Super Bowl Sponsors Justify Record Rates With Online Hits

Super Bowl sponsors are touting a new rationale for the record $4 million they’re spending on some 30-second spots this year: that viewers of the most-watched U.S. TV event will turn their ads into Internet hits.

“That is absolutely a factor in the cost of the ads,” said Les Moonves, chief executive officer of CBS Corp., which is televising the game. “The advertisers expect they’ll get a nice bump online, so it’s well worth the increase.”

The Feb. 3 pro football championship, which draws more than 111 million U.S. viewers, offers marketers such as Coca-Cola Co. and PepsiCo Inc.’s Doritos a rare chance to make big leaps online, whether it’s increasing Twitter followers or Facebook fans. Super Bowl advertisers bank on an extended online audience to justify and add value to their costly TV buys, said Rob Norman, chief digital officer of GroupM, the media buying unit of WPP Plc, the world’s largest ad company.

“More than ever, it’s mandatory to stretch,” Norman said in an interview.

Companies are paying CBS an average of $3.75 million for 30-second Super Bowl spots, an increase of 7.1 percent from a year earlier and the most expensive ad rate in U.S. media, according to WPP Group’s Kantar Media, an industry research. Some paid more than $4 million, Moonves said in an interview.

CBS, owner of the most-watched TV network, has been the best-performing member of the 16-stock S&P 500 Media Index over the past two, three and four years, climbing from a close of $8.19 in 2008 to $42.33 yesterday, the highest closing level since the split with Viacom Inc. was announced in June 2005.

Rising Rates

The percentage of analysts recommending the stock has risen steadily since June to 75 percent. The shares are also up 11 percent this year.

Super Bowl rates have risen about 60 percent over the past decade, underscoring the value marketers place on reaching the largest TV audience. Last year’s game, with 78 commercials, produced ad sales of $262.5 million, according to Kantar Media.

The network plans a full day of coverage around the game, which features the San Francisco 49ers and Baltimore Ravens, with kickoff scheduled for 6:30 p.m. New York time.

New York-based CBS is running an online contest, letting voters choose the best commercials from past games and airing the winners in a TV special on Jan. 30.

Super Bowl campaigns now are designed to work across media, from TV to the Web to smartphones and tablets, said Jonathan Taplin, director of the Annenberg Innovation Lab at the University of Southern California.

“We’ve been talking about this coming for quite a time, and it does seem to finally be a reality,” Taplin said in an interview.

‘Better Return’

Coca-Cola began streaming the first part of a Super Bowl ad last week. It shows three groups, cowboys, showgirls and “badlanders,” racing across a desert to reach a bottle of Coke.

Viewers can vote on who they want to win through the end of the game using the website, Twitter, Facebook, Tumblr and other online services. They can vote against a group by clicking “sabotage” buttons on the contest site. The winning contingent shows up in the ad spot right after the game.

“We’re all trying to get a better return on our investment, and digital is now a necessary part of that strategy,” Pio Schunker, a senior vice president of marketing for Coca-Cola’s North America division, said in an interview.

After last year’s game, Atlanta-based Coke discovered the online audience for its ads was larger than anticipated. The company had to add servers to handle the traffic.

Fan-Made Ads

“Digital and social had come to the forefront in a way that we had underestimated,” Schunker said. “Based on that, we decided this time around we needed to make it much more interactive, to drive more engagement from the fans.”

PepsiCo, a regular Super Bowl advertiser, is running an online contest to see which fan-made commercial for Doritos should air during the game. The winner also gets to join director Michael Bay on the set of the next Transformers film as an “unpaid independent contractor,” according to rules posted by the Purchase, New York-based company.

For the first time this year, Twitter Inc. will let advertisers target users with sponsored tweets right after their Super Bowl commercials run. People can vote for their favorite ad within the tweet itself.

Maintaining Conversations

“As the price for playing in the Super Bowl continues to increase year over year, brands are looking for ways that they can augment the conversation after those 30- or 60-second spots expire on air,” Josh Grau, head of brand strategy at San Francisco-based Twitter, said in an interview.

A now-standard practice among marketers is to post spots on Google Inc.’s YouTube before game day. While that seems counterproductive, YouTube says companies attract more viewers this way. Ads released before the Super Bowl generated more 9.1 million views on average, compared with 1.3 million for those appearing online the day of the game, YouTube says.

“We found that you’re more likely to remember the brand on the Super Bowl day if you saw the ad beforehand,” said Lucas Watson, YouTube’s vice president of advertising.

Mercedes-Benz USA is streaming five teasers online ahead of its Super Bowl spot, including one featuring model Kate Upton that already has more than 5.3 million views.

Companies that advertise during the Super Bowl generate a 20 percent increase in Web traffic on the day of the game, along with a higher average online audience in the week, according to an analysis from Adobe Systems Inc.

The importance of attracting an Internet audience has led almost all of this year’s Super Bowl sponsors to purchase ads on digital outlets, including Facebook Inc., YouTube and Twitter Inc., according to Todd Gordon, managing director at MagnaGlobal, the media investment arm of the advertising company Interpublic Group.

“You can’t have a standalone spot anymore,” Gordon said in an interview. “Viewers expect more now.”

Before it's here, it's on the Bloomberg Terminal.