Assignment:
Supply, Demand, and the Cost of Super Bowl Advertising
During 364 days out of the year, the average cost of a 30-second prime time television advertisement spot is a little over $100,000. But for one four-hour block, on one day, on one channel each year, the price skyrockets to around $3.5 million. That time slot is the Super Bowl.
Like most prices in a market economy, the price for television advertising is set by supply and demand. Advertisers want to reach the largest number of viewers with each ad, so demand is high for ad space during a program lots of people are watching. Few programs are watched by more people than the Super Bowl, which averages over 100 million viewers each year.
When demand is high, the supplier (in this case the television network airing the game) can raise its prices as high as buyers (advertisers) are willing to go. The limited supply of ad space also plays a role in sending the price higher. In 2013 there were only 70 slots available to sell.
In the end, all of the ad space available during the game is filled, because the television network will not charge a price so high that advertisers are unwilling to pay. They charge the price that makes them the most money, while leaving no surplus airtime.
Focus Questions
Each student will answer all three questions about Super Bowl advertising in the forum. Then they will respond to one other student's posts. Use the Guidelines for Responding to Another Student (opens in a new window) to prepare your two replies.
1. What makes the price for an advertisement during the Super Bowl so different from the normal price for a television advertisement?
2. Do you think pricing for Super Bowl advertising is fair? Explain your reasoning.
3. Think of an advertisement from a recent Super Bowl that you recall (or select one from the resources below). Explain how it was effective, or not. Do you think sales for the advertised product increased after the Super Bowl?
Your discussions will be graded according to the rubric (scoring guide) below.
Resources
Best Commercials from Super Bowl 2017, CNN (opens in a new window)
Super Bowl Commercials 2017, SB Nation (opens in a new window)
2017 Super Bowl Commercials, CBSSports (opens in a new window)