Super prices for Super Bowl ads
CBS is looking to charge a record $2.6 million for a 30-second spot during this year's Super Bowl XLI.
NEW YORK (CNNMoney.com) -- The National Football League playoffs begin this weekend, and Super Bowl XLI is only about a month away.
But while sports junkies argue about which teams will wind up playing in the big game in Miami on February 4, many business people and casual fans are more concerned about the advertising frenzy associated with the Super Bowl - that is, which companies will have commercials airing during the game and how much are they paying to do so.
According to several media buyers, CBS (Charts), which will air Super Bowl XLI, is said to be asking for slightly higher than the record $2.5 million that Walt Disney (Charts)-owned ABC charged last year for a 30-second spot during Super Bowl XL.
"I'm hearing that ads are being sold for more than last year," said Bill Carroll, vice president and director of programming with Katz Television Group, a media buying and consulting firm based in New York. "It's not going to be a dramatic increase but informally, people from advertising agencies as well as CBS have said it will probably be a new record."
John Bogusz, executive vice president for sports sales and marketing for CBS, confirmed that some advertisers are paying more than $2.6 million for a 30-second commercial. He added that most of the commercial spots for the first half of the game are sold out but that CBS is still looking to sell inventory, mainly during the fourth quarter.
But other ad experts were quick to point out that, even though CBS may be able to charge as much as $2.6 million for some spots, the average rate for a 30-second commercial is likely to be lower than that.
"I'm hearing a rate of $2.6 million but how many advertisers actually will be paying that is tough to gauge. Most people get some sort of discount," said Jordan Breslow, director of broadcast research with MediaCom, a media buying firm that is part of ad agency WPP Group.
To that end, one media buying source, who asked not to be named, said that CBS was more likely to average between $2.2 million and $2.3 million for a 30-second spot and could wind up with an average price as low as $1.8 million to $2 million.
Bogusz would not comment on how much the average price for a Super Bowl commercial would wind up being since the network is still in negotiations with advertisers.
"We're doing well but can't rest until all the advertising units are sold," he said.
Still, advertisers appear willing to pay premium prices for ads since the Super Bowl remains the one broadcast event that is guaranteed to not only generate a huge number of viewers but an audience that actually tends to be interested in the commercials since advertisers pull out all the stops creatively in order to attract buzz.
Last year's game was watched by 90.7 million people, according to Nielsen Media Research, the most since 1996.
"The Super Bowl is one of the few, if only, times of the year that viewers anticipate, look forward to and pay complete attention to commercials," said John Rash, senior vice president and director of media negotiations with Campbell Mithun, a media buying firm based in Minneapolis. "It's a one day reprieve from the challenges faced by broadcasters and advertisers."
TV networks face the daunting task of trying to keep people engaged in the age of online user-generated video sites like Google's (Charts) YouTube. And marketers have to worry about how effective TV ads can be when many people can simply fast-forward past commercials with digital video recorders.
But Breslow said this isn't a big issue for Super Bowl advertisers or advertisers buying commercials during most sporting events. In fact, the funny thing about the Super Bowl is that it's the rare instance when TiVo (Charts) and other types of DVRs can actually be an advertiser's friend.
"Over and over, we find that sports tend to be TiVo-ed infrequently due to the live nature of the games. But it's possible that people may record the Super Bowl so they can rewatch the commercials," he said.
CBS's Bogusz said several high-profile companies that ran more than one commercial during last year's big game, including Budweiser brewer Anheuser-Busch (Charts), online job recruitment site CareerBuilder.com, General Motors (Charts) and PepsiCo (Charts), have bought more than one spot for this year's game.
Anheuser-Busch bought 10 spots, the same as it did for last year's game, Bogusz said.
Pepsi's Frito-Lay unit is taking an interesting gamble this year with its Doritos brand. The company announced last September that it was running a contest in conjunction with Yahoo's (Charts) video site where users can create their own Doritos commercial for the Super Bowl. Frito-Lay will choose five finalists this month, and people can vote for their favorite. The fan vote will help determine which ad Frito-Lay chooses.
GM's Chevrolet is also going to run a user-generated ad, but with a twist. The company is accepting ideas for commercials from average consumers, but an ad agency will actually produce the winning ad.
On Wednesday, Diamond Foods (Charts), the company that makes Emerald Nuts, said there will be an Emerald Nuts ad for the third straight Super Bowl. The Emerald Nut ads have tended to be among the stranger commercials (last year's ad featured a druid and people wielding machetes), and this year's promises to be no different. Actor and singer Robert Goulet of "Camelot" fame will star in the commercial.
Andrew Burke, vice president of marketing for Diamond Foods, said that the company's ad will air during the third quarter of this year's game and that it paid about $2 million for the spot, the same it paid last year for a commercial that ran in the fourth quarter.
Burke said Diamond decided to advertise again because the company felt that having an ad in the Super Bowl helped raise awareness for and lift sales of Emerald Nuts. In particular, he said that the ads enabled Emerald to get more favorable in-store displays with retailers.
And online domain registrar firm GoDaddy.com, known for its controversial, risqué Super Bowl ads, is also said to be planning on buying an ad for Super Bowl XLI.
One ad agency executive said he thinks that the amount of buzz created from a Super Bowl commercial usually makes it worth it for companies to advertise during the game. But he added that companies need to be cautious since flops can be costly.
"You have to create spots especially for the game and that can double the price. You have to pay $2.5 million or so to get in the game and to produce a spot could easily cost you another million or two," said Fran Kelly, president and chief executive officer of Arnold Worldwide, a leading advertising agency. "It is a challenge for marketers. If you wind up with one of the poorly rated commercials you wonder if it's worth the money."