Untethered Market, Social Media Help Drive Super Bowl Pricing
If Apple’s “1984” spot is credited with demonstrating just how much Super Bowl spots can become cultural icons, an NBCUniversal executive might deserve similar recognition for upending the big game’s ad sales process this year. Seth Winter seems to have taken some of the gentleman’s agreements and pre-set pricing out, while introducing a model rooted more in what the market will bear.
If that’s being a bit generous to Winter and exaggerated – executives at other networks would probably say yes -- he does seem to have pinpointed how much social media can be a chip in helping a network command a big price jump.
If networks traditionally began Super Bowl negotiations with the previous year’s pricing as a base, Winter -- who heads sports sales at NBCU -- believes the discussions should not be tethered to history and made a point to drop that for 2012.
Along the way, he’s overseen a process said to be bringing NBC about $3.5 million per 30 seconds for the Feb. 5 game, 17% higher than what Fox got a year ago.
“There had been an expected protocol of an incremental increase of $100,000 per year," Winter told “Freakonomics” co-author Stephen J. Dubner in an NFL.com interview. "And much to the disdain of everyone -- and even my own staff -- I said, ‘Well, to hell with protocol, let’s see what this is really worth?’”
TNS figures show increases from $2.3 million to $2.4 million to $2.5 million from 2004-06. Greater year-over-year jumps came from 2007 to 2008 to 2009, but none were as high as NBC’s 17% bump this year.
And, NBC's increase may actually be higher versus Fox a year ago.
“My intelligence tells me ($3 million is) probably on the upper end of what they got per unit,” Winter said.
NBC should pull in $250 million in sales on Super Bowl Sunday, Winter said. In the years ahead, if his heck-with-protocol strategy pushes the gameday number to climb exponentially, that's good news for networks considering their rights fees for the NFL have soared.
While he is in the sales business and NBC will have the Super Bowl again in three years, Winter believes advertisers are getting a bargain. Getting ready for next year, CBS wouldn’t argue.
Speaking with Dubner, CNBC business reporter Darren Rovell suggested networks conduct an auction for the spots, which might have brought NBC even more than $3.5 million. Google surely would be happy to set up an online system. Who knows what a CEO might bid on a whim while sitting on the couch at home?
“I don’t know that we’ve ever really tested the exact boundaries of what the Super Bowl is worth," Winter said on NFL.com "I think technology and social media have taken that value and grown exponentially the value to the advertiser."
At least for the next few years as Facebook, Twitter and YouTube continue to grow, price increases might be correlated. As people watch the game with a smartphone in hand, immediate endorsements via social media for Eminem pumping Chrysler or the ETrade baby should only further convince advertisers the money is well-spent. Couple that with heavy replay viewing on YouTube and they should be further gratified. A decade ago, they may have simply counted the number of times an ad was replayed on newscasts to determine added value.
Dubner's "The Hidden Side of Super Bowl Ads" piece was the latest in his exceedingly interesting “Football Freakonomics” short-form series on NFL.com. (Using data and other factors, he's offered up that icing the kicker doesn’t work, momentum is a myth and Tim Tebow’s faith actually gives him an advantage.)
Winter told him that NBC tracks a slew of factors to determine the worth of a Super Bowl spot. Besides using firms that track traffic and opinions on social media, the impact on a company's sales and stock price after the game are gauged.
Take it for what it’s worth, but spots from Anheuser-Busch, PepsiCo (Doritos) and Volkswagen were the three most popular last year, according to the USA Today Ad Metter. Each advertisers' share price closed slightly higher the day after the game.