The Economics of a Super Bowl Ad(ro.co)
ro.co
The Economics of a Super Bowl Ad
https://ro.co/perspectives/super-bowl-economics/
50 comments
As someone who is somewhat familiar with marketing but no expert, I always wondered how well attribution works.
It seems all guesswork to me. User journeys and decisions are not well enough understood to say, "If I spend $1 here, it’ll return $x".
Of course, marketing people come up with all kinds of calculations to show it’s possible.
That or I’m completely ignorant.
It seems all guesswork to me. User journeys and decisions are not well enough understood to say, "If I spend $1 here, it’ll return $x".
Of course, marketing people come up with all kinds of calculations to show it’s possible.
That or I’m completely ignorant.
> User journeys and decisions are not well enough understood to say
The power of math is its understanding of you, not your understanding of it.
The power of math is its understanding of you, not your understanding of it.
>> This article uses a lot of numbers to make not very strong arguments.
That's how marketing works.
That's how marketing works.
Sorry it's just f'ing bizarre we're talking about throwing TENS of millions for "advertising" instead of shit that actually benefits people and the world.
Meanwhile some people complain about space programs etc. wasting money.
Meanwhile some people complain about space programs etc. wasting money.
I don’t care about use of money that others spend freely. I do care about use of money that is forcibly confiscated from me.
(Not taking a position on space programs. Tax-funded programs deserve more inspection than privately-funded programs.)
(Not taking a position on space programs. Tax-funded programs deserve more inspection than privately-funded programs.)
At least it's not Facebook or other online monster. When I read the piece I thought if it wasn't for superbowl that money would have went straight in the garbage.
I think this is true if you evaluate it purely as a performance channel, but I suspect most Super Bowl buys aren't competing with search/social on the same axis
Ah yes. The mythical brand value.
Let me give you the counterpoint that is increasingly hard to ignore :
You can reach the same users on search and social that the Superbowl will give you and if you can convert them more efficiently, where should your $10m go ?
The newfangled wisdom is that customers are at least as effective branding as the Superbowl
Let me give you the counterpoint that is increasingly hard to ignore :
You can reach the same users on search and social that the Superbowl will give you and if you can convert them more efficiently, where should your $10m go ?
The newfangled wisdom is that customers are at least as effective branding as the Superbowl
This has always bugged me. $7 million for a 30-second-long ad. What do they get out of it? Well, presumably, a change in peoples' concrete behaviors that is more than $7 million. They expect that (otherwise they wouldn't buy the ad in the first place).
At the same time, we're told that all the sex and violence on TV doesn't matter, because it doesn't change peoples' behavior.
So, which is it? Does what we watch on TV change our behavior, in concrete ways, or doesn't it? I suspect that it does change our behavior, that the advertisers are right. (They're betting a lot of money on their position; I'd expect them to have some basis for doing so before committing that kind of coin.) But if so, then the rest of what we watch also changes our behavior.
And, obviously, so does our social media feed...
At the same time, we're told that all the sex and violence on TV doesn't matter, because it doesn't change peoples' behavior.
So, which is it? Does what we watch on TV change our behavior, in concrete ways, or doesn't it? I suspect that it does change our behavior, that the advertisers are right. (They're betting a lot of money on their position; I'd expect them to have some basis for doing so before committing that kind of coin.) But if so, then the rest of what we watch also changes our behavior.
And, obviously, so does our social media feed...
>This has always bugged me. $7 million for a 30-second-long ad. What do they get out of it?
Super Bowl ads are about brand building. They're not conversion ads. Their direct impact is to reduce CPC (cost per conversion) on other advertising.
Say you have to pay $100 per instagram conversion. Users see your ads cold and need a lot of convicing. Most won't pay attention long enough for your ad to convert. You need them to see a lot of ads.
But after they've seen your brand plastered all over the Super Bowl (and other brand opportunities), those same instagram ads might start converting at $90 per conversion. Users see your ad and go "Oh yeah I remember that brand, lemme check this out"
The brand effect is so strong that displaying a Visa (or Mastercard or Amex) logo near checkout literally increases consumer spend. Study from 1986: https://academic.oup.com/jcr/article-abstract/13/3/348/18224...
Another study from 2015 showing that credit card logos increase estimates of item value: https://www.semanticscholar.org/paper/Effect-of-Credit-Card-...
Super Bowl ads are about brand building. They're not conversion ads. Their direct impact is to reduce CPC (cost per conversion) on other advertising.
Say you have to pay $100 per instagram conversion. Users see your ads cold and need a lot of convicing. Most won't pay attention long enough for your ad to convert. You need them to see a lot of ads.
