The Superbowl As An Economic Indicator
The Superbowl As An Economic Indicator
America’s unofficial holiday is this weekend, the Superbowl. What can this event tell us about the economy?
The first chart below shows the cost of a 30-second commercial (domestic audience only). The blue bars show the actual cost, while the black like shows the cost on an inflation-adjusted basis. In red are the 2010 estimates based on various news reports.
A 30-second commercial this Sunday should cost around $2.6 million, down from $3 million last year. This 13% decline is only the third decline ever and the largest year-to-year decline on record. At $2.6 million, the cost of a commercial is the same as it was in 2000. Interestingly, the Dow Jones Industrial Average is also near its 2000 levels, as is total employment in the United States. America’s Lost Decade takes many forms.
The only other Superbowls that saw lower advertising rates were in 2001 (-2.38%) and 2002 (-7.38%). These declines were in the aftermath of the 2000 “dotcom” bubble which saw advertising rates increase by over 50% just two years earlier as floods of internet companies bought commerical spots. Who could forget the pets.com sock puppet that year? The company was in bankruptcy for the 2001 Superbowl.
Charts after the jump . . .
<Click on chart for larger image>
While the advertising rates shown above are interesting in their own right, the size of the audience must also be considered. The next chart shows the number of viewers as blue bars (in millions), the number of households as the black line and the 2010 estimate in red. For 2010, the Superbowl’s domestic audience is expected to down-tick slightly from last year to 98 million viewers spread among 48.15 million households.
<Click on chart for larger image>
Combining the two series together, we get the next two charts. Both show exactly the same thing, differing only by time frame as the second chart below only shows the last 10 years.
These charts divide the size of the domestic TV audience by the cost of a 30-second commercial. The blue bars show the number of views per nominal dollar and the black line shows the number of viewers per inflation-adjusted dollar. The red shows the 2010 estimate.
<Click on chart for larger image>
<Click on chart for larger image>
In the late 1960s and early 1970s, Superbowl advertising was a real deal. Each dollar was paying for hundreds of prospective viewers. By the late 1980s each dollar of adverting was still paying for about 100 prospective viewers. As the second chart shows, in the last 10 years each dollar of advertising was paying for less than 50 viewers, bottoming at 33 viewers per advertising dollar for last year’s (2009) Superbowl.
These charts suggest that Superbowl advertising is no longer a growth industry, at least domestically. The audience size seems to have peaked near 100 million viewers (about one-third of the country, nearly one-half if only adults are considered). Therefore, we believe Superbowl advertising now moves up and down with the economy, unlike the 1970s when Superbowl advertising was a growth industry and increased dramatically each year even if the economy was struggling like 1974/1975 and 1979 to 1981.
As the last chart above shows, advertisers are estimated to be getting the best deal in years. They are expecting 38 viewers per advertising dollar at this year’s Superbowl. Such a deal means advertisers are not as willing to bid for ad time this year relative to previous years. We believe this shows that advertisers are still concerned about the economy and do not want to pay to advertise to consumers that cannot buy, or have elected to bypass, their products. With a 10% unemployment rate nearly 10 million unemployed are going to be watch the Superbowl.
This year’s Superbowl advertising, consistent with other measures of the economy, shows an economy still struggling to recover from the financial crisis.
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February 5th, 2010 at 11:19 am
On my meter measuring the metrics pointing to the inevitable decline and fall of the American empire, lower Super Bowl advertising rates push the meter backward. This is a good thing.
For those that aren’t in the real estate mortgage business, it may be hard to remember that Ameriquest–perhaps the slimiest of all slimy sub-prime mortgage operators, was the named sponsor of the game in, I believe, 2005. It was a marker pointing to the eventual slide. Ameriquest folded up shop shortly thereafter.
February 5th, 2010 at 11:55 am
Paying full price for a Super Bowl ad is akin to paying sticker price for a new car.
Let’s define the “modern era” as beginning in 1982, the onset of the Great Bull Market. I would point out that, in the modern era, there are far more people (and not just birds) who watch just for the ads…which forces the rest of us to pay attention to them (I wouldn’t watch the commercials but, because the NFL is a boring commie league, I wouldn’t really pay attention to the game if I had to watch alone) when we otherwise wouldn’t…mitigates having less viewers per dollar.
February 5th, 2010 at 12:07 pm
The US GOVT is also buying airtime, how appropriate for the times we live in!
http://sports.yahoo.com/nfl/news?slug=ap-census-superbowl&prov=ap&type=lgns
February 5th, 2010 at 12:36 pm
No inside dope here but I’m betting The Who go with a Baba O’Reilly/Pinball Wizard/Don’t Get Fooled Again set at halftime, or possibly an abbreviated Tommy finale (Listening to You…) Too bad Magic Bus is such a long song cause that would be frickin’ awesome.
