Franchisors Buy over Half of Super Bowl Ads

February 11th, 2015

<div class="photoright"><img alt="McDonald's Pay with Lovin' Ad" src="http://www.bluemaumau.org/sites/default/files/021115_2123_McDonaldsPa1…; style="height: 384px; width: 680px;" />
<div class="caption">McDonald's "Pay with Lovin'" Super Bowl commercial. <a href="https://www.youtube.com/watch?v=iq2Sm2XGv_s" target="_blank">YouTube</a></div>
</div>

<p>GLENDALE, Ariz.—Super Bowl XLIX may have been a game for the ages, but the 2015 Advertising Super Bowl was a ho-hum affair. Companies engaged in franchising continued to dominate the advertising buys for the most viewed television program of the year, purchasing 54.2% of paid spots, as compared to 45.8% of paid ads by all non-franchisor advertisers combined.  If the pregame storyline for the football game was the "DeflateGate" controversy, the Advertising Super Bowl for 2015 can best be described as "InflateGate" as the purported cost of a 30-second ad soared to an astronomical $4.5 million.</p>

<h3><span style="color:#800000;">Franchisors Win the 2015 Advertising Super Bowl</span></h3>

<p>Marking the 26th time in the past 27 years that franchisors dominated ad spending at the Super Bowl, there were a calculated 108 paid 30-second segments shown during the big game. Franchisors purchased 58.5 30-second spots (some ads ran just 15 seconds); non-franchisors in all categories purchased 49.5 spots. As in 2014, the difference maker was that several franchisors, including BMW, Budweiser, Coca-Cola, Chrysler, Dodge, Kia, McDonalds, Mercedes, Nationwide Insurance, Nissan, Toyota and GM all purchased longer spots of between one to three minutes, and the cumulative total of advertising time, rather than number of ads, made the difference in the score. By contrast, only seven non-franchisors aired extended spots, including Microsoft, T-Mobile, Esurance, plus three motion pictures and two video games.</p>

<h3><span style="color:#800000;">Super Bowl Ad Costs and Spending Inflating Fast</span></h3>

<p>Franchisors spent an estimated $263 million on Super Bowl ads, $40 million more than the $223 million estimated spend by non-franchisors. NBC reportedly charged a record average price of $4.5 million per 30-second spot ($150,000 per second). The estimated total ad spend of $486 million, up from $400 million last year, was helped by ad costs that increased by 12.5% over 2014, and are up by 50% over the last three years--thus the 'InflateGate' tag for the 2015 survey. The higher cost didn't seem to impact advertiser demand as NBC reported it sold out the available national network spots. (Each local network affiliate franchise sold about 30 local spots).</p>

<p>These numbers are even more dramatic when 23 NBC network promotional spots and seven NFL spots are added to the mix. Both NBC and the NFL have franchised affiliates, and if these 30 ads are factored in the totals, franchisors placed 64% (88 spots) of some 138 total ads that aired during the four-hour game broadcast. (These totals do not include local ads run in San Diego County, and results may vary in other local communities.)</p>

<p>According to American Association of Franchisees and Dealers (AAFD) chairman Robert Purvin, who launched the organization's Advertising Super Bowl survey 27 years ago, "Super Bowl advertising continues to demonstrate the power of franchising. How else can small business owners afford to share their messages with more than 100 million households at one time?"</p>

<p>Yet for a single $4.5 million spot, the advertising cost for a ubiquitous franchise such as Subway (who aired just one spot this year) breaks down to just $180 per store when divided among the approximate 25,000 US restaurants in the chain. "The collective marketing power among franchised businesses is formidable," adds Purvin.</p>

<h3><span style="color:#800000;">Comparing Industries – Automakers and Beverages Dominate Spending</span></h3>

<p>Among companies that market through franchising, companies that manufacture products distributed through independent dealer networks (called "product franchisors" in the trade) continued to dominate ad buys. A robust 51.5, up from 42 in 2014, ads were placed by companies that sell cars (15 minutes), beverages (6 minutes), and insurance or other services through independent networks.</p>

<p>Business format franchisors – those businesses that consumers traditionally associate with franchising – accounted for just six commercials, including spots from McDonalds, Pizza Hut, and Subway, plus several regional entries (on the West Coast where the survey was conducted) from Jack in the Box and Carl's Junior, among several others. The business format segment was even more active in the pre- and post-game broadcasts.</p>

<h3><span style="color:#800000;">The Biggest Spenders – Budweiser and Chevy Trucks</span></h3>

