Superbowl Commercials

by on February 9, 2005 at 5:01 pm in Economics | Permalink

A new Slate article (click here) reports that Superbowl commericals are very inefficient. You can easily reach many more viewers by purchasing cheaper air time on other "unwatched" shows that air during the Superbowl. Broadcasting and Cable magazine (click here) reports an experiment showing that a computer can generate a buying schedule consisting of non-Superbowl ads that reaches 60% more viewers. Why, then, do firms insist on buying these insanely inefficient commercials? Slate’s Timothy Noah answers:

"I suspect the answer is that, while the Super Bowl may not be an especially smart forum in which to sell the advertisers’ products, it’s a great forum for selling the ad agency itself."

I don’t buy this argument, at least in the way it is presented. The explanation ignores the fact that the client is still paying for the ad time. Does a Chrysler executive really give a $$$ that their hired Saatchi wannabe ad guys have acquired another Mobius award or that they made ESPN’s top 25 sports commercials list? I think the answer is no.

So what is a better answer? I’d revise Noah’s explanation to say that clients are buying ad firm prestige rather than raw viewer numbers. High prestige ads reinforce the company’s position within their industry. Noah doesn’t believe this: "The clients are receptive because having an ad on the Super Bowl confers an undeniable glamour. But glamour doesn’t pay the bills."

Actually, it does. It’s similar to real estate – companies often purchase pricey real estate and fancy architecture not for the immediate impact on profits, but because they want to signal their legitimacy to the business community. In the business world, there’s a tendency to go with "tried and true," and glamour helps reinforce the image. If you were an executive unsure of who to hire and with bosses to impress, would you go with the company that advertised during the Superbowl, or the company that advertised more efficiently on Manimal?

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