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Friday, February 3, 2012

Moneybox: I Paid $4 Million for This?

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Moneybox
I Paid $4 Million for This?
Super Bowl ad prices have risen faster than inflation or viewership. Can they really be worth it?
By Matthew Yglesias
Posted Thursday, Feb 02, 2012, at 05:52 PM ET

The most-expensive 30-second slot during this weekend's Super Bowl cost a shocking $4 million. That's a hundred-fold increase in the inflation-adjusted average price of a spot since Super Bowl I in 1967. Even at the recent 2010 low point, ads sold for $2.65 million, up more than 20 percent from where they stood in 2000. What drives increases of this scale, and how can it possibly make sense for companies to pay such sky-high prices?

The main answer has less to do with the popularity of the NFL than the declining popularity of everything else. The most-watched Super Bowl of all time was Super Bowl XLV last February, with 163 million total viewers and 111 million average viewers in 53.3 million households. It's followed in viewership by Super Bowl XLIV, Super Bowl XLIII, and Super Bowl XLII. That's not so surprising. As the population of the United States grows, our most-watched sporting event is watched by slightly more people. Still, the actual growth in the number of football watchers can't possibly explain the surging ad rates. According to Nielsen, 35.3 million households tuned in to watch the Steelers play the Rams in 1980. In three decades, then, the Super Bowl had a very nice 50 percent increase in viewership. But advertising prices increased tenfold during the same period.

The interesting action has happened off the gridiron.

The past four Super Bowls haven't just been the most-watched TV programs in history—they ...

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