Companies Are Wasting Millions on Super Bowl Ads

It's the biggest venue for showcasing products -- and the biggest waste of money.

Jan 12, 2014 at 9:30AM

It's said any publicity is good publicity, but a recent study suggests companies running ads during the NFL Super Bowl are wasting colossal sums of money. With the cost of a 30-second spot now running upward of $4 million, a 5% increase over the amount charged in 2013, it's right to question whether companies are unwisely spending limited resources buying up space.

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Source: NY/NJ Super Bowl Host Company.

Although advertising can have a multitude of purposes, such as raising awareness or providing information, ultimately the end game for marketing campaigns -- particularly for those run during this annual sports spectacle -- is to get consumers to take action, to buy a product or service. But research firm Communicus says as many as 80% of the ads featured fall well short of this goal, even suggesting that the more it costs to run the ad, the less effective the commercials.

The results of the study are based upon research that followed the individual buying habits of more than 1,000 consumers ages 21 to 59 before and after the 2012 and 2013 Super Bowls. They were asked beforehand what products and services they'd already bought and what they intended to buy in the industries covered by the football game's advertisers. They were then asked similar questions weeks after the game and to determine whether the ads worked.

Yet not all companies that advertise during the Super Bowl lend themselves to impulse purchases. Automobile buys, for example, are not snap decisions, yet carmakers like General Motors (NYSE:GM) and Toyota (NYSE:TM) are heavy ad buyers during the game -- particularly the former, which bought three or four spots for its various brands in each of the last two bowl games. To account for these types of ads, Communicus measured changes in consumers' attitude toward brands that would be investigated before making a purchase.

The overall results show that while the ads often do raise awareness -- 44% of people remember seeing a Super Bowl ad versus 32% for other similarly placed, high-profile ads -- they actually cause failure by consumers to remember the brands that made them. Likely because many of the ads are more style over substance, brands from Super Bowl advertisers are recalled only 35% of the time by consumers compared to about half the time otherwise.

Yet new products and services typically do better than more established ones because the ads are typically more focused on getting the name out. That makes sense because a newcomer that tries to run a style-heavy ad like Nike's (NYSE:NKE) "Just Do It" spots will fall flat. The sports-equipment maker can afford to run generic ads that build an aura around a brand because it's also heavily advertising elsewhere. But new products and services don't have that luxury and need to make every second count. (It's perhaps noteworthy that Nike doesn't advertise during the Super Bowl anymore, either.)

Even so, Communicus found that the most effective commercial run during last year's Super Bowl was the "Brotherhood" ad from Anheuser-Busch InBev (NYSE:BUD), which told the story of a Clydesdale horse and its trainer. The research firm said it created an affinity with consumers with its well-told story while also "driving preference for that brand."

So, which Super Bowl ad was among the least effective? PepsiCo's (NYSE:PEP) Doritos spots, which, despite generating huge amounts of engagement by holding an annual competition for consumers to create its featured spots, failed to change anyone's mind about buying the chips. 

For the amount of money companies are spending to showcase their products and services, investors have a right to ask if they're getting their money's worth. And for 4 out of 5 of Super Bowl ads, the answer is a resounding no!

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Fool contributor Rich Duprey owns shares of Nike. The Motley Fool recommends General Motors, Nike, and PepsiCo. The Motley Fool owns shares of Nike and PepsiCo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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