Saturday, February 4, 2017

Advertising in the Super Bowl

The Super Bowl is the premier advertising event of the year. Four of the five most watched telecasts ever were Super Bowls. The 2012 broadcast was the most watched telecast in history at 54% of US households. Costs of airing a thirty second spot during the game have grown to more than $3 million. The two biggest spenders have been Anheuser-Busch (Budweiser) and Pepsi: both well-known brands whose existence and tastes presumably do not need to be communicated. This highlights one of the most puzzling questions in advertising. Can continued heavy advertising by established brands pay off, and if so why?

The Super Bowl presents an interesting laboratory to answer these questions because it resolves two of the most significant measurement challenges. First, some television advertising studies lack sources of exogenous variation to infer causality. This is particularly problematic in advertising because the growth of data informed marketing has made it easier for media planners to endogenously concentrate ad exposures to their best potential targets. 

The patterns of Super Bowl advertising profitability also uncovers the source of effectiveness and competitive implications. Advertising can build or reinforce a complementarity between a brand and potential consumption occasions. Consumption of beer, snacks and other items while watching sports is easily observed in society, but this is, to our knowledge, the first evidence illustrating that advertising plays a role in this relationship and can link the complementarity to a particular brand. 

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