This past week, I had an interesting discussion with my friend and fellow social media consultant Mike Oradini about the effectiveness of Super Bowl commercials and the future of advertising. For the price that companies are paying (reports show a $3.5 million price tag for a 30 second spot), they better be at least breaking even on their investment.
During our discussion, Mike brought up the trend of ads going from a “one to many” approach to a “one to one” approach. What this means is that while advertising has traditionally been done on a mass media basis, the trend is for advertising to become more personal. This means a switch from full page newspaper advertisements or TV ads to specific Facebook or Google ads.
Let’s do some math. If you are a company that advertises at the Super Bowl, lets say Ford, you are spending $3.5 million, even if you only have one, 30 second commercial. Now, it was reported that approximately 110 million people watched the Super Bowl. Of that 110 million person number, we can exclude about 30 million of them because they are children or college kids who won’t be buying a car. Now we’re down to 80 million. We can also exclude another 60 million, because at least 75% of the audience will not be in the market for buying a new car. This brings us down to 20 million. Of this group, maybe (and this is being generous), there are 2 million potential Ford customers. Of this group, a conversion rate of 1% or 20,000 purchases as a direct result of the ad are possible.
Now, with $3.5 million, you could run an enormously extensive online advertising campaign. For example, you could allocate $1 million for Google ads, running with keywords associated with Ford car purchases. These customers are actively looking to buy cars. Another $1 million can be used for Facebook ads, targeting people who are interested in American-made vehicles. At an average of $2/click for Google and $1/click for Facebook, you would be able to get 1.5 million potential customers to come to your site. And yes, I know the argument for Super Bowl ads includes a “brand awareness” boost. For this purpose, lets allocate the remaining $1.5 million in the budget for banner ads across the Internet (particularly on relevant sites, like car review and car magazine sites). From these banner ads, for argument’s sake, lets say another 500,000 potential customers come to your site. That brings your potential customer number to 2 million, equivalent to the Super Bowl ad number. But we forgot one key factor; conversion rate. Since your online ads are targeting Internet users who are actively looking for, or likely to buy a vehicle, your conversion rate will logically be higher. Even with a conversion rate of just 2%, you are already selling DOUBLE the number of cars you would have been able to sell from the Super Bowl ad.
Obviously the numbers used in the preceding paragraphs are a bit rough but the message is still important. Over time, advertising will start to shift towards this “personalized” direction. However, now is the time to be ahead of the game and tailor your advertising message to the group you are marketing to. It is simply common sense. If you were a big Green Bay Packers fan and there were 2 different companies advertising the same car to you: one using New York Giants quarterback, Eli Manning in the commercial and the other using Packers quarterback Aaron Rodgers in the commercial, which are you more likely to pay attention to?
Do you have any thoughts on the future of advertising? Let us know in the comments below!