The True Economics & ROI of a Super Bowl Ad

Neil, do you want to know the true economics and ROI of a Super Bowl ad?

I already know it, but continue. I did a chart and a post on this a while ago, but it's terrible.

So why is it terrible?

Super Bowl ads do not work out from a profit standpoint.

So get this, the, you know, Ro, the health company, right? So they did a post yesterday. You saw it on Twitter?

No.

Okay, so they do, I think they do about $500 million a year or so. Okay, so he actually wrote a post about this, the economics of a Super Bowl ad. So check this out. So he's going to have Serena Williams, known as one of the GOATs of tennis, right? Or I guess you can't be one of the GOATs, you're just the GOAT, right, of tennis. And so he's doing the— he just kind of broke this down. So he's like, look, you're not actually paying, and this is where we talked about it, you're not actually, if it's $7 to $10 million, you're not actually paying $7 to $10 million. There's a lot more that goes into it. And I'm going to get to that. And then you can push back on some of these things that we've done or that he's talking about here. But he was just saying, look, the ads are a part of the product, but there's asymmetric upside. So here's, the table that he made over here. I know you like tables. So assuming his marketing spend is $200 grand, sorry, not $200 grand, $200 million a year, the annual percentage you're spending on this ad is maybe 5%, right? And then you kind of go up. So I think their spend is, it's, I think it's around here, $200 to $300 or so.

So very few companies, Eric's showing a chart that goes up to $900 million a year. Very few companies spend $900 million a year on marketing.

But I would say, I mean, you would agree with this, that a lot of companies that are spending on these ads are spending a good chunk of money on Marketing for much higher percentage than the 5%. Yes. Now, so, you know, first let's talk about the full cost, which you've kind of addressed, and then let's talk about how he's breaking down the ROI and the short-term and the long-term benefits because the Super Bowl is coming up. Sad that the Rams lost, but you know, it's okay. I still like the Seahawks. So when you look at the production cost of this thing, okay, typically, okay, a 30-second ad Neil, I'll let you answer this one first. How much would the 30-second ad spot cost initially, just for the Super Bowl one, just the Super Bowl one, not all in?

So when you say all in, are you talking about the other costs like production or are you talking about more ad buying?

Because typically when you buy— I'm not talking about the additional ad buy. I'm just talking about the Super Bowl ad buy, not including the production cost for the ad.

It's typically less than $10 million.

Okay. So he's got it here. 30-second ad media cost is $7 to $10 million. Okay. Then he says production is $1 to $4 million, okay? Talent is $1 to $5 million because you're paying the influencer, right? And 64% of these ads last year had influencers. The total Super Bowl, you're paying $9 to $19 million. I don't know where that comes from, but additional media spend, which we've talked about because the networks—

The $9, he's doing $7, $1 for the commercial, $1 for the influencers. So he's saying low end is $9.

So then the initial media spend that we're talking about where the networks require you to buy another shows, right? That's an additional $7 to $10. So your total committed media plus production spend, to $29 million. So do you agree with the cost on that before we talk about measuring success?

I would say $16 is on the low end. Usually you see it, if you're going to do it, you're going to do it right. Typically all the companies we've worked with when we've done Super Bowl commercials, you're looking in the 20s.

Okay. So exactly what he's saying, right? So $16 to $29, $16 on the low end, right? So how do you measure success here? So the value of a brand to a customer can generally be distilled down to 2 parts. One is an association with a set of values. So privacy, craftsmanship, the environment, status, wealth, et cetera. Number 2, The reduction in uncertainty, trust that the company will deliver on the promises it makes. So, you know, you don't want it to be like brand awareness is not necessarily a brand value, right? A lot of people know Enron, for example. So what he's saying is that the way the economic value of a brand typically shows up is in one or a combination of the following. One, lower CAC, right? Lower cost of acquiring a customer through more efficient ad spend or word of mouth. Number 2, premium pricing power. If there are 2 identical products, but people are willing to pay more for one because of the brand, the brand is driving additional LTV. Lifetime value, and then you have loyalty and retention, right? So just to wrap this up, and then we can finally discuss this. So how's Ro? Again, they're the health company, they sell like, I think the ad is about GLPs, right? GLP-1s. So the peptide that helps you lose weight. So how do we think about measuring the financial impact of the ad in the short and long term? So short term, it's all about tracking the conversion funnel from beginning to end across all touchpoints. So he's basically saying, okay, overall, Zooming out from the moment our Super Bowl ad airs through the rollout of complementary campaign elements, we will track the entire funnel. I'll save people from DTC metric diatribe.

