(ma/art) Mass Marketing Super Bowl Advertising
ragingbull.com
Super Bowl underdogs
Market Sleuth 01/27/2000 3:30 PM
By Tom Ker
This Sunday's Super Bowl between the Tennessee Titans and St. Louis Rams promises to be one of the most competitive match-ups in recent years. However, the real battle will be taking place not on the field, but between you and the commercial advertisers. One half of this challenge involves big-name traditional sponsors, bombarding you with engaging and clever commercial spots hoping to sucker you into buying their products, and the other side involves dot-com companies simply hoping you will remember their name. Compare this list of advertisers...
Electronic Data Systems (EDS)
Coca-Cola (KO)
Anheuser-Busch (BUD)
Motorola (MOT)
Pepsi (PEP)
Ford (F)
Hewlett-Packard (HWP)
Disney (DIS)
Pizza Hut
Visa
...with this list:
Hotjobs.com (HOTJ)
Kforce.com
Ourbeginning.com
Autotrader.com
Lastminutetravel.com
Monster.com
Lifeminders.com (LFMN)
Netpliance.com
Internet companies this year are expected to garner about one-fourth of the commercial spots during Super Bowl XXXIV, up from maybe just three or four last year. This year's 30-second commercials are costing about $2 million, a 25% increase over last year's prices. In what will become a truly fascinating experiment, these dot-com companies will spend an enormous percentage of their annualized marketing budget -- not to mention some of them spending a frightening amount of their existing cash -- in just 30 seconds.
Blowing cash
Hotjobs.com (HOTJ), the leading proponent of one-shot advertising, spent about half of its revenues last year on one Super Bowl spot, and it continues to claim it was definitely worth it. Five minutes after the commercial ran in 1999's Super Bowl XXXIII, the volume of people accessing Hotjobs.com surged fivefold. The site later in the year was ranked number six in brand recognition, according to an August, 1999 study conducted by Opinion Research Corp. International. This year, it will take two 30-second spots costing roughly $4 million total, which will represent about 20% of sales, or almost 15% of cash on the balance sheet as of September 30, 1999. This is once again an amazing gamble by Hotjobs, because the company generates no positive cash flow, so the commercials are being funded either by your IPO money or venture capital money. Supporters of one-shot advertising will claim it's necessary to be successful in the ultracompetitive world of the Internet, and they're probably right. But is this really an attractive business where this type of marketing blowout becomes a necessity?
And are we even sure one-shot advertising can actually be a singular event? The competitiveness of the Internet would lead us to believe that dot-com companies continually need do this in order to keep eyeballs, as opposed to capturing them just once. Contrast this with a brand like Budweiser,. where after its Super Bowl ads are done, people will continue to see that brand randomly and for free -- in the bar, in the grocery store, in the garbage can -- essentially keeping that brand alive with minimal additional cost. Not so for Internet companies, in which there is very little, if any, free publicity, and a user must make a conscious decision to visit a particular site. Nothing is going to remind me to go to a particular Web site unless I am bombarded with reminders of that presence, and bombarding never comes cheap.
Emptying the coffers
However, nothing is more intriguing from an investment perspective as those advertisers whose Super Bowl ad spending exceeds the entire revenues of the company. Ourbeginning.com, an online provider of wedding stationary, is supposed to generate just $1 million in revenues its first full year of operations. Angeltips.com has not generated any revenues, and was willing to finance its $2 million spot from early investors -- that is, up until a few weeks ago, when it recently pulled out of its spot. Some pre-IPO candidates are even suspected of throwing away a big chunk of marketing expenditures just to create hype in order to jump-start the offering, instead of building a brand over the long term. Ourbeginning.com, Lastminutetravel.com, and Autotrader.com are still private, and Netpliance.com is scheduled to go public this current quarter.
The only sure winner, of course, is Disney (DIS)-owned ABC Television. Last-minute spot sales, in which ABC will buy from existing advertisers and resell to the highest bidder, are reaching $3 million, which is estimated to raise the overall average to about $2.3 million per 30-second spot. With 61 spots available during the game, ABC could enjoy over a $140 million payday, not counting pre-game and post-game activity.
Still playing catch-up
I suspect the dot-com ads will have minimal affect on viewers, because the real interest still lies in the innovative and witty ads from traditional advertisers. Expectations are high for companies like Anheuser-Busch (BUD), the mother of all Super Bowl advertisers, which is spending $30 million this year. That figure happens to be less than 1% of just one quarter's sales. Recent ads from Internet companies have proven to be too quirky and incomprehensible for mass audiences, which makes sense, since a large percentage of worldwide viewers are still not online. Viewers are often hard-pressed to figure out just what these companies actually do after watching a particular ad.
Give me a talking lizard any day. |
