NEW YORK (CNNfn) - There's more at stake in Sunday's Superbowl than merely the NFL championship.|
As the ball soars over the Georgia Dome in the opening kickoff between the Tennessee Titans and the St. Louis Rams, so will the hopes of executives at a dozen Internet companies who shelled out record millions for commercial spots.
For these dot.com companies, many of them first-time launches, it's already third and 10 in the fourth quarter as they have far outspent revenue on ads that will reach more than 100 million viewers, in hopes of a marketing touchdown.
But if an ad fumbles, it could be game over for some of these start-ups. Experts question whether such a do-or-die situation is worth the risk.
"The dot.com advertising you got in the holiday season extends to the Superbowl. So unless it's a really good commercial, you might not get a lot of people coming to your site after a while," said Jarvis Mak, an analyst with Nielsen Net Ratings. "My guess is this will be a very successful venture for some, advertising their services and getting people to come back. For others, it might be more of a flameout."
Only two Internet companies advertised during last year's Superbowl: Monster.com and Hotjobs.com. Following on their success, a dozen others have now decided to risk everything on this year's Superbowl XXXIV. Together, they represent roughly 40 percent of all the bowl advertisers.
The average cost of a 30-second spot during the game is $2.2 million. That's up from the $1.6 million advertisers spent during last year's Superbowl, said Marissa Gluck, an analyst for Jupiter Communications, which tracks e-commerce.
"I think for a lot of them, this is what happens. Last year, Monster and Hot Jobs bet the farm, but it paid off for them," Gluck said. "For some of the returning guys like Hot jobs and Monster, it's not do or die. But for others, like Ourbeginning.com., they probably spent a really significant portion of their budget."
Gluck said consumers were inundated with ads from Internet companies over the holiday season and although there were record online purchases this year, the glut of ads made it difficult for some companies to stand out. That's why Gluck believes with so many companies advertising in the Superbowl this year, capturing the attention and imagination of viewers becomes a more difficult prospect.
"In general, Internet companies are lemmings. No one wants to be the first," Gluck said. "But they saw what worked for others and now they're trying it. The problem with that mentality is that it was easier to break from the clutter last year when only one or two advertised."
But that's not how many of the advertisers see it. One, Ourbeginning.com, a relatively new site that sells wedding invitations, birth announcements, stationery, letterhead and other products online, is spending about $4 million on four 30-second spots. That's $2 million more than the company's total revenue for the nine months ending Dec. 31, said Michael Budowski, the company's founder and chief executive officer.
Despite comments from analysts who said that Ourbeginning.com is taking an unwarranted gamble on Superbowl advertising, Budowski insists that a lot thinking and preparation went into his decision.
"We have something that people are going to be talking about Monday morning. Hinging all our hopes on this dot.com scrimmage of advertisers, we've never had our focus that narrow," Budowski said. "The exciting part is we have a very solid business model. The Superbowl not working ... well, how can it not really work? It is part of our branding campaign; it's not going to make or break us as a company."
Budowski said the ads are being paid for in part by angel investors who are also putting up the quarter-of-a-million dollars the company plans to give away on its site in a Superbowl promotion.
Nevertheless, for others, the prospect of betting the farm on one ad, even with the help of venture capital, simply makes no sense.
Angeltips.com, an online investment analysis site set to launch in the first-quarter of this year, pulled its $2 million ad out of the Superbowl at the last minute. Steve Fu, the company's founder and CEO, said it made more sense to focus the company's $10 million advertising budget on a series of smaller ads spread out over time, rather than to hinge everything on one 30-second spot during the Superbowl.
"While it's a great opportunity to break into the market, there's a bigger business risk of not having our partners integrated into the launch," said Fu. "Let's say we ran it and it was not fully integrated. The worst thing we could do is launch a site, spend $2 million on advertising, and it doesn't work right.
"We want to be here 12 months out, and that's the key thing," Fu said. "We want to be able to advertise on next year's Superbowl. We want to be around for next year's Superbowl.
Although analysts question the wisdom of smaller dot.coms advertising on the Superbowl, especially ones that haven't even officially launched yet such as Computer.com, at least one believes the potential windfall is attractive enough to make the risk worthwhile for some.
"If the ad is bad people get turned off. That's 125 million potential viewers, so you just killed reach. But there's also a big potential payoff," said Charlene Li, an analyst with the Forrester Group in Boston. "I think it does pay off because you get a lot of traffic, a lot of free public relations(in media stories). It helps position themselves for the next round of financing."
Li said that since the Superbowl has become more of a social event with big parties planned, its audience has changed significantly in its 34 years. As just one example, more women are watching the game than in the past. Therefore, advertisers can reach a broader range of people.