We track the additional—

we track traditional funnel metrics. This allows us to see the impact, the uplift over time, right? Holding as much constant as possible. So long-term, which I think I'm more interested in, and then we can talk about this, is you are now able to Short-term impact is immediate customer acquisition. Long-term impact is improved efficiency of future marketing spend, right? Because you have awareness and hopefully the idea here is that that 1, 2, 3, 4, 5% of marketing spend that they're spending on this, they'll drive further efficiency across the board. And to him, that $30 million bet is worth it for that. Like it either does nothing for it or it lifts it slightly. And that's a lift across the board for all advertising. That's what he's saying.

Yeah, so we've done a lot of Super Bowl commercials. We're 8 years old now, I think we're going on 9, but we've done quite a bit. And what we found is it is great brand awareness. And most companies do look at it from the perspective that he is saying, in which if you end up doing a Super Bowl ad, you get not just more brand awareness, but you get more brand loyalty or love, whatever you want to end up calling it, where in the long run, your conversion rates can go up and people are willing to pay more for you over the competition. But here's what companies don't really talk about, because on our end, if a company runs a Super Bowl ad through us, we make more money. And I'm usually the advocate telling them, don't do it. And that'll cost us money.

Mm-hmm.

And the reason I say that is, What companies tend to forget is when you take all those brand dollars and let's say you're going to spend $30 million, because you have to remember, they usually make you, I've done it in the past, I'm assuming they're going to do it this year depending on the channel that the Super Bowl's run on. But a lot of times they'll do things like make you buy ads for the Olympics, which are coming up really soon, right? In February, the Winter Olympics, assuming it's the same network. I don't know which channel the Super Bowl's playing on this year.

NBC.

So it usually, Yeah, you would have to buy Olympic ads as well.

Yeah.

If you just took that money and you bought Facebook ads, Google ads, influencer marketing ads, you know, you did more partnerships and you did a lot of things like that, we see not only a higher ROI, but you're also getting the brand love and affinity because you're getting so many impressions. And with the Super Bowl, yes, you're getting a lot of eyeballs, but we find that we can get way more eyeballs spending $30 million on digital ads than we get from running a Super Bowl ad.

Yeah, so what I'll say is this. So he's actually got some, you'll like these charts, long-term math efficiency compounding, okay? So the more interesting math and the more often more important happens over time. For the long-term analysis, we'll look at 12 months time horizon. This is likely conservative, but it provides a clean frame. So let's imagine a company's annual spend and estimate that the Super Bowl increases the efficiency of that spend by 1%, 3%, 5%, and 10%. As discussed, it could do this in a variety of ways, decrease cost of traffic through higher performing ads, increased word amount. So he's just saying that it provides like a booster to everything, right? So the chart here shows that, you know, efficiency gained by marketing budget. So if your marketing budget is $200 million and then you gain 1%, you know, you're in the red here, right? Which is, you know, $2 million. If you gain by 3%, then $6 million, 5%, 10%, it kind of just goes up from there, right? You got $10 million and then $20 million over here. So That's the bet that he's making. I'm not sure, Neil, because they're a 3-year-old company, I believe. I think this is their first time running these ads. And so I don't know if this is just the math to kind of justify in his mind to run it. That's like, if this math worked out, great, right? But I don't think it's as simple as this.

No, I'm assuming he hasn't done this before.

I don't think he's done this before.

I think, A, he's totally off. I've done it so many times, dude.

I don't think he's done it before.

Because the other thing that companies don't think about is, dude, even LinkedIn had a post about this. This lady worked in the ads department at LinkedIn and she broke down the highest converting ads. What kind of ads do you think they were?

