Sunday, February 04, 2007

Economics of the Super Bowl...

We're still really early in the semester, so there's not a lot of economic theory that we've talked about, but anyone want to give it a try?

I can start - why do businesses pay $3 million+ for a 30-second commercial that is never shown again other than during the Super Bowl?


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So...will we have school tomorrow? It's supposed to be mighty cold...

11 comments:

Mary Hable said...

We definitely will not have school on Monday.

kfbare said...

Ok so here is my guess... not sure if it is really economically sound...
The Super Bowl has more viewers than anything else televised, so it makes sense that businesses would want to advertise to the millions of potential customers. But, since so many companies want to advertise the price is hefty. Kinda like supply and demand I guess. There are only so many slots, and lots of companies fighting for them. In the end, usually only the already successful companies are willing to pay $3 million for 30 seconds.


And I also think that we will not be in school tomorrow. Mary and I had a little discussion Dr. Fitzpatrick :)

domino said...

i agree with what katie said. but i also think, and i know this is more psychology than economics, but during the super bowl people are excited and happy, (or not, depending on how their team is doing, but either way adrenaline is pumping), and more than likely there is some alcohol involved, all of which makes an atomosphere more conducive to consumption. when are you more likely to want spend money frivilously, relaxing at home watching lost, or during a party while you're slightly tipsy (21 and over, only, of course)?
like i said, more psych than econ.


about our assignment, my group is not done yet. we have everything calculated, but we haven't decided which restaurants to use or started writting anything up. is that going to be a problem?

Wojtek said...

In my humble opinion the comercial break time during Super Bowl game is so valuable because the demand for it drives it so high. Is is also valuable for advertisers because of high viewership of the game- more people will see it more its worth.
The key thing is scarcity of this time. The supply of it is constant but the demand is increasing so the price does so too.
My guess concerning why they view it only once is because the comercial producers wnat to make their comercials as scarce as the Super Bowl. If you want to see them wath the game.

Raveen Shah said...

I believe businesses pay $3 million+ for the commercial because they have a demand for getting their message out which requires a supply of viewers that can be reached in the super bowl (higher number of people watching television at that time). Additionally, the price of a commerical is quite high because the super bowl attracts a large amount of viewers, which in turn leads to a high demand for a spot on t.v. and only businesses who are willing to pay the $3 million+ can serve as the supply.

Dan said...

Well school is canceled...
But as for the commercials, people will pay 3million for these commercials because there are over 100 million people watching the game. Advertising applies branding. The 100 million people that saw the commercial will be more likely to buy your product because the recognize it as one of the people crazy enough to spend 3 million for 30 seconds of advertising space.

joelleb said...

Happy no school day everybody!:)

Companies are willing to spend to upwards of $3 million on commercials during the game not only because they realize the profitable gains from advertising, but also because of the "buzz" the commercials generate. Even though the commercial will probably be aired only once on primetime television, many people will remember their favorite commercial for its comic/clever nature, which in itself is scarcity. People watching the superbowl are more likely to favorably regard a witty comercial they see only once, as opposed to a boring, overplayed commercial that seems to be on every channel at every hour of the day.

Kate said...

i know when i sit down to watch the superbowl, half the fun for me is getting to watch the commerical. In the newspaper the next day they analyze the best commercials. It's almost like whoever makes the best commericals, has the best product. Also, since a lot of companies can't afford to put commercials on during the super bowl, the ones who do (especially Bud Lite, which had the monopoly when it came to beer commercials for the game) are now a lot more recongnizable after having more exposure then the competiting products. The Super Bowl is kind of the one game where everyone tries to sit down and watch and commericials are a big appeal of that.

champion said...

i'm going to repeat domino's question because i'm wondering the same thing:

about our assignment, my group is not done yet. we have everything calculated, but we haven't decided which restaurants to use or started writting anything up. is that going to be a problem?

will we have time on tuesday?

KM said...

Sorry - I missed that question somehow!

I can give some time in class tomorrow, hopefully not all hour. We need to get started on S & D, especially since we lost today.

If you don't have time to finish, we can have it due later in the week, but you'll have to find time to get together on your own.

Count on 15-20 minutes, though.

D Mac said...

alright, so i know its a little late, but i decided to put my two cents in as far as why companies pay so much for superbowl commercials. the biggest reason for companies to pay that much for a commercial is that the superbowl is viewed by so many people. nearly every person in the united states watched the game, many of htem specifically for the commercials.