godaddy commercialThis weekend the most viewed television show in the world will air. Last year the Super Bowl was watched by well over 100 million people and this year will likely be no different. These viewers tune in to see biggest game in America’s most popular sport. But they also watch the halftime show and the commercials, making it an oddity even in sports. But with ads costing between $3.8 million and $4 million and perhaps more, is it really worth the cost to put a fancy commercial out there?

Let’s look at some back of the napkin math and see how the cost compares to other shows on TV. One of the most popular shows on TV is “Big Bang Theory”. As nerdy as I am I just can’t watch laugh tracks anymore so I don’t fully understand the appeal of 40 year olds that look like teenagers. Anyway, a 30 second spot on that show costs about $275,000. It doesn’t quite compare to the Super Bowl. But the cost for the spot isn’t comparable this way. The Super Bowl will reach well over 100 million people and Big Bang Theory will reach less than 20 million. In order to compare the two you have to see what the cost per person is.

In the ad industry the cost is usually presented as a cost per thousand (or CPM) since the cost per person is sometimes fractions of a penny. With this number you can actually care how cheap or expensive an ad is. For Big Bang Theory the cost is about $14 per thousand. The Super Bowl, $34. By that view it’s very expensive. 30 Rock, a well made show with low viewership (4 million) is able to charge more than Big Bang at around $20. But because the viewership is low the cost for the spot is only about $75,000.

Why can 30 Rock charge more per person than Big Bang Theory? I’m not an ad expert but it’s likely due to the type of viewer that’s watching. If Big Bang Theory has a viewer that is less engaged or makes less money then that viewer isn’t as valuable as a 30 Rock viewer. Let’s compare to a popular drama: Grey’s Anatomy. Dramas really engage the viewer and keep them in front of the TV after a major shocker that cuts to commercial break. Grey’s charges almost $25 per thousand. Significantly higher than Big Bang Theory and approaching Super Bowl territory.

This gives us some insight into why Super Bowl commercials are expensive on a per person and gross sense. The Super Bowl is the only place where many tune in just to see the ads themselves. They are entertaining. Those watching the game are engaged anyway because sports have that type of engagement. So when you throw all the different factors together then you find yourself with one expensive ad that to many companies is easily worth the cost.

Links:
Super Bowl Ad Cost
Super Bowl Ratings
Prime Time Ratings
Prime Time Ad Cost

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categories: business, media, sports