<p>Budweiser and Chevrolet led all advertisers with 3.5 minutes of air time each (the equivalent of about seven 30-second spots). For Budweiser, this was about half of its 2014 spending, and down for the third year in a row. Jeep, Microsoft, and Toyota each bought two minutes of time, and 26 advertisers ran at least one full minute of airtime. For the first time in several years, Ford skipped the event. In the soft drink category, both Coke and Pepsi were both active with multiple spots. Pepsi sponsored the halftime show, ran a spot for a Mountain Dew product, and also ran two spots for its non-franchised Doritos brand.</p>

<p>Technology related ads led the non-franchised segment with 9 airtime minutes, up dramatically from 2014. Movie and video games combined for a close second place with 15.5 spots, up from just five ads last year. Manufacturers, including food producers, ran 9.5 ads. Retailers disappeared, after accounting for five ads in 2014, and nine spots as recently as 2008. For online businesses, Amazon was a no-show, but online businesses were well represented by GoDaddy.com, Esurance.com, Squarepace.com (new last year), and newcomers Microsoft and Wix.com. Also in technology, all the big four mobile networks invested in the game: Verizon, AT&T, Sprint, and T-Mobile.</p>

<p>During the game more than 65 companies bought advertising. There was just one public service announcement (Healthinsurance.gov) but several paid spots focused on public service concerns, including heartfelt messages from Microsoft, Coca-Cola, Reebok, McDonalds and Dodge.</p>

<p>This year's crop of ads was generally considered tame in comparison to recent years – with some notable winners (and no obvious losers). Two of the most memorable ads (both franchise related) were touching and inspirational rather than humorous: Dodge (Chrysler) and Coca-Cola tributes to American culture and grit. Microsoft joined Coke in tributes to human compassion. Budweiser probably took first prize with another classic ad featuring the famous Clydesdales saving their 'adopted' puppy from a certain death.</p>

BMM

Comments

February 16, 2015 - 09:08am

Franchisor Use Franchisee's Money to Buy Ads!

What is wrong with this picture?

Franchisors use money collected by franchisees to buy ads and a franchisee association gives the franchisor credit for spending the money?

The brand includes all stakeholders.

Paul Steinberg

February 17, 2015 - 18:40pm

How did franchisors "win" ?

BMM and Bob Purvin jump up and down every year with excitement about how franchisors and distributors spend huge amounts of money for 30 second advertisements.

What neither one of them do is assess how effective that spending is. Perhaps this is because it would require some detailed analysis, or perhaps it is because the results would take away the one moment of kumbaya joy they have each year, as zors and zees come together in harmony.

Leaving aside who is ponying up the buckets full of money, the whole cottage industry of Superbowl advertising has come under scrutiny for the past several years: there is serious doubt as to the wisdom of spending for national ad spots.

Last year, Advertising Age said that 80% of Superbowl ads did not help sales, and this year Marketing Land said that "empirical evidence suggests" that Superbowl ads do not create value for the advertising companies.

It may be that 27 years ago when Bob Purvin began this survey that Superbowl advertising made sense.

Times have changed, and to assume that because the network and the NFL can find people willing to spend huge amounts of (other people's) money that we should all get excited and attribute this to the wonders of the franchise industry is illogical.

Mr. Purvin implies that Superbowl advertising is wonderful for franchisees because they can band together and reach large amounts of eyeballs. Mr. Purvin's logic is flawed, and his facts are not necessarily true.

The goal of any business owner is not to reach large amounts of eyeballs. It is to reach prospects who will buy your product.

In the modern age, it is not necessary to waste money on national advertising. For many years, local cable has allowed small businesses to have a cost-effective way of reaching the buyers who are capable of patronizing the advertised location. With the demise of cable (and television in general), alternative methods of reaching local consumers have come to the fore.

For businesses reliant on walk-in traffic, those alternative methods may provide better reach and more impactful messaging.

Is the traditional "broad"cast model still relevant? Or is a "narrow" cast model a more effective use of money?

Neither Mr. Purvin nor BMM bother to consider this, but the folks at Marketing Land are not certain that the old-fashioned Purvin/BMM view is still valid:

Mobile marketing platform Fiksu points out that for the $4.5 million spent on a single 30-second spot you could generate roughly 576 million mobile impressions and much greater brand engagement.

I would also point out that TV viewer engagement is not what it was back in the old days: texting, social media engagement, and other online distractions are part of the Superbowl experience and there is a far more superficial engagement between the viewer and the broadcast.

Finally there is an unsupported assumption in the BMM article. The article assumes that the ad space was sold at full price. The truth is that BMM has no way of knowing what was actually paid, as this data is not released by the network. There are a number of reasons why an advertiser is going to pay a discounted rate, including a shortfall in viewer numbers for an ad which ran previously.

If the logic and empirical data (or lack thereof) in the AAFD and BMM articles is any indication of how franchisors are spending the ad money, then franchisees need to start asking for proof that this money is being spent wisely.