Whatever became of the ‘AFC wins, good year for markets, old NFL team wins, bad year’ or whatever indicator? Has that been debunked or does it still hold statistically?
February 5th, 2010 at 12:57 pm
NFC wins are good for the markets. AFC wins are bad. Or at least that’s how the correlation analysis used to run. Of course, the Colts are actually an old NFC team that now plays in the AFC. So, either way this one goes, it could be considered an NFC win. But if the Saints win, well, that’s something you can expect about every forty years or so, kinda like the last two hurricanes (Betsy and Katrina) to hit the city.
However, in college football, the performance of the Crimson Tide and the economy have something of a correlation. They were champs this last year, after an economic slump. The last time before that was ’92, just after another little recession; before that it was ’78. While the rooster’s crowing didn’t cause the sun to come up…
February 5th, 2010 at 1:40 pm
@The Curmudgeon
You’re on the right track, but your data is slightly incorrect…
The lore is that “NFL” teams are good for the markets (not NFC)…
The Colts (formerly “Baltimore Colts”) were NEVER an NFC team… They agreed to join the AFC (along with the Pittsburgh Steelers and Cleveland Browns) in 1970 at the time of the AFL-NFL merger…
Therefore, anytime the Steelers, Browns (who are now officially the Baltimore Ravens), or Colts (who are now the Indianapolis Colts) win, it qualifies as an NFL win (according to lore)…
- The Steelers have won 6 Super Bowls
- The Cleveland Browns (now Baltimore Ravens) have won one Super Bowl
- The Colts have won 2 Super Bowls (one as Baltimore, one as Indy)…
As for the Saints?
They DO NOT qualify as an “original” NFL team… They came into existence in 1967 (9 months AFTER the first Super Bowl was even played)… Note: the first Super Bowl wasn’t even called the “Super Bowl”, it was called the “AFL–NFL World Championship Game”
On September 17th the Saints took the field for their first regular season game in front of 80,879 fans at ancient Tulane Stadium. The Saints got things started with a bang as rookie Running Back John Gilliam returned the opening kickoff 94 yards for a Touchdown.
Hope that clears things up :-)
cv
traders-anonymous.blogspot.com
February 5th, 2010 at 1:42 pm
@drey
“No inside dope here but I’m betting The Who go with a Baba O’Reilly/Pinball Wizard/Don’t Get Fooled Again set at halftime, or possibly an abbreviated Tommy finale (Listening to You…) Too bad Magic Bus is such a long song cause that would be frickin’ awesome.”
All I can say to that is:
“Fool me once… shame on you… Fool me twice, uh, we won’t get fooled again”
:-)
CV
February 5th, 2010 at 2:07 pm
@The Curmudgeon – yes, 2005: Bush Picks Ameriquest Owner as Ambassador – Firm’s Lending Tactics Investigated
http://www.washingtonpost.com/wp-dyn/content/article/2005/07/28/AR2005072801842.html
On the same day that the White House announced that President Bush is nominating California billionaire Roland E. Arnall to be ambassador to the Netherlands, the company he controls said it would set aside $325 million for a possible settlement of allegations of predatory lending tactics. Arnall’s company, Ameriquest Mortgage Co., is being investigated by regulators in 30 states. A $325 million settlement would be one of the largest ever in a predatory lending case.
February 5th, 2010 at 2:08 pm
The Original NFL Teams
The 1920 season consisted of:
Akron Pros
Buffalo All-Americans
Decatur Staleys
Rock Island Independents
Dayton Triangles
Chicago Cardinals
Canton Bulldogs
Cleveland Tigers
Detroit Heralds
Chicago Tigers
Columbus Panhandles
Muncie Flyers
Rochester Jeffersons
Hammond Pros
The Decatur Staleys are now known as the Chicago Bears
and the Chicago Cardinals became the St Louis Cardinals then the Phoenix Cardinals then the Arizona Cardinals-
all the other teams folded to the best of my knowledge-
the Cardinals are the oldest Franchise in the league followed by the Chicago Bears and Greenbay Packers (who joined the NFL in 1921)
February 5th, 2010 at 2:13 pm
@DOA:
Not to quibble, but didn’t I say that the Colts were an NFC team? By that, I meant they originated in the old pre-merger NFL.