But after they've seen your brand plastered all over the Super Bowl (and other brand opportunities), those same instagram ads might start converting at $90 per conversion. Users see your ad and go "Oh yeah I remember that brand, lemme check this out"
The brand effect is so strong that displaying a Visa (or Mastercard or Amex) logo near checkout literally increases consumer spend. Study from 1986: https://academic.oup.com/jcr/article-abstract/13/3/348/18224...
Another study from 2015 showing that credit card logos increase estimates of item value: https://www.semanticscholar.org/paper/Effect-of-Credit-Card-...
> Another study from 2015 showing that credit card logos increase estimates of item value
Notably, the abstract of the 2015 study specifically points out that the 1986 study has frequently failed to replicate, and although it finds an effect, the 2015 study has n = 28. As always with psychology studies, we would do well not to assert their purported findings as facts, as with the statement "The brand effect is so strong that displaying a Visa logo near checkout literally increases consumer spend". Psychology as a field is far too unreliable to make such assertions with confidence.
Notably, the abstract of the 2015 study specifically points out that the 1986 study has frequently failed to replicate, and although it finds an effect, the 2015 study has n = 28. As always with psychology studies, we would do well not to assert their purported findings as facts, as with the statement "The brand effect is so strong that displaying a Visa logo near checkout literally increases consumer spend". Psychology as a field is far too unreliable to make such assertions with confidence.
Not able to replicate an earlier study doesn’t mean that study is wrong. More likely that the assumptions and factors taken into consideration have changed, especially after almost 30 years. The pull of Visa brand may have declined, but the effect may be as strong or even stronger if it was replaced with, says, Apple.
I didn't say that it was wrong. I said that the field is murky and not suitable for such confident declarations of fact. "Putting a credit card logo on your checkout stimulates spending" is a very different sentence than "An experiment on 130 restaraunt customers and 150 college students found credit card logos stimulated spending among the people tested", and it is abundantly clear that sentences of the latter type do not reliably generalize to entire populations, because humans are ridiculously complex and it is somewhere between very hard and impossible to accurately control for all possible confounding factors. Do they sometimes generalize? I'm sure they do, but there are also times they don't, but the general populace treats them as though these experiments always do generalize reliably and allows them to influence their thinking and discussion of issues to an unearned degree. Such studies can be useful evidence towards a claim, but they are not proof of a claim.
It's not just a single run of the ad. The same ad is run many times over, on other TV programs. It's promoted on social media. People see it and think "Oh yeah, that was a super bowl ad" and that makes it more memorable, and they associate it with the fun they had watching the game.
> It's promoted on social media.
It gets discussed for free on HN.
It gets discussed for free on HN.
Well luckily I mostly just read the comments on HN, and I didn’t watch the superbowl, so unless someone tells me about the amazing Frito Lays commercial they saw, I have no idea which company is being talked about. Except I have been reminded that my Ring doorbell is bad, very bad.
There is the cache for everyone involved in creating the commercial. So, nice feather in the cap for the hundreds of people who get to touch it.
I have no doubt advertising has some effect on consumer preferences. However, I am a skeptic that one more Coke Cola ad aired at the Super Bowl meaningfully changes sales relative to the billions they already spend elsewhere.
I have no doubt advertising has some effect on consumer preferences. However, I am a skeptic that one more Coke Cola ad aired at the Super Bowl meaningfully changes sales relative to the billions they already spend elsewhere.
> I am a skeptic that one more Coke Cola ad aired at the Super Bowl meaningfully changes sales
It actually might. Coca Cola had $48b revenue last year, or in other words, 4800 millions. Spending 7 of those millions to put your product in front of 100 million people seems like a reasonable bet. If even a couple percent of those people are (sub)consciously influenced to pick up a 12-pack the next time they stop by a store when they might otherwise not have, it would likely be a profitable endeavour given the profit margins on their sugar water.
I think there's also a longer-term status play at stake. If only one of Coca Cola or Pepsi engaged in flashy advertising to this degree, it might give them a slight edge in status perception. In the long term, even an 0.1% shift in consumer preferences between Coca Cola or Pepsi would shift significantly more than 7 million in value. So if one of them engages in this, the other is obliged to follow, in a classic prisoner's dilemma. At any rate, given that 4800 millions in annual revenue translates to 13 million in sales per day, the number paid for that advertisement is a rounding error and doesn't have to move the needle very much at all to be successful.
It actually might. Coca Cola had $48b revenue last year, or in other words, 4800 millions. Spending 7 of those millions to put your product in front of 100 million people seems like a reasonable bet. If even a couple percent of those people are (sub)consciously influenced to pick up a 12-pack the next time they stop by a store when they might otherwise not have, it would likely be a profitable endeavour given the profit margins on their sugar water.
