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Would you invest $7m in a Super Bowl Commercial?
Some thoughts on how to measure uneven return on investment, illustrated by classic Super Bowl commercials. Read: "Everything Starts Out Looking Like a Toy" #132
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Hi, I’m Greg 👋! I write essays on product development. Some key topics for me are system “handshakes”, the expectations for workflow, and the jobs we expect data to do. This all started when I tried to define What is Data Operations?
This week’s toy: a first attempt to identify the seed images used for GPT tools. It’s a basic way to try to identify and attribute the creators of the original images and perhaps lead to a middle ground where AI-seeded images will have proper attribution to the humans that created those source images (or the ability to block their usage). Edition 132 of this newsletter is here - it’s February 13, 2023.
The Big Idea
A short long-form essay about data things
⚙️ Would you invest $7m in a Super Bowl Commercial?
If you’ve never seen this iconic 1984 ad for the Apple Macintosh computer, take a minute and watch. It will seem familiar to you, even 40 years after it was produced.
The director - Ridley Scott of Alien, Blade Runner, and the Martian fame, described his thoughts on this commercial:
“My God. They're not saying what it is, they're not showing what it is. They're not even saying what it does. It was advertising as an art form. It was devastatingly effective.”
What was the cost to air this ad? Not including production costs, it was about $1m in 1984 for 1 minute of time (about $2.85m if you index those dollars to today). Today’s cost for the same time? $14m, or about 6.5% Compound Annualized Growth (CAGR) after inflation. This is pretty similar to the long-run return of the US public stock markets, suggesting (from a money standpoint only) that placing that money in other investments might yield a higher return.
Yet this ad buy from 1984 was a brilliant move and one of the most viewed commercials of all time, launching what is now a $40b annual segment of Apple’s business.
Can you capture this lightning in a bottle?
Shot, and chaser …
Investing in a Super Bowl commercial is a moment in time. For the winners, it can create long-term brand value. For everyone else, it might make … not so much difference. Even though you are paying to get attention on one of the largest stages in the world, the expectation is that you will provide entertainment rather than information about business value.
Here’s a sampling of ads from 2000-2022. Most of these focus on either big ticket items (cars, finance) or frequent purchase consumables (food, alcohol)
This is a small overlap with companies that sell to other businesses, so we might have a clue here that you have to have a consumer angle for your ad to work.
Here’s a grid of the companies from last year’s game that have reduced their workforce since last year. An excellent Big Game performance in the media didn’t necessarily separate any of these companies from their peers and from economic headwinds.
So you want to do it anyway…
Knowing these facts, would you recommend that your executive team invest in a commercial for a major sporting event like the NFL’s championship game?
What’s the ROI? Here’s my (sort of uninformed) take on this:
An ad like this needs to move the needle on an important metric (awareness followed by action)
Although the total audience is 100m US households, you are not likely to get much recall during game day itself
If 1m people taking an action might result in 5-10% of them converting, then each of those conversions needs to be worth a few hundred dollars or more to break even (assuming a 10m total budget for this campaign)
To really be worth it for a B2B company, each of those conversions needs to be worth thousands of dollars; a B2C company could probably live with hundreds of dollars
Don't forget that your org needs to be able to handle the volume
Awareness and Action
To hit the mark on a Super Bowl ad, you need to make it memorable. It’s even better if it’s very simple. Many brands resort to celebrity hosts because we already recognize and remember them. Perhaps it will help us to remember the product too.
This ad works because it’s funny and it demonstrates self-parking, a capability that might actually get you to take a test drive in a Hyundai dealership.
You need to build a long-term relationship with the customer for the conversion in a Super Bowl ad to pay off, and one way to do that is to repeat an ad over a series of years (yup, this is a long game). Remembering a character from an ad is a good cue for a brand.
E*trade used a series of commercials with a talking baby to demonstrate how easy it was to use their service to make financial investments. When this series started in 2008, trust in Internet fintech was not assumed. Building recall and making a talking baby the spokesperson for a brand made it easier to think about using this brand.
This 2011 commercial from Volkswagen is a great example of trading awareness from a popular brand (no word on how much they paid to use the music and likeness of Darth Vader in this commercial). This checks the box of remembering the character.
The conversion question in this ad remains: did remote start move the needle enough for people to test drive a VW? It seems pretty unlikely. This ad could have been a fantastic catalyst if there was a differentiated feature for VWs cars. (It would probably work better now for the ID4 or for the Buzz.)
Is it worth it?
Some advertisers have tried in recent years to break through the noise by making increasingly weird commercials. I love the self-parody of this meta-commercial from Tide, where David Harbour stars in … many ads at once. It’s pretty high-concept, and as an ad, it’s brilliant.
As a conversion vehicle to drive Proctor and Gamble’s Tide sales in a crowded, saturated market for laundry detergent? That’s a lot of Tide pods to move before this ad ever pays back.
What’s the customer experience during the extra attention?
Compare and contrast that David Harbor meta-ad with this customer love letter to Little Caesar’s pizza. The production values are a little low, but you absolutely get the idea that the 1980s video game character Pac-Man is here and is ready to … eat lots of pizzas.
You can take action on this commercial immediately, even during the game if you’ve forgotten to order enough pizza. And the experience of being a customer who needs a pizza unexpectedly is exactly in line with the typical experience of buying a pizza from Little Caesar’s at any other time. We’ve got awareness, ability to convert, and the ability to deliver … pizza. This commercial is a winner and I bet it actually did provide some ROI for Little Caesars.
Would you invest in next year’s Super Bowl?
By the time this newsletter is sent, you’ll know who won this year’s Super Bowl (go Eagles!) and also which commercials seemed like they could cut through the noise of everything connected to the Big Game.
So, what would it take for you to invest $7m per 30 seconds (+6.5% premium applied next year)? You’d need to either be a giant consumer brand believing you could realize additional conversions from enough people who link your brand to an ad, or a brand with enough differentiation that a few people heading your way would be very valuable.
If you don’t have a clear sight line to how you’re going to realize $10m in immediate benefit, or a lot more pretty soon, it’s hard to make the call to spend that money.
What’s the takeaway? It’s really fun to watch the commercials at the Super Bowl. As an advertiser, you’ll want to be part of that party if you have an expensive, differentiated product where you can service resulting demand. You’ll also think about advertising if you’re in a crowded consumer market where moving a few points of market share can generate tens of millions of dollars of profit. For most B2B companies, the answer of whether to invest is going to be nope.
Links for Reading and Sharing
These are links that caught my 👀
1/ Easy design rules to remember - Thank you, Anthony Hobnay, for this list of design rules you can safely follow every time.
2/ Where did US rents rise during Covid? - This interactive presentation shows how rents went up or down from 2020 to 2023, segmented by county. If you’re wondering, rents went up in 59% of counties.
3/ How to become a Cyborg - The world of AI may be all around us, but there’s hope. I’m not in the camp that an AGI will take over the universe, but I think things will change and get much weirder and unexpected. One way to react is to think about how we will respond, starting with becoming a little bit more like a cyborg. This is a long and interesting read.
What to do next
Hit reply if you’ve got links to share, data stories, or want to say hello.
The next big thing always starts out being dismissed as a “toy.” - Chris Dixon