The Super Bowl has traditionally attracted lots and lots of viewers, including non-football fans due to the commercials, and the party it creates.
But one major advertiser decided to skip the game. Is this a sign of things to come?
Read the LA Times story:
latimes.com
Will Super Bowl sponsors stay in the game?
Commercial spots for the NFL championship game are nearly sold out. But the Internet is changing the advertising market.
By Meg James
January 4, 2010
With less than five weeks to go before the game, CBS has only four commercial spots left to sell during the Super Bowl broadcast -- demonstrating that advertisers once again will elbow each other to get into TV's biggest event of the year.
But will they always rush onto the field of sponsorship?
One of the NFL's biggest sponsors, PepsiCo, sent a shudder through the television industry last month when it said it was benching its soft drink ads after 23 years and tens of millions of dollars of air time during the championship games. Pepsi plans to shift its marketing budget to less costly digital venues, such as Facebook and other Internet social networking sites.
Now some network executives are nervously waiting for the next advertiser to call a timeout for such marquee TV events as the Super Bowl, Academy Awards and Grammys.
Pepsi's decision to sit out the Super Bowl, once deemed a can't-miss showcase for major advertisers, underscores how the Internet is reshaping marketing by providing companies less expensive ways to convey their messages to consumers who might be likely to buy their products.
Other longtime NFL sponsors, including beer giant Anheuser-Busch, in the coming years will reassess their strategies and commitment to spend millions for commercials that run during a single game.
No other TV event matches the size -- and attentiveness -- of the Super Bowl audience. In recent years, the annual NFL championship game has attracted more than 90 million viewers, and last year's game between the Pittsburgh Steelers and Arizona Cardinals grabbed a record 98.7 million viewers.
Given the huge reach, many advertisers are confident that the game will reign supreme.
"The Super Bowl has long been like the Empire State Building imposed against the Manhattan skyline," said Fran Kelly, chief executive of U.S. operations for advertising agency Arnold Worldwide, which represents such clients as Volvo, McDonald's, Hershey's and Progressive Insurance. "Now, in this fragmented media landscape, the Super Bowl is like the Empire State Building set against the Hartford skyline. It towers over everything else."
Despite a recession that has forced many advertisers to cut spending, demand for spots in the Super Bowl has held firm.
CBS appears to be ahead of NBC's progress at this time last year, when the network reduced its $3-million asking price for a 30-second spot to attract skittish advertisers. The network that broadcasts the Super Bowl allocates about 45 minutes for commercials, including about seven minutes to promote shows.
Last year, NBC raked in an estimated $213 million in revenue from ads that aired during the game, according to TNS Media Intelligence.
CBS has been charging $2.5 million to $3 million a spot for the game that airs Feb. 7, roughly the same rates as last year's, according to people familiar with the negotiations.
"The pregame is well sold, but we do have inventory that is still available," said John Bogusz, CBS' executive vice president for sports sales.
This year's game will have several longtime advertisers, including Hollywood studios promoting their upcoming movies; Coca-Cola; Doritos from Pepsi's Frito-Lay division; carmakers Hyundai, Honda and Audi; Internet job sites CareerBuilder.com and Monster.com; and Anheuser-Busch, which is buying 5 minutes to promote Budweiser and Bud Light.
"There is nothing else like it in the world of television," said Tom Peyton, senior manager for national advertising for American Honda Motor Co., which is buying one 30-second Super Bowl spot. "If you have the right product, and the right message, the Super Bowl is a terrific environment to be in."
Indeed, when it comes to the Super Bowl, advertising assumes a mutually reinforcing cycle, with the reach of a commercial extending well beyond the last play of the game. Companies use the ads to steer people to their websites and others', which in turn promote the ads, asking people to comment on and rank the commercials.
"In many ways, these are no longer traditional television advertisements. Many companies are making the Super Bowl the cornerstone of a larger marketing and public relations effort with online extensions," said Jon Swallen, senior vice president of research for TNS Media Intelligence, which tracks advertising.
Until a couple of years ago, he said, companies were secretive about their Super Bowl plans. Now they publicize their bowl ad campaigns, hoping the resulting Internet chatter will spur interest long after the game.
"They want people blogging about their ads and discussing them," Swallen said.
But for many companies, an ad's Internet afterlife has become a double-edged sword. Some have suffered backlash from critics who bash the spots if they fail to live up to high expectations. For that reason, some top companies take a pass on the Super Bowl.
During the last year, companies also have had to weigh economics. Automakers that have accepted government bailout funds and companies that have cut thousands of jobs, fearful of criticism for misplaced priorities, have been reluctant to shell out for the high-priced commercial time.
"There is less to gain in this environment for an established company to advertise in the Super Bowl," said William Baker, a marketing professor at San Diego State University. "It takes up a pretty big chunk of an advertising budget to basically reinforce their brand. But for an upstart, a company that is trying to establish itself as one of the big boys, it can be a real home run."
Take, for example, Korean automaker Hyundai, which is making a big push in the U.S.
About 18 months ago, when domestic auto companies were scaling back their ad budgets, Hyundai instead pressed the accelerator.
"We decided to attack the market and be much more aggressive, and that really paid off for us," said Joel Ewanick, vice president of marketing for Hyundai Motor America. Last year, Hyundai bought five spots in the Super Bowl and pregame show.
The strategy appears to have worked. From January through November 2009, when industry car sales were down an average of 24%, Hyundai's sales were up 6%.
Pepsi's decision to sit out this year's game allowed Hyundai to move up in the rotation because networks offer the best positions and rates to loyal sponsors. Hyundai's two commercials will run during the first half of the game. The company is also buying three spots in the last 20 minutes of the pregame show -- including in the prime position of shortly before kickoff.
"This is an aggressive buy and an appropriate level for Hyundai," Ewanick said.
Pepsi said it wanted this year to focus on digital media to get "deep consumer engagement" for its Pepsi Refresh Project, a multimillion-dollar grant program that encourages people to submit ideas to "refresh their world."
Arnold Worldwide's Kelly doesn't believe most major sponsors will throw in the towel.
"As long as the Super Bowl can reach almost 100 million Americans, there will be 20 major companies who will want to play on that stage, and three or four little guys with big ambitions who will pay to take their shots," he said.
meg.james@latimes.com
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