But I hear you on the Aints. They’re one of the original “expansion” teams. Reckon how an expansion team win would play for the markets? When the Ravens won in 2001, it was on the way down, but when Tampa Bay won in 2003, it had more or less bottomed and was on the way up.
February 5th, 2010 at 2:20 pm
@drey
and I agree…
Baba O’Reilly & Don’t Get Fooled Again are “locks”
Probably Pinball Wizard too…
the problem with “Magic Bus” is that it’s not an ANTHEM song…
The only way to ROCK THE HOUSE is with ANTHEM SONGS… Songs that vibrate in your nuts!
February 5th, 2010 at 2:23 pm
@TC
The Bucs were an expansion team… But the Ravens, technically WEREN’T… Art Modell moved his franchise from Cleveland to Baltimore…
No the new Cleveland Browns, are, technically, an expansion team…
BTW…
I’ll be having an extensive Super Bowl coverage on my blog this weekend (if you care to stop by)…
CV
February 5th, 2010 at 2:26 pm
@DOA: I might just do that…you knows your football–I had forgot about the Cleveland connection.
February 5th, 2010 at 2:33 pm
@TC
I still haven’t settled on a winner yet…
Right now I’m leaning towards a narrow Colts victory (with the Saints covering the spread)…
Scott Green (the “Tim Donaghy” of NFL referees) & his crew are doing the game – so ANYTHING could happen :-)
February 5th, 2010 at 2:33 pm
“the new Cleveland Browns, are, technically, an expansion team…”
exactly-
Ravens = old Cleveland Browns
February 5th, 2010 at 2:49 pm
@ahab
are you at work?
Snow is coming down, not hard, but steady…
Not much accumulation yet because it’s wet, and some is melting off… It’s going to start accumulating soon tho…
February 5th, 2010 at 2:53 pm
cv-
at my office my man- only live about 10 miles away- and drive a 4runner-
as long as the gas pedal doesn’t stick- I think I’ll make it back(-:
market looks beautiful
February 5th, 2010 at 2:57 pm
@drey (FYI)
The cover from THE WHO “Odds & Sods” – 1974 album is the official T-Shirt for the performance…
Many Miami locals think, “Who are you” (which is the theme song for CSI: Las Vegas NOT CSI: Miami), will be a theme song:
The playlist for The Who’s Super Bowl Halftime Show is obviously being kept top secret:
The top choices include:
- My Generation
- The Kids Are All Right
- Who Are You
- Love, Reign O’er Me
- Pinball Wizard
- Magic Bus
- I Can See For Miles
- Can’t Explain
- Won’t Get Fooled Again
- Squeeze Box
- Baba O’Riley
February 5th, 2010 at 6:54 pm
DOA – Always good to hear from another Who afficianado…
Never dug The Who by Numbers – this was not a good period for the band, IMHO.
The Who Live at Leeds is one of the top ten rock ‘n roll recordings ever, again IMHO.
Would love to hear them do one cool throwback like Can’t Explain or My Generation but don’t think it’ll happen.
And BTW, anyone who doesn’t concede that Keith Moon is the best rock drummer to ever touch a pair of sticks either knows squat about music or isn’t paying attention.
February 5th, 2010 at 6:59 pm
“The Who Live at Leeds is one of the top ten rock ‘n roll recordings ever, again IMHO.”
In fact, I still have the original Marquee poster (you know the one – it’s a classic) which came with that album hanging on my wall, just like it has in every home I’ve had for the last 35 years.
February 5th, 2010 at 7:00 pm
One more thing – Colts 34, Saints 24 will be the final.
February 5th, 2010 at 7:26 pm
@drey
I saw them at the LA Colisseum back in 1982 (with The Clash as opening act)…
They rocked!
February 5th, 2010 at 10:45 pm
I’m wondering how much Super Bowl advertising is affected by the Winter Olympics this year? They start only a week later and I have to think they would demand more of the female sports wife interest since they are more geared to a general audience. I notice the 2002 year was low and that also coincided with an Olympic year
February 5th, 2010 at 11:09 pm
Why are you guys getting excited about the half time show, it’s always over produced and sounds like shit.
And The Who? please…
February 6th, 2010 at 11:07 am
Is this commercial worth $2.6 million though? http://www.wallstreetoasis.com/blog/big-game-this-weekend
Nevertheless, funny commercial though. Wouldn’t be nice if some of the women did that in our office (or if you’re a woman then you’d want some men, or not)?
February 6th, 2010 at 12:32 pm
[...] is a graph of the cost of a 30-second superbowl ad that I borrowed from the The Big Picture blog. The title of the post there is `The Superbowl As An Economic Indicator’. If it was a good [...]