Commercials: Is the Cost Worth it?

By Ian O.

“Half the money I spend on advertising is wasted; the trouble is I don't know which half”

                                                                                                - John Wanamaker

This quote, given by a man often considered to be one of the pioneers of marketing, explains a common misconception by the public. This idea that advertisements, specifically TV commercials, always work is something that has resigned in the general public, yet is far from the truth. The biggest culprit of this may well be the yearly Super Bowl, known for it’s ads almost as much as it is known for it’s football. People flock to watch not only the championship match of the NFL playoffs, but to watch the very new, expensive, and star-studded commercials created by huge corporations. A lot of people see this and think that companies would only spend this much if they got insane boosts in sales, yet that could be farther from the truth. Multiple studies done by research firms, one notably being Communicus, suggests that 80% of ads don’t actually sell anything. This is a fairly surprising statement, considering this year's ads are costing roughly 4.5 million on average for a 30 second showing.

Why spend so much when there seems to be little gain from any ad? To understand this, we must look at 1 key factor, branding. This is essentially the art of building a name, symbol, emotion, or idea around your company through A LOT of repetition. This factor is fairly recent in marketing, but boy has it expanded quickly. This means if you are the likes of Coca Cola or Budweiser and you have excess amounts to spend with your marketing department, it could be worth it to spend money on commercials ads. Ads give a wonderful 2 for 1 deal on both branding yourself with the commercial or ad you make, while also advertising your product or service. Superbowl ads are where this happens in large parts, such as in the picture to the above, where Coca Cola uses a popular NFL player to endorse their ads and thus build their brand. Sure there will not be a large change in profit, but now people will see you for having that memorable commercial and leaving your name in their mind just in case they are deciding between your product and a competitors..

The entire situation can kind of be described as a coin flip. It’s a 50-50 chance with the chance of it booming, which favors larger and well known companies due to branding opportunity and typically paying off the initial cost. On the other side it could flop, making you lose a large amount of money as well as possibly creating a negative image of your company. For this reason the smaller companies shouldn't rely too heavily on commercials, and should instead not risk their already shallow pockets. Understanding these limits is what can make or break a company, while adding just another element to the already complex business jungle.

Citations:

Article Source: Neff, Jack. "Study: 80% of Super Bowl Ads Don't Help Sales." Advertising Age Special Report Super Bowl RSS. 6 Jan. 2014. Web. 29 Jan. 2016. <http://adage.com/article/special-report-super-bowl/study-80-super-bowl-ads-sales/290907/?qwr=FullSite>.

Super bowl Picture: http://image.nj.com/home/njo-media/width620/img/realtimesports_impact/photo/19524079-mmmain.jpg

Mean Joe Picture: https://i.ytimg.com/vi/vvEoX6SwxAQ/hqdefault.jpg