Ad prices fall, but still most expensive

The economic slump appears to have taken a toll on Super Bowl ads, pushing the price down for only the second time in the game’s history, though they’re still the most expensive on television.

In this image provided by HomeAway

In this image provided by HomeAway

The economic slump appears to have taken a toll on Super Bowl ads, pushing the price down for only the second time in the game’s history, though they’re still the most expensive on television.

While early readings suggest there are better deals this year over last, Pepsi won’t advertise its drinks for the first time in 23 seasons, joining FedEx and GM, who dropped out last year. In their absence, newcomers and smaller companies have snatched up slots.

TNS Media Intelligence said Monday that a 30-second commercial during next month’s Super Bowl on CBS are selling for between US$2.5 million and $2.8 million, based on reports from advertisers and media buyers. That’s a drop from last year, when ads averaged $3 million on NBC — a record, according to TNS. Prices remained strong last year because the majority of ads are typically bought in the spring, before the deepening of the recession, analysts said.

Final figures for this year will come in after the Super Bowl airs Feb. 7. CBS won’t comment specifically about its prices, but company officials said they believe prices will be higher than last year.

“We don’t calculate average price because it’s not how we manage the business, but we’re confident that if we did it would be higher than last year,” said CBS spokesman Dana McClintock. “In certain cases, we’re getting over $3 million” per spot.

McClintock said it was difficult to peg a lower end of price range because some clients buy Super Bowl commercials as part of a package of ads throughout the football season.

Vacation rental website HomeAway was lured in for the first time by the prospect of lower prices. Its ad in the third-quarter of the game is its first television commercial.

“We certainly had a hunch that it wasn’t going to be massively overpriced versus last year. We had a hunch there’d be some wiggle room,” said CEO Brian Sharples, whose company is launching a year-long campaign tied to the Griswold family of National Lampoon’s Vacation fame.

CBS officials said the pace of sales had been better than it was for NBC a year ago. As of Friday, only four of the 62 commercial slots remained to be sold.

CBS is keeping a few slots open so it can sell them at higher prices to last-minute buyers, said Bob Horowitz, president of Juma Entertainment and executive producer of television show Super Bowl’s Greatest Commercials.

He said putting a single number on Super Bowl ads is tricky because they are often bought in packages that can include other events like the Olympics.

The only other year that prices declined was from 2006 to 2007, when 30-second slots dropped from $2.5 million to just under $2.4 million, said Jon Swallen, senior vice-president of research for TNS. Overall advertising spending fell slightly in the first half of 2007, even before the recession began.

Super Bowl prices crossed the million-dollar threshold in 1995, and topped $2 million five years later.

Prices didn’t fall during the downturn of the 1980s because the games didn’t have the cachet they do now, Horowitz said. Back then, 30-second spots sold for $275,000 in 1981 and jumped to $600,000 five years later.

Ad prices spiked as viewership soared, going from 68.3 million viewers in 1981 to 87.2 million in 1986, according to Nielsen. Last year’s Super Bowl had a record 98.7 million viewers.

From 1990 through last year, the Super Bowl generated $2.17 billion of network sales, including 1,400 commercials from 210 advertisers, TNS said.

CBS won’t say what it paid for the rights to the Super Bowl. The three networks that now alternate carrying the game, CBS, NBC and Fox, get it in a package along with the other football games they broadcast through the season.

NBC Universal has said it expects to lose money televising the Winter Olympics next month, mainly from the $820 million the company paid for the rights to the games. The company has said advertising sales were soft for much of past year, but they have increased as the Olympics draw near.

The 2009 Super Bowl brought in $213 million in advertising revenue — just for ads airing during the game. That was a 14 per cent increase from the previous year’s $186.3 million, when the average 30-second slot cost $2.7 million.

In economic downturns, companies are more likely to buy Super Bowl advertising when they want to make an impact by jump-starting a brand or introducing themselves, said Tim Calkins, a marketing professor at Kellogg School of Management. Dr Pepper Snapple is doing that this year with an ad promoting new flavour Cherry Dr Pepper, featuring rock band Kiss.

The Census Bureau is paying $2.5 million for two pregame spots, two on-air mentions and an ad during the game to promote this year’s census.

But it’s an expensive proposition for companies like Pepsi, FedEx and General Motors that would otherwise use the game to simply remind people they’re still out there.

PepsiCo Inc. won’t advertise its Pepsi brand or any other beverages during the game, shifting its ad dollars instead to a new, mostly online marketing effort. But its snack unit, Frito-Lay, will have Doritos commercials in the game.

“In a way, Super Bowl advertisers are acting like people are acting in the economy, which is they’ll buy only if there’s a deal,” Calkins said. “If the price is right, people will step up.”

That’s exactly what 5-year-old HomeAway is doing. The company is spending “many millions” to kick off a year-long campaign with a commercial bringing back Chevy Chase and Beverly D’Angelo in their roles as the quirky, travelling Griswold family from the movie “National Lampoon’s Vacation.”

HomeAway paid an undisclosed sum for the rights to the movie from Warner Brothers and spent nearly $1 million to upgrade its technology to handle what may be one million hits on Homeaway.com after the ad airs.

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