorship," is $4 million (including one :30 @ $2.6 million, production & talent & promotion), is a mere $4 million, the CPM homes would approach $100, about 500% more than first quarter prime time, plus we'll throw in a promotion.

    That simply means, to pay out, somehow, Super Bowl ad exposures have to be at least 5 times more effective than ad expsures in other quality media vehicles.

  7. But People WATCH Super Bowl Commercials. The Commercials are the Stars of the Show!!


  8. True, commercials have become a Super Bowl attraction (despite being panned somewhat this year). But even if we assume that somewhere between 75-85% of the Super Bowl audience is paying full attention when "your" commercial comes on, compared to 70-75% for select prime time programs, the relative cost effectiveness of the Super Bowl remains little changed.

    The implication is that, if the likelihood of ad exposure in the Super Bowl is similar to other quality media vehicles, given a 500% cost efficiency premium, at least 75% of the investment is wasted, i.e., that's $3 million out of a $4 million investment or $15 million out of a $20 million investment. Regardless, it's enough to turn old John Wanamaker over in his grave ("I know that half of my advertising is wasted, I just don't know which half.")

  9. But Doesn't Advertising in the Super Bowl Have More Consumer IMPACT?


  10. If we stopped our analysis here, we would conclude that the Super Bowl is overpriced by perhaps 300-500%. But is an ad in the Super Bowl environment so much more impactful or persuasive with consumers that it's worth a 500% premium?

    To address this question, we reviewed some of the recent research on Super Bowl advertising effectiveness which was conducted by credible advertising research companies Here is the summary:

a) Gallup & Robinson (G&R), one of the leading advertising research firms in the U.S. has continuously studied the effectiveness of Super Bowl commercials. In response to, "This Year's Super Bowl had some of the best advertising I've seen," only 7% strongly agreed, down from 21% in 2006. G&R concluded from their research that despite increasingly extravagant production values, they do not translate into motivating brand messaging. "Entertainment along does not move brands."

b) Copernicus, another major market research firm, conducted studies, "Whether advertising during Super Bowl XXXVII was worth the investment." Based on their findings, Copernicus concluded that Super Bowl XXXVII was not worth the investment for many of the advertisers. Commercial popularity scores do not necessarily translate to impact, and while commercials may spark conversation at work the next day, the advertiser will probably not be remembered and the call to action will be subliminal, said Copernicus.

c) Zyman Marketing Group published the results of their research in Z View, a whitepaper. Similar to the studies cited above, Zyman concluded that "fun" commercials are not necessarily the most effective. ".while fun advertising may entertain consumers and senior management, it usually won't add to you bottom line. On the other hand, if you're more interested in generating sales growth, you'd be wise to test the purchase intent impact of the creative concepts and final executions."

d) There are other studies, pro and con, on Super Bowl advertising effectiveness. The problem is that the research deals largely with the effectiveness of the commercials (fun, expensive, lacking in message), rather than the effectiveness of the medium (Super Bowl).

Conclusions

Following are our overall observations and conclusions:

  1. Does the Super Bowl provide a positive return on investment? There is no evidence that commercials in the Super Bowl are somehow five times more impactful than commercials appearing in alternative media.

  2. Is the Super Bowl the best showcase of great creative? The Super Bowl has fostered a creative competition to see who can come up with the costliest and most entertaining commercials. But are commercials nearly devoid of strategy and motivating brand messages really good commercials? Research says no.

    Do we have to remind advertising professionals that we are here to build brands, not the cutest commercials?

  3. Do advertisers have a ficuciary responsibility which extends to marketing investments? We believe that advertisers do have a fiduciary responsibility to their shareholders to maximize the ROI of all of their marketing investments, including those for ads in the Super Bowl. Using major investments as toys or making major financial decisions mostly by emotion is not responsible. Advertisers simply need to conduct their due dilligence as seriously with their advertising investments as they do in other areas of their business.

  4. Does this POV apply to media investments other than the Super Bowl? Definitely. Few companies are Super Bowl advertisers. The real point is that everyone should follow the ANA's recommendations and evaluate all of their major ad investments from an ROI perspective.
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