What Can Superbowl Ads Teach Us About Financial Decisions?

January 13, 2012

I just read this article about NBC selling out all of its Super Bowl ad inventory.  $3.5 MILLION is the average price for each 30 second ad!!!  Wow, that’s a lot of money.  (Unless you’re in Congress where even $3.5 Billion doesn’t seem like a whole lot of money…..)  What do the companies who purchase these ads get?  A big audience and the chance to make a memorable ad that hopefully drives customers to purchase more of their product or use their service are their rewards.  But $3,500,000????  Really????  That’s a big expense for any company.  For some companies, it pays off.  For others, it’s not very effective.  So, spending money isn’t always the best choice!  (Are you listening, Washington D.C.?)  In our own lives we can incur big expenses.  The question we have to answer is if it’s the right choice.

Sometimes, spending money to buy a new car makes a whole lot of sense.  My car has 210,000 miles on it but is running great and while it is a little ugly right now (I ran over an orange highway cone & busted up the front grill, but it beats being run over by the 18-wheeler that was 3 inches from my rear bumper & made braking the wrong choice), mechanically it’s very sound.  So, I’ll keep it, treat it well, and hope to see 300,000 miles.  Then 400k, then 500k.  After that, it’s anyone’s guess how long it can go.  So, spending money on a car right now is not something that makes sense.  What I’d get for my expense isn’t worth it to me.  That’s why most companies that make the products and provide the services that you enjoy will never even consider advertising during the Super Bowl.  It’s a cost vs. benefit analysis and if there isn’t enough bang for the buck, it’s best to pass.  No matter how cool your ad (or new car or new house or iPad or…….) could be!

What about a person I know who buys a new car every 2-3 years?  His payment gets higher each time he trades in a relatively new car for a new car.  What’s he getting for that expense?  A new car smell, a warranty (with >200k miles, I don’t have one!), a new seat, updated electronics, the latest safety innovations, and many other things that you’ll see advertised during this year’s Super Bowl are what he’s getting for his new car expense.  He sees his expense outlay as being worth it. Groupon ran an ad during the Super Bowl and prior to that ad, I had never heard of them.  Within days of that ad, I had a Groupon app on my phone and no less than 10 of my friends told me stories about things they bought using Groupon.  I know that’s a really small sample size, but it seems like that company got some serious bang for the buck with their ad.  I don’t remember the ad, but I do remember the company and the buzz around their product in the months that followed.

Sometimes the ads are better than the actual game, so it’s always fun to watch them and hear opinions of them from friends and the media.   What can we take away from these ads, though?  First and foremost, enjoy them!!! Some will be incredibly memorable.  Some will be absolute flops.  But, they are worth the 30 seconds just to see how the level of creativity keeps getting raised.  (not always for the better)  While you’re enjoying them, realize that somewhere out there, someone decided to write a check for $3,500,000.   Was it the best use of their money?  Only time will tell.  When you’re ready to write a check or take out a substantial loan or make a major purchase, ask yourself that same question….