Super Bowl Ads Are Cheap: $3.5 Million for 30 Seconds Isn't Enough

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Ad_Rates_WSJ.pngOh sure, $3.5 million sounds like a high price to pay for the privilege of airing a 30-second bar joke. But hold your shock at the sticker price of a Super Bowl spot. If anything, blame NBC for not charging more. Super Bowl ads are almost certainly too cheap.

Let's talk philosophy before we get to the math. The purpose of any ad is to get the attention of people with money. U.S. advertising is a $600 billion ploy to distract you from your life and get your eyes and ears focused on a brand or product. Every day, the typical American is exposed to up to 600 advertisements on televisions, buses, streets, and browsers.

How could you possibly focus on an ad every two minutes? You couldn't, possibly. Most ads pass through our awareness like radio waves. Still more are fractured across an awfully decentralized media environment. Fifteen years ago, if Toyota wanted to get the attention of a Washington Post reader, it could buy a page in the A1 section and consider its work done. Today, there's the Post, the morning paper Express, the website, the iPad app, the smart phone app, and so on.

Compared with this confusing ad climate, imagine a television event. Imagine that more than 100 million Americans are watching at the same time. Imagine that instead of trying to avoid ads, tens of millions of these viewers actually look forward to watching slickly produced marketing segments. Imagine that after this 100-million-person event, where your advertisement is watched with hushed reverence, most of those people will go to work on Monday to do something totally bizarre. They will talk about advertisements! Now ask yourself how much would you pay to buy a slice of this veritable Super Bowl of advertising.

The answer, apparently, is $3.5 million.

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When it comes to targeted advertising, the Super Bowl is in a league of its own. The top two television events in history were the last two Super Bowl games, with the last one netting 111 million watchers. Every year, between 40 and 50 percent of TV households are tuned into the big game, and that certainly undersells the size of the audience, since Super Bowl parties gather around a single TV. An audience of more than 100 million people not only watching, but also focusing on advertisements together, at the same time, is something utterly unique in a fractured media environment.

In 2008, "American Idol" ads went for as much as $800,000 per spot in a season whose biggest rating was around 30 million. The 2011 Super Bowl audience is expected to be between three- and four-times bigger. If you multiply the per-viewer cost of an "Idol" ad to approximate the Super Bowl price, you'd expect tonight's ads to fetch between $2.4 million and $3.2 million.

But Super Bowl ads are a different beast because they attract attention outside their 30-second window. They also receive millions of clicks on YouTube because they're emblazoned with the honor of being a Super Bowl ad. There is an entire cottage industry of ad criticism dedicated to showing, analyzing, and ranking these ads, which draws even more focused attention to their message. This is, well, free advertising for advertisements that is worth millions of dollars. Volkswagen claimed that it reaped more than $100 million in free publicity for its adorable ad featuring a little boy dressed at Darth Vader, Jordan Weissmann wrote this year.

Since 2001, the cost of a Super Bowl commercial has grown twice as fast as the game's audience -- 59% to 28%, as Weissmann wrote. But over the same period, total disposable personal income has grown by more than 50% and the invention of YouTube multiplies viewing opportunities by a factor of, well, millions. Today, Super Bowl ads are 58% more memorable than a typical TV spot.

"Selling the Super Bowl is like an auction, except the auctioneer sets one price that applies to pretty much everyone," Stephen Dubner wrote. What would happen if the gated model were replaced by an open auction? A full understanding of the advantages of Super Bowl advertising would almost certainly result in an even higher price for 30 seconds of your undivided attention and many more minutes of your conversation.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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