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Are Super Bowl Ads Worth the Cost?

Super Bowl ads could arguably be the best part of this Sunday’s championship game between the Baltimore Ravens and the San Francisco 49ers. They’ll make us laugh. They’ll make us cry (from laughter). We’ll share our reactions and thoughts on Facebook (FB) and Twitter for the entire Internet universe to read. We’ll judge and critique and scrutinize each one, mentally taking notes to determine the winning ad. And 48 hours later, after we relived the videos on YouTube and debated coworkers about the sexiest and most hilarious ads, we’ll move on.

Companies are paying nearly $4 million for one 30-second Super Bowl ad this year. Will those precious 30-seconds convince us to buy that product? Will one ad leave an indelible mark on our collective consciousness?

Super Bowl advertising staples like Anheuser-Busch (BUD), Doritos and GoDaddy.com can afford to drop several million dollars for one night of airtime. Fifteen percent of all Super Bowl advertisers last year invested more than 10% of their full-year media budgets in that game. But for many smaller companies, the pay-off can be unclear.

According to Brad Adgate, research director at Horizon Media, 42% of dot.com companies went bankrupt about a year after advertising in the 2000 Super Bowl. Maybe the timing was just off (two months after the game aired the “Tech Bubble” officially crashed).

Every year there’s a new roster of Super Bowl ad rookies that are trying to build brand awareness and reach a national audience. In the 2012 game, first-time advertisers accounted for 30% of the Super Bowl ad lineup, according to Kantar Media.

This year, viewers will watch ads from first-time advertisers like Oreo Cookies, SodaStream, Research in Motion (RIMM) and Wonderful Pistachios. Struggling smartphone marker RIM (which will be known as "BlackBerry" starting next Monday) will feature its new BlackBerry 10 device and operating system. Will the ad convince viewers to ditch their iPhones (AAPL) and buy BlackBerries again?

Electronics retailer Best Buy (BBY) will debut its ad that stars actress and comedian Amy Poehler. Super Bowl XLVII marks the third year in a row that Best Buy bought ad time. The company is in the middle of an existential crisis – is one Super Bowl ad an appropriate allocation of resources? It may be hard to argue that one ad will be persuasive enough to convince consumers to shun Amazon (AMZN) and rush to Best Buy stores for their latest gadget. But that’s the gamble Best Buy and RIM -- two beaten down and beleaguered companies -- are making.

Super Bowl ads can reverse a company’s bad fortune. Online brokerage firm E*Trade (ETFC) said it saw a 32% increase in new brokerage accounts the week after its 2008 Super Bowl ad. Choosing to advertise proved to be a smart move for E*Trade, which at the time was hurting financially -- its stock had dropped 80% that year. E*Trade is just one example. According to a CareerBuilder.com executive, the job search Web site experienced an average 40% year-over-year growth in invoices and a 23% jump in job applications one month after its 2011 Super Bowl ad.

More than 111 million people tuned into the 2012 Super Bowl, the most-watched program in television history. Sunday night could be another record-breaker. Advertisers are betting their entire marketing season on this one night. Are the odds in their favor?

What's your favorite Super Bowl ad? Tell us in the comment section section below!

Got a topic you’d like covered? Have a guest you’d like to see interviewed? Send us an email: thedailyticker@yahoo.com

You can also look us up on Twitter and Facebook.

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