How Super Success Occurs In Super Bowl Advertising
BY ADAM GROSSMAN
Do Super Bowl television commercials work? It is the five-million dollar question facing companies looking to purchase advertising inventory during America’s most watched television event coming up on Feb. 4th. More specifically, do Super Bowl advertisements lead to incremental revenue growth?
There have been several attempts to analyze the impact of Super Bowl advertising. However, confounding variables have been the primary issues in determining a clear ROI. In particular, it is difficult to isolate the Super Bowl ad itself as the catalyst for new sales when factors such as national advertising, local advertising, new product introductions, and spikes in sales overall could impact revenue.
The authors of the journal article "Super Bowl Ads" in Marketing Science found a compelling approach to address these issues. These professors from Stanford and Humboldt University found there was significant variance in television ratings in different markets depending on which teams played. In particular, there were increases in viewership based on if local teams to a geography were playing and/or if 3-5+% of Facebook likes came from certain geography. For example, if 3-5% of fans in the Los Angeles DMA like the New England Patriots on Facebook then this becomes a “local” Patriots market. If Super Bowl ads were effective then there should be increases in revenue when there is an increase in viewership.
This enabled the authors to isolate the impact of the television ads while controlling for the cofounding variables that usually impact this type of analysis (for more information click on the “Super Bowl Ads” link at the top of the previous paragraph). They completed a five-year analysis of the impact of television advertising on the increase sales volume and increase in revenues for beer and beverage brands before and after the Super Bowl.
The study focused on the impacts of Budweiser, PepsiCo, and Coca-Cola advertising during the Super Bowl, and the findings were:
- Budweiser and Pepsi saw a statistically significant increase in sales in the week prior to the Super Bowl occurring where Coke saw a decrease in sales. The authors hypothesize that Pepsi generates the increase because customers identify Pepsi as the official sponsor and therefore associated the company's products with the Super Bowl. Coke is not seen in this light and therefore is not associated with the event in the same way.
- Budweiser and Pepsi saw a statistically significant increase in sales in the 8-weeks following the Super Bowl but only when it was the sole or primary advertiser. When both Pepsi & Coke advertise in the Super Bowl in the same year, the impact of advertising on sales disappears.
- Budweiser and Pepsi saw a statistically significant increase in sales around the NCAA Tournament but only when it was the sole or primary advertiser during the Super Bowl. When both Pepsi & Coke advertise in the Super Bowl in the same year, the impact of advertising disappears on sales in a similar way as it does post Super Bowl.
The main takeaways, however, are that Budweiser and Pepsi do see a significant return on investment with the Super Bowl and it should do everything possible to "own" the event. The effects seem to resonate many weeks after the Super Bowl but mostly around other sporting events. More specifically, customers seem to associate Pepsi with sports after the Super Bowl occurs with sales increases post Super Bowl around sporting events like the NCAA Tournament.
In fact, the researchers may have underestimated the impact because they did not have access to all purchasing data in all markets including access to sales from Walmart. Even without Walmart data, the authors determined that Budweiser generated $45 million in direct revenue from its Super Bowl advertising with PepsiCo achieving similar results.
The study is definitely not perfect in large part because the analysis was only from 2006-2011. In addition, it also only focused on beverage brands that have a primarily business to consumer / retail strategy. It is unclear that companies in other industries or companies that focus on enterprise or business clients rather than individual customers would see similar results. The authors do identify these as areas for future analysis.
Block Six Analytics (B6A) does conduct this type of analysis when looking at ROI of sponsorship spend. Our Corporate Asset Valuation Model examines partnership spend to determine the expected and actual incremental revenue growth. Rather than only looking at television advertising, we look at in-venue, digital, social, IP, event, and hospitality to determine a clear ROI for spend in different channels across different major sporting events.
There is no question that Super Bowl commercials are expensive. However, there is clear evidence that answers the question of whether these commercials can generate significant ROI for companies when used in the right way.