Why Super Bowl Ads Keep Getting More Expensive

What does 30 seconds of your attention cost these days? About $3.5 million if you're watching the Super Bowl. Why do companies keep paying?

Reuters

In the world of advertising, there truly is nothing quite like the Super Bowl. 

This morning, The Wall Street Journal reported that ad slots for Super Bowl XLVI had officially sold out at an asking price of $3.5 million per 30-second spot. That was up from about $3 million last year. As the paper showed in the chart to the right, the price of advertising during the big game has been rising fairly steadily for the entire past decade, even managing to jump during the economic nightmare year of 2009. Overall, the cost of a commercial is up 59% since 2001. 

Why is the most expensive ad space on television getting even costlier? There are a few reasons, but they all boil down to something simple. As audiences have fractured the age of Hulu and DVR, the Super Bowl is among the last of an increasingly endangered species: The truly mass audience live TV event. In good times and bad, that distinction has been worth a premium to advertisers. 

Since the turn of the century, the number of Americans watching the Super Bowl has increased every year except 2005 (apparently everyone was sick and tired of watching Tom Brady and the Patriots take home the Lombardi Trophy by then). In 2010, the year the New Orleans Saints beat out the Indianapolis Colts, the game became the most watched broadcast in U.S. history, beating out the record set in 1983 by the series finale of M*A*S*H* Overall, the game's audience has grown about 28% since 2001.  

 

Not only has the Super Bowl's raw audience grown, but so has its share of television viewers. According to Nielsen, about 46% of TV households tuned in for last year's game, up from about 40% in 2001. That's lower than the its all-time high claim of 49% in 1981, but still remarkable, considering how few events can continue to command that sort of widespread viewership. 

It's not just about how many people watch, though; it's also about who. The  Super Bowl's audience has money and is young enough to spend it. The game performs strongly in the much coveted 18-49 age demographic, and as Nielsen notes, the wealthier you are, the more likely you are to tune in. Its highest ratings are among families that make $100,000 a year or more. 

But there's another important value proposition in the Super Bowl: People actually care about the ads. Deeply. Think about what you'll be talking about Monday morning after the game. Unless you're a dedicated football fan, it'll probably be the beer commercials. You'll go back on YouTube and rewatch your favorites, maybe even vote for them in an online poll. Compare that to a regular night spent cycling through your DVR queue and fast forwarding through the commercial breaks. Unsurprisingly, Nielsen has found that Super Bowl ads are 58% more memorable than your average TV spot. The extended lives they live on the web make them all the more valuable. According to the WSJ, Volkswagen claimed that it reaped more than $100 million in free publicity for its adorable ad featuring a little boy dressed at Darth Vader. When you put it in that light, $3.5 million doesn't seem like such a bad deal.