In any given year, advertising rates for the Super Bowl are set by the network that owns the broadcast rights for that year’s game.
There are no strict equations for setting a price. Instead, the network will decide what price it thinks the market can bear and charge accordingly.
In 1991, ABC figured $800,000 was about right for a thirty-second spot, the standard commercial time unit. ABC sold all fifty-six of its thirty-second advertising slots that year, for a grand total of twenty-eight minutes of network commercials.
At $1.6 million per minute, that translated into $44.8 million in advertising revenues for the network. Not bad for an hour of football.
Although the networks have no absolute formula for determining the price of commercial time, they do follow one rough guideline: the price never goes down. The only time the cost of Super Bowl advertising declined was in 1977, during a recession, when the price fell by $25,000 from the previous year, from about $150,000 for thirty seconds to roughly $125,000.
In the next two years the price jumped up to just over $200,000. Rates have risen every year since. The increase might be as much as 15 percent or as little as 5 percent from one year to the next, but there is always an increase.
Inflation accounts only partially for the skyrocketing price of Super Bowl ad time. The real reason commercial slots have become so costly is that the Super Bowl has developed into a showcase event for corporations.
The big manufacturers in every industry, from computers to beer to athletic footwear, have seized upon it as the time to unveil new products and launch new ad campaigns. Some companies now spend as much as 30 percent of their annual advertising budget on the Super Bowl. The single most compelling reason for this corporate strategy is the game’s huge television viewership. It almost always draws the largest audience of any show broadcast during the year.
In 1991, more than 100 million people in the United States, and hundreds of millions more abroad, tuned in. According to Nielsen Media Research, Super Bowls account for five of the ten all-time most popular programs in American television history.
Advertisers know there will be a large audience for their spots. As one executive whose company has spent a bundle in recent years explained it, “The game is not a typical football event that caters to male viewers. It really is the convening of American men, women, and children, who gather around the sets to participate in an annual ritual.”
Despite all the hoopla surrounding the game, the size of the viewing audience has actually been shrinking in recent years. The highest-rated Super Bowl of all time was the 1982 game, which pulled down a 49.1 rating. (Each rating point represents 1 percent of all U.S. households with televisions.) By 1990, the rating had slipped to 39. But that still represented 35.9 million households and more than 100 million individuals. Considering the size of the audience, Super Bowl advertising is not really so expensive.
During the height of its popularity, for instance, The Cosby Show commanded $300,000 for a thirty-second ad spot, and the audience was less than half that of the Super Bowl. On the other hand, while the peak Cosby episodes were usually pretty good television shows, the Super Bowl often turns out to be a dud of a football game.