Super business of the Super Bowl

The final game of America's national football league (NFL) is a big deal, and not just for players and fans.

More than 100 million people will watch this year's match at the Superdome in New Orleans on Monday (NZT), advertisers are paying as much as $US4 million for a 30-second TV spot and tickets selling for more than $US50,000.

In terms of scale, nothing in New Zealand compares. To get close, the Rugby World Cup would need to be held in Auckland every year.

And even the two can't be compared; the Rugby World Cup is spread over several weeks, the Super Bowl is a single game. 

Since the first Super Bowl in 1967 the game has grown into a marketing juggernaut, generating hundreds of millions of dollars in TV revenue, ticket sales and economic benefits for the host cities.

This year, the 47th edition, the Baltimore Ravens will face off against the San Francisco 49ers.

The game is unique in that it's the first Super Bowl where the head coaches of both teams are brothers – Baltimore's John Harbaugh and San Francisco's Jim Harbaugh.

But while the game is important for the sport itself, it's also a big day for business, as advertisers spend up large to capitalise on the game's enormous audience.

The cost of ads

Each year the Super Bowl is one of the most-watched events on US television.

In 2012 it averaged 111 million domestic viewers, making it was most-watched television event in history.

Reaching such a large audience commands an impressively large price tag – as much as $US4 million per 30-second spot on this year's host network, CBS.

CBS will earn about $US250 million in ad sales, up from $US188 million the last time it aired the Super Bowl in 2010.

Super Bowl ads are famous for being outrageously expensive – Chrysler, for example, spent about $US12 million on its "Imported from Detroit" commercial in 2011.

The ads are of such high quality that they become a feature in themselves – minutes after they air, they appear on social networking sites such as YouTube where they'll be watched millions of times again.

Is it worth it?

While some may question whether it's worth it for the advertisers, Northwestern University market professors Derek Rucker and Tim Calkins suggest the Super Bowl is still the single biggest marking event in the US.

They told Forbes that while the general television audience has become more fragmented due to an ever-increasing choice of programmes, the Super Bowl is one of the few opportunities for advertisers to reach a very large audience at once.

"As a result, it is impossible to rival the Super Bowl if you are trying to launch a new brand, build an established brand or defend a strong brand," they say.

Chief creative officer at US ad agency David & Goliath, David Angelo, says the large spend on Super Bowl ads is worth it, but the ads have to be exceptionally good.

"The social sphere is making it easier for customers to call B.S. on brands than ever before.

"It has given them a platform where they can call you out if they feel like they're being sold to, or you're not telling the truth, or the brand message isn't fresh," he told Forbes.

While it is the most expensive ads from the biggest brands which attract the most attention, RBC Capital Markets analyst David Bank suggests it's actually the local ads which make the TV network the most profit.

Mr Bank estimates CBS just barely breaks even from the big national ads, after accounting for NFL fees to air the game and other costs, but local ad sales generate about an 85% profit margin, he told The Age.

Ticket sales.

While the NFL makes its keep from broadcasting revenue and TV networks benefit from advertisers, ticket sales are another important revenue stream.

This year's venue, New Orleans' Superdome, holds 70,000 people, a smaller-sized stadium by NFL standards.

The relatively limited seating capacity and the enormous demand for seats means tickets are hard to come by.

According to StubHub, the cheapest individual seat available for Monday's game is $US1498, while the most expensive is $US53,333.

Tickets to the Rugby World Cup final in Auckland were selling for between $NZ390 and $NZ1250.

But despite the high prices, Monday's game will most likely sell out.

Expected ticket revenue is not known for the game, but in 2011 it was estimated ticket revenue for the game in Dallas, Texas, was as high as $US200 million.

PwC estimates New Orleans will reap $US185 million ($NZ220 million) in benefits from hosting the Super Bowl, thanks to the 150,000 people expected to visit the city the week before the game.

In comparison, the New Zealand government estimates the Rugby World Cup earned the country $NZ573 million ($US480 million).

callison@nbr.co.nz