Highly produced ads?

Performance ads with influencers or lo-fi content?

Lo-fi content.

Yes, you nailed it. So if you think about how much companies spend doing a Super Bowl ad, Coinbase did one, one time that was really lo-fi.

They bought a double. Remember it's a 60-second.

Uh-huh, and then it was just a QR code moving around.

Yeah, and they were number 1 for a day.

Yeah, they did really well because people were like, what the heck is this? That's lo-fi, cost is really low on that. But most companies don't do that, they spend an arm and a leg. When you take the cost of how much you have to spend on the Super Bowl, how much more you have to spend on other ads like Olympics, okay, how much you're spending to create the commercial, if you just take the majority of that money or almost all of it and you spent it on digital ads, and you did lo-fi content as your ad, your economics are way better because you're spending more money on reach than the actual creative and you're picking your audience instead of just blanketing most of the United States.

Yep.

And on top of that, I just asked ChatGPT or Google actually, not ChatGPT. Well yeah, it pulls from AI Overviews, but same thing. What percent of publicly traded companies spend at least $200 million a year on marketing? And they couldn't give me a good answer, but they pretty much said it's generally reserved for like the top 100 companies, right? And it's saying 100 to 200 companies, but I don't think in the US you're even having 200 companies spending over $200 million a year annually on marketing. I could be wrong. I'm just pulling this from the web. That's too big. His baseline is $200 million. That is not the normal spend on marketing by You know, by most companies globally, like that is just an extremely large number.

I was trying to use Perplexity for this to do the research. And then how many companies spend over $200 million a year on marketing? Okay. You know what's funny, Neil? We'll come back to this. I had a nightmare yesterday. You want to know what the nightmare was? Nightmare was I was getting on a long-haul flight and I forgot my iPad was in the— Oh, the container.

Yeah.

Yeah. But okay, so there's no public dataset. Okay, what we can say with confidence, global ad spend is projected, okay, $1.5 trillion, whatever. Industry reports show that top 200 advertisers in the US alone accounted for over $130 billion a year. So yeah, you're not— so given that one country, the US, already has 200 leading national advertisers, many of which cleared a $200 million threshold domestically, it's reasonable to estimate that hundreds of companies worldwide on the order of a few hundred, not thousands, spend $200 million a year. So not many. So here's what he's saying.

How many companies in the US spend over $130 million?

This is an estimate. So he says the best you can say given available data is that there are several hundred companies globally, not US, with annual marketing advertising budgets greater than $200 million, but no authoritative source gives an exact count.

Yeah. And that's why I saw something—

$200 million.

Is because it's like he's saying minimum in that table, $200 to $900 million. These numbers are extremely large.

He says this, right? So he says, for a company spending $500 million annually on marketing, a 2% improvement sustained over a year effectively covers the full cost of Super Bowl ad without counting any short-term acquisition. So I think this is well written, but the point is I think he's trying to justify it with these things that are actually not realistic. And I think you, like, the problem is you should probably write this after you've done it. That's what I would say.

Dude, and I've been in the offices speaking to CMOs and marketing executives all around the world for companies like Pfizer, Procter Gamble, Walmart, like these are some of the biggest advertisers in the world, right? Pfizer and pharmaceuticals are more restricted on how they can do marketing, but they spend. And like, even then I'm telling you, dude, some of these companies that I mentioned, like, okay, they spend over a billion dollars. They're some of the biggest advertisers in the world. There's not too many companies like that.

This guy's the CEO and co-founder of ROE.

Yeah. He's delusional on his metrics.

Yeah. So we'll see what happens. Z, I hope you hit these metrics and then maybe prove us wrong, because then we can have something else to talk about. But I don't think this is realistic.

No, and not just that, what Z is not taking into account, and dude, we've done this side by side for so many corporations. If you just took the money that you spent and spent it digitally, you would've made a much better ROI. You would've got a lot of brand love. You would, people would get to know you, your target audience would more likely see it and you'll generate way more revenue.

