7 ms·

The Economics of a Super Bowl Ad

40 points by nnmg 7mo ago

fairity 7mo ago
The author keeps saying, over and over, that the reason this is a good bet is because "the downside is capped and the upside is asymmetric" as if that's some ground-breaking realization. Sorry, but obviously the downside is capped. The downside of virtually any marketing investment is capped at the cost of the media buy...And, the upside being "asymmetric" isn't some saving grace. What matters is the likelihood that you actually realize that asymmetric upside. And, nowhere in the article does he talk about Ro's estimated success likelihoods or actual outcomes. In short, he's basically saying: - I made a bet - It costs me something ("capped downside") - There's a potential payout ("asymmetric upside") - I have no idea whether this is positive expected value
- hn_throwaway_99 7mo ago
  This is also kinda wrong because the downside can be a lot more than your marketing spend if people really hate your ad. Just look what happened when Budweiser decided to send a personalized Bud Light can to a transgender person. For the Superbowl specifically, I can't imagine the "Search Party" ad helped Amazon sell more Rings.
  - Ekaros 7mo ago
    Or Gillette. Or Jaguar. Wrong sort of advertising can provably destroy your brand image among your consumers. Social media helps to amplify things in both directions. So you really need to know your audience's current mindset. Or wrong move could lead to losing lot more than just any money and manpower spend on the ad.
  - conductr 7mo ago
    Yeah but this is footnote territory. The idea of a cap is more appropriate for most advertisers. There’s a minor chance you miscalculate and the cap dissolves. It kind of goes without saying as that always applies, possibly can have high magnification if too far off the mark.
- hvb2 7mo ago
  The downside isn't really capped as in most cases there's a big dev effort to prep for an event like that. Plus a lot of spend on the day of the event to deal with the surge. This can easily be in the millions as well, in direct cost as well as in opportunity cost
upmind 7mo ago
I find the US commercialisation and dopamine inducing activities quite annoying. Compared to European sports, it's so different.
- rconti 7mo ago
  Well, we used to at least not have to suffer through gambling ads...
- KurSix 7mo ago
  I think it reflects a broader difference in philosophy: US sports are optimized as media products first, sporting events second, whereas in Europe it's historically been the other way around
  - mrguyorama 7mo ago
    I was yet again shocked at just how little football is actually shown to viewers of the Superbowl. You cut away from commercials to already running plays. You miss everything. The Superbowl cares more about viewers who don't watch football. Luckily this time there wasn't much football to watch anyway.
aorloff 7mo ago
This article uses a lot of numbers to make not very strong arguments. Lets assume that as a media planner, you have the bag of money under your desk to plausibly be discussing buying a Superbowl spot. You are already spending millions of dollars on media every month, the question is - will the Superbowl spot yield more than other channels ? For some small set of advertisers in this decision matrix, there's also the question of whether the media production cost is worth it (hello coinbase). For the vast majority of decision makers in this position, the media production budget is already getting spent. Lets say the spot plus extra cost is $10m to use a nice round number. You have an expectation of how many new users or website visitors your media budget typically delivers for $10m, because you spend that regularly (monthly, quarterly, it doesn't matter, but the point is that your spend has been growing). So the decision is really really simple. Superbowl or the other places you've been shoving $10m. Sometimes it works, sometimes it doesn't, but usually its like eh compared to the other places you've been shoving your $10m, underwhelming. Which is why you see justification pieces like this.
- baxtr 7mo ago
  As someone who is somewhat familiar with marketing but no expert, I always wondered how well attribution works. It seems all guesswork to me. User journeys and decisions are not well enough understood to say, "If I spend $1 here, it’ll return $x". Of course, marketing people come up with all kinds of calculations to show it’s possible. That or I’m completely ignorant.
  - aorloff 7mo ago
    > User journeys and decisions are not well enough understood to say The power of math is its understanding of you, not your understanding of it.
- PunchTornado 7mo ago
  At least it's not Facebook or other online monster. When I read the piece I thought if it wasn't for superbowl that money would have went straight in the garbage.
- 7mo ago
haritha-j 7mo ago
I would argue the downside wasn’t capped for Ring.
- brazzy 7mo ago
  First thing to come to mind when I read that claim. Pretty obvious gap in the logic to consider only monetary downsides, right before listing all thos non-monetary upsides.
samlinnfer 7mo ago
That’s a nice blog but they still get ripped apart in the Youtube comments. https://www.youtube.com/watch?v=tqXOcRtZoow https://www.youtube.com/watch?v=tqXOcRtZoow
wiradikusuma 7mo ago
at least $233,000 per second.. I'm not familiar with American culture, but are the following true? 1. More than half Americans watch it. 2. People don't go to toilet during breaks/ad time. Otherwise it's just money flushed down the bowl..
- rkomorn 7mo ago
  Super Bowl ads, in particular, really are their own thing. People will even watch them later, discuss, share, etc. There are some people who have more interest in the Super Bowl for the ads than the sport. So I'd say it's not money flushed down the bowl. Random fun fact: 20ish years ago, I used to work at a web hosting company that had superbowlads.com (iirc) as a customer. I'm not surprised it's no longer an actual site, though: I speculatively doubt NFL lawyers would've left it alone.
- alphawhisky 7mo ago
  More than half is a stretch, about half sounds more right.
AnimalMuppet 7mo ago
This has always bugged me. $7 million for a 30-second-long ad. What do they get out of it? Well, presumably, a change in peoples' concrete behaviors that is more than $7 million. They expect that (otherwise they wouldn't buy the ad in the first place). At the same time, we're told that all the sex and violence on TV doesn't matter, because it doesn't change peoples' behavior. So, which is it? Does what we watch on TV change our behavior, in concrete ways, or doesn't it? I suspect that it does change our behavior, that the advertisers are right. (They're betting a lot of money on their position; I'd expect them to have some basis for doing so before committing that kind of coin.) But if so, then the rest of what we watch also changes our behavior. And, obviously, so does our social media feed...
- ycombinatrix 7mo ago
  Sorry, I didn't realize we weren't supposed to be having sex.
- SoftTalker 7mo ago
  It's not just a single run of the ad. The same ad is run many times over, on other TV programs. It's promoted on social media. People see it and think "Oh yeah, that was a super bowl ad" and that makes it more memorable, and they associate it with the fun they had watching the game.
  - xnx 7mo ago
    > It's promoted on social media. It gets discussed for free on HN.
    - wincy 7mo ago
      Well luckily I mostly just read the comments on HN, and I didn’t watch the superbowl, so unless someone tells me about the amazing Frito Lays commercial they saw, I have no idea which company is being talked about. Except I have been reminded that my Ring doorbell is bad, very bad.
- 3eb7988a1663 7mo ago

