The Super Bowl is now less than a month away, and it's not just football fans who are getting geared up. Advertisers and media giants are carefully watching this year's super bowl as a barometer of the health of the advertising economy.
First the bad news: the carefully watched cost of a 30-second spot is down this year. Advertisers are paying $2.5 million to $2.8 million, down from $3 million a year ago, according to a TNS Media Intelligence report issued today. This is only the second time in Super Bowl history that ad pricing has dropped from one year to the next. Pepsi —the number two Super Bowl advertiser over the past two decades will not buy a spot in the broadcast for the first time in 23 years. General Motors, which was a major advertiser for the event until it dropped out last year, will not advertise again this year. Ditto for Fed Ex, which last year sat out the event for the first time in 12 years.
The good news: CBS reports that it's sold out nearly every one of its 62 available ads, which puts it in a stronger position than NBC was in at this point last year. Even though the price for a 30-second commercial is lower, the price of an ad has still more than quadrupled in the past 20 years. And while advertisers always drop out, newcomers always join, accounting for 20 to 25% of the advertisers.
The fact that nearly all of CBS’ ad inventory is sold a month before the event indicates that demand is coming back. While the lower ad rate isn't great, many of last year's ads were sold before the financial crisis really took hold, so last year's rates may not take into account the full decline before the 2009 Super Bowl. We'll see how long it takes to sell the final few ads, and we'll see if some new mega brands emerge to replace stalwarts like GM and Pepsi.