I think there's also a longer-term status play at stake. If only one of Coca Cola or Pepsi engaged in flashy advertising to this degree, it might give them a slight edge in status perception. In the long term, even an 0.1% shift in consumer preferences between Coca Cola or Pepsi would shift significantly more than 7 million in value. So if one of them engages in this, the other is obliged to follow, in a classic prisoner's dilemma. At any rate, given that 4800 millions in annual revenue translates to 13 million in sales per day, the number paid for that advertisement is a rounding error and doesn't have to move the needle very much at all to be successful.
The irony is that this especially true for Coca Cola. They are basically an advertising company at heart. They sell flavored sugar water. For all the hype about "are you a coke person or a Pepsi person", in blind tests most people can't tell the difference between coke and generic cola. The billions they spend in marketing annually helps ensure they can sell their flavored sugar water for a lot more than Aldi sells their store brand flavored sugar water.
I don't know, I can distinguish between Coca-Cola and Pepsi-Cola easily. I prefer Diet Coke, FWIW.
I also now have a bottle of Lab Cola from https://www.youtube.com/watch?v=TDkH3EbWTYc and it _is_ indistinguishable from regular Coca-Cola to me. So it might be plausible in case of a deliberate Coca-Cola knock-off?
I also now have a bottle of Lab Cola from https://www.youtube.com/watch?v=TDkH3EbWTYc and it _is_ indistinguishable from regular Coca-Cola to me. So it might be plausible in case of a deliberate Coca-Cola knock-off?
I also "can" and so can my siblings but I actuallly stopped drinking sugar water but my siblings don't so they are "passionate" about coke and "hate" Pepsi for some reason. I don't understand
Pepsi is disgusting to me. To even speak of them as substitutes is outrageous to me. If you like it fine. I like both mayo and mustard but if someone doesn’t like mayo I don’t recommend it as a substitute for mustard.
> in blind tests most people can't tell the difference between coke and generic cola
According to who?
I think most colas taste fine but it's not hard to differentiate the ones I've had.
According to who?
I think most colas taste fine but it's not hard to differentiate the ones I've had.
> According to who?
According to researchers who actually ran blinded tests: https://daily.jstor.org/the-coca-cola-wars-can-anybody-reall...
What's funny is kind of the reverse is also true: when people were given the exact same cola but one was labeled Coke and the other Pepsi, not only did they say they preferred Coke, but fMRI brain scans should more prefrontal cortex activation for the Coke as well: https://medium.com/@marketingoal/the-pepsi-vs-cola-cola-expe... . That's the power of branding.
According to researchers who actually ran blinded tests: https://daily.jstor.org/the-coca-cola-wars-can-anybody-reall...
What's funny is kind of the reverse is also true: when people were given the exact same cola but one was labeled Coke and the other Pepsi, not only did they say they preferred Coke, but fMRI brain scans should more prefrontal cortex activation for the Coke as well: https://medium.com/@marketingoal/the-pepsi-vs-cola-cola-expe... . That's the power of branding.
That blinded test isn't about telling the difference though, it's knowing which is which, a significantly harder thing to do without practice. And I don't know how many of the participants regularly drink any of the brands, which makes identification even harder.
Have you done a blind test before? A group of friends and I have done a blind test of around 10 coke brands before. The only ones you could reasonably tell apart were Pepsi and some dubious organic cokes. But of all the ones that actually try to replicate the coca cola flavour it was just pure guesswork on our side.
I did a blind taste test of Starry, Sprite, and 7-Up the other day. My wife was amused when I nailed all three. As a recovering fat guy, I’m a bit of a soft drink connoisseur (diet soda now!).
Unfortunately then the question became “well, which do you prefer?” And my answer was “I have no idea”.
Unfortunately then the question became “well, which do you prefer?” And my answer was “I have no idea”.
I've never had any that specifically tried to replicate another brand, no. That's naturally going to be harder than telling apart normal colas.
> It's promoted on social media.
Résumé-driven marketing
Résumé-driven marketing
Sorry, I didn't realize we weren't supposed to be having sex.
Advertising usually isn'tt trying to create a behavior from scratch, it's trying to redirect or prioritize behavior that was already likely to happen
And of course the influencing on media networks doesn't stop at the 30 second slot when the money is spent by the million ;)
Ads are designed to change our behavior.
approx 300 million eyeballs.
I find the US commercialisation and dopamine inducing activities quite annoying. Compared to European sports, it's so different.
I think it reflects a broader difference in philosophy: US sports are optimized as media products first, sporting events second, whereas in Europe it's historically been the other way around
I was yet again shocked at just how little football is actually shown to viewers of the Superbowl. You cut away from commercials to already running plays. You miss everything.