40 points by nnmg 7mo ago

The author keeps saying, over and over, that the reason this is a good bet is because "the downside is capped and the upside is asymmetric" as if that's some ground-breaking realization. Sorry, but obviously the downside is capped. The downside of virtually any marketing investment is capped at the cost of the media buy...And, the upside being "asymmetric" isn't some saving grace. What matters is the likelihood that you actually realize that asymmetric upside. And, nowhere in the article does he talk about Ro's estimated success likelihoods or actual outcomes. In short, he's basically saying: - I made a bet - It costs me something ("capped downside") - There's a potential payout ("asymmetric upside") - I have no idea whether this is positive expected value

hn_throwaway_99 7mo ago
This is also kinda wrong because the downside can be a lot more than your marketing spend if people really hate your ad. Just look what happened when Budweiser decided to send a personalized Bud Light can to a transgender person. For the Superbowl specifically, I can't imagine the "Search Party" ad helped Amazon sell more Rings.
- Ekaros 7mo ago
  Or Gillette. Or Jaguar. Wrong sort of advertising can provably destroy your brand image among your consumers. Social media helps to amplify things in both directions. So you really need to know your audience's current mindset. Or wrong move could lead to losing lot more than just any money and manpower spend on the ad.
- conductr 7mo ago
  Yeah but this is footnote territory. The idea of a cap is more appropriate for most advertisers. There’s a minor chance you miscalculate and the cap dissolves. It kind of goes without saying as that always applies, possibly can have high magnification if too far off the mark.
hvb2 7mo ago
The downside isn't really capped as in most cases there's a big dev effort to prep for an event like that. Plus a lot of spend on the day of the event to deal with the surge. This can easily be in the millions as well, in direct cost as well as in opportunity cost

upmind 7mo ago

I find the US commercialisation and dopamine inducing activities quite annoying. Compared to European sports, it's so different.

rconti 7mo ago
Well, we used to at least not have to suffer through gambling ads...
KurSix 7mo ago
I think it reflects a broader difference in philosophy: US sports are optimized as media products first, sporting events second, whereas in Europe it's historically been the other way around
- mrguyorama 7mo ago
  I was yet again shocked at just how little football is actually shown to viewers of the Superbowl. You cut away from commercials to already running plays. You miss everything. The Superbowl cares more about viewers who don't watch football. Luckily this time there wasn't much football to watch anyway.

aorloff 7mo ago

This article uses a lot of numbers to make not very strong arguments. Lets assume that as a media planner, you have the bag of money under your desk to plausibly be discussing buying a Superbowl spot. You are already spending millions of dollars on media every month, the question is - will the Superbowl spot yield more than other channels ? For some small set of advertisers in this decision matrix, there's also the question of whether the media production cost is worth it (hello coinbase). For the vast majority of decision makers in this position, the media production budget is already getting spent. Lets say the spot plus extra cost is $10m to use a nice round number. You have an expectation of how many new users or website visitors your media budget typically delivers for $10m, because you spend that regularly (monthly, quarterly, it doesn't matter, but the point is that your spend has been growing). So the decision is really really simple. Superbowl or the other places you've been shoving $10m. Sometimes it works, sometimes it doesn't, but usually its like eh compared to the other places you've been shoving your $10m, underwhelming. Which is why you see justification pieces like this.

baxtr 7mo ago
As someone who is somewhat familiar with marketing but no expert, I always wondered how well attribution works. It seems all guesswork to me. User journeys and decisions are not well enough understood to say, "If I spend $1 here, it’ll return $x". Of course, marketing people come up with all kinds of calculations to show it’s possible. That or I’m completely ignorant.
- aorloff 7mo ago
  > User journeys and decisions are not well enough understood to say The power of math is its understanding of you, not your understanding of it.
PunchTornado 7mo ago
At least it's not Facebook or other online monster. When I read the piece I thought if it wasn't for superbowl that money would have went straight in the garbage.
7mo ago

haritha-j 7mo ago

I would argue the downside wasn’t capped for Ring.

brazzy 7mo ago
First thing to come to mind when I read that claim. Pretty obvious gap in the logic to consider only monetary downsides, right before listing all thos non-monetary upsides.

samlinnfer 7mo ago

That’s a nice blog but they still get ripped apart in the Youtube comments. https://www.youtube.com/watch?v=tqXOcRtZoow https://www.youtube.com/watch?v=tqXOcRtZoow

wiradikusuma 7mo ago

at least $233,000 per second.. I'm not familiar with American culture, but are the following true? 1. More than half Americans watch it. 2. People don't go to toilet during breaks/ad time. Otherwise it's just money flushed down the bowl..

rkomorn 7mo ago
Super Bowl ads, in particular, really are their own thing. People will even watch them later, discuss, share, etc. There are some people who have more interest in the Super Bowl for the ads than the sport. So I'd say it's not money flushed down the bowl. Random fun fact: 20ish years ago, I used to work at a web hosting company that had superbowlads.com (iirc) as a customer. I'm not surprised it's no longer an actual site, though: I speculatively doubt NFL lawyers would've left it alone.
alphawhisky 7mo ago
More than half is a stretch, about half sounds more right.

AnimalMuppet 7mo ago

This has always bugged me. $7 million for a 30-second-long ad. What do they get out of it? Well, presumably, a change in peoples' concrete behaviors that is more than $7 million. They expect that (otherwise they wouldn't buy the ad in the first place). At the same time, we're told that all the sex and violence on TV doesn't matter, because it doesn't change peoples' behavior. So, which is it? Does what we watch on TV change our behavior, in concrete ways, or doesn't it? I suspect that it does change our behavior, that the advertisers are right. (They're betting a lot of money on their position; I'd expect them to have some basis for doing so before committing that kind of coin.) But if so, then the rest of what we watch also changes our behavior. And, obviously, so does our social media feed...

ycombinatrix 7mo ago
Sorry, I didn't realize we weren't supposed to be having sex.
SoftTalker 7mo ago
It's not just a single run of the ad. The same ad is run many times over, on other TV programs. It's promoted on social media. People see it and think "Oh yeah, that was a super bowl ad" and that makes it more memorable, and they associate it with the fun they had watching the game.
- xnx 7mo ago
  > It's promoted on social media. It gets discussed for free on HN.
  - wincy 7mo ago
    Well luckily I mostly just read the comments on HN, and I didn’t watch the superbowl, so unless someone tells me about the amazing Frito Lays commercial they saw, I have no idea which company is being talked about. Except I have been reminded that my Ring doorbell is bad, very bad.
3eb7988a1663 7mo ago