The Superbowl cares more about viewers who don't watch football.
Luckily this time there wasn't much football to watch anyway.
The Superbowl cares more about viewers who don't watch football.
Luckily this time there wasn't much football to watch anyway.
Well, we used to at least not have to suffer through gambling ads...
That’s a nice blog but they still get ripped apart in the Youtube comments.
https://www.youtube.com/watch?v=tqXOcRtZoow
https://www.youtube.com/watch?v=tqXOcRtZoow
at least $233,000 per second..
I'm not familiar with American culture, but are the following true?
1. More than half Americans watch it.
2. People don't go to toilet during breaks/ad time.
Otherwise it's just money flushed down the bowl..
I'm not familiar with American culture, but are the following true?
1. More than half Americans watch it.
2. People don't go to toilet during breaks/ad time.
Otherwise it's just money flushed down the bowl..
Super Bowl ads, in particular, really are their own thing. People will even watch them later, discuss, share, etc.
There are some people who have more interest in the Super Bowl for the ads than the sport.
So I'd say it's not money flushed down the bowl.
Random fun fact: 20ish years ago, I used to work at a web hosting company that had superbowlads.com (iirc) as a customer. I'm not surprised it's no longer an actual site, though: I speculatively doubt NFL lawyers would've left it alone.
There are some people who have more interest in the Super Bowl for the ads than the sport.
So I'd say it's not money flushed down the bowl.
Random fun fact: 20ish years ago, I used to work at a web hosting company that had superbowlads.com (iirc) as a customer. I'm not surprised it's no longer an actual site, though: I speculatively doubt NFL lawyers would've left it alone.
More than half is a stretch, about half sounds more right.
The author keeps saying, over and over, that the reason this is a good bet is because "the downside is capped and the upside is asymmetric" as if that's some ground-breaking realization.
Sorry, but obviously the downside is capped. The downside of virtually any marketing investment is capped at the cost of the media buy...And, the upside being "asymmetric" isn't some saving grace. What matters is the likelihood that you actually realize that asymmetric upside. And, nowhere in the article does he talk about Ro's estimated success likelihoods or actual outcomes.
In short, he's basically saying:
- I made a bet
- It costs me something ("capped downside")
- There's a potential payout ("asymmetric upside")
- I have no idea whether this is positive expected value
Sorry, but obviously the downside is capped. The downside of virtually any marketing investment is capped at the cost of the media buy...And, the upside being "asymmetric" isn't some saving grace. What matters is the likelihood that you actually realize that asymmetric upside. And, nowhere in the article does he talk about Ro's estimated success likelihoods or actual outcomes.
In short, he's basically saying:
- I made a bet
- It costs me something ("capped downside")
- There's a potential payout ("asymmetric upside")
- I have no idea whether this is positive expected value
This is also kinda wrong because the downside can be a lot more than your marketing spend if people really hate your ad. Just look what happened when Budweiser decided to send a personalized Bud Light can to a transgender person. For the Superbowl specifically, I can't imagine the "Search Party" ad helped Amazon sell more Rings.
Yeah but this is footnote territory. The idea of a cap is more appropriate for most advertisers. There’s a minor chance you miscalculate and the cap dissolves. It kind of goes without saying as that always applies, possibly can have high magnification if too far off the mark.
Or Gillette. Or Jaguar. Wrong sort of advertising can provably destroy your brand image among your consumers. Social media helps to amplify things in both directions. So you really need to know your audience's current mindset. Or wrong move could lead to losing lot more than just any money and manpower spend on the ad.
The downside isn't really capped as in most cases there's a big dev effort to prep for an event like that. Plus a lot of spend on the day of the event to deal with the surge. This can easily be in the millions as well, in direct cost as well as in opportunity cost
Lets assume that as a media planner, you have the bag of money under your desk to plausibly be discussing buying a Superbowl spot. You are already spending millions of dollars on media every month, the question is - will the Superbowl spot yield more than other channels ?
For some small set of advertisers in this decision matrix, there's also the question of whether the media production cost is worth it (hello coinbase). For the vast majority of decision makers in this position, the media production budget is already getting spent.
Lets say the spot plus extra cost is $10m to use a nice round number.
You have an expectation of how many new users or website visitors your media budget typically delivers for $10m, because you spend that regularly (monthly, quarterly, it doesn't matter, but the point is that your spend has been growing).
So the decision is really really simple. Superbowl or the other places you've been shoving $10m. Sometimes it works, sometimes it doesn't, but usually its like eh compared to the other places you've been shoving your $10m, underwhelming. Which is why you see justification pieces like this.