All right, so I wanted to take a moment to tell you about my podcast co-host Niels. agency called NP Digital, and they work with a whole host of global companies or global organizations. Also, Neil has SEO tools such as Ubersuggest and AnswerThePublic. All you have to do is go to npdigital.com to learn more, and we'll see you on the other side. Yep. All right. So that's our little Super Bowl piece, and I agree with that. And I do want to shift gears because, Neil, I'm going to start creating this series now because I'm finding that the more—

One thing before we shift to that topic, I have something that's similar, but I would love your take on it because I already know you and I are going to think the same way. All right?

We'll see.

The largest companies in the world are like the Nvidias, the Microsofts, the Apples, the Googles. You agree with this, right? The Amazons. There's not too many that are just multi-trillion-dollar companies, Meta. All right? So when you think about traditional advertising, a lot of people, or when you think about advertising, a lot of people think, Super Bowl, Olympics, FIFA World Cup. They even think sponsoring like jerseys, teams, okay? Stadiums and all that kind of stuff. Would you agree with this statement?

Yep.

If this form of marketing was so profitable and so effective, would you agree that these big corporations would start spending way more money on this kind of stuff?

Yes. And they only do it for fun when they do it. Like Google, when they sponsor McLaren, the F1 team, that's almost for fun. It's like just a little logo there.

Totally agree.

Yeah.

Right?

Yeah.

But do you agree that none of these guys really spend on any of these marketing channels like crazy because they just don't care?

No.

And it's because the ROI, and it's not as effective as people think. If it really was, these large corporations, the largest corporations in the world, would be running tons of these ads, taking up all inventory. Every damn stadium would be called the Microsoft Arena if it was that profitable.

Yeah.

It isn't.

There's only one Super Bowl ad I remember, and I feel like it's only the one you might remember too. Let's guess. Okay, let me guess for you. Is maybe the only Super Bowl ad you remember the Oreo one?

I remember a lot of Super Bowl ads.

But the one that comes to mind first.

The Doritos one.

Oh, the Doritos one.

No way.

I don't remember the Doritos one. I remember the Oreo one. But my point is, and then the Coinbase one, right? There's not, first, there's not that much brand recall. And a lot of these brands are doing—

GoDaddy, you remember that one?

With Danica Patrick?

Uh-huh.

The driver?

GoDaddy Girls before that.

Yeah.

Also put GoDaddy on the map.

Yeah.

It was risqué.

Yeah, but like still a lot of these, like the Oreo one, like what happened to Oreo, right? Like, you know, It is what it is, right? So was that an Oreo? That was a Superbad, right? The Oreo one. Oh, it was a tweet. It was a tweet.

That was a tweet.

Never mind. That was a tweet. So anyway, all that to say is your mileage may vary. I think Z, I'm curious to see how your study goes in about a year or so after you do this evaluation. But it was a good justification from your side. And I like the numbers and the charts. I think it convinces many people. Okay. So I want to jump over to this piece because, and then I'll tell you kind of where I'm going with this. So yesterday you saw me tweet something about how I did $50,000 of copywriting work in 10 minutes. There is a reason that I'm doing this and I'm going to almost be making more and more of these, these videos. And I'll tell you, I'll explain why maybe, because I think we did briefly touch upon it. Now, you saw the copy between the old version on my site and the new version. So, and then you being unbiased, you saw the old version. How would you rate the old version copy on my site? 1 through 10?

Like honest?

Yeah, honest.

Do you want me to just give you a number or give feedback?

Just a number. I don't want feedback. I just want a number.

Yeah. I would say it's like a 4 or 5.

Okay. And then, and Neil, give me— Neil saw the new version too, where I was kind of going through a video. The new version is better. I wouldn't say it's top tier, but I would say it's better. What would you say?

I would say your new version is more like a 7.

Okay, great. Which is a lot, right?

It's a good improvement. There's mistakes in it and I can always break 'em down if you want.

So this, what I'm calling out here is this whole, you know, $50,000 of copywriting work in 10 minutes. This prompt was generated off of the legendary David Ogilvy, Eugene Schwartz, Claude Hopkins, and it did a few rewrites, right? And this is like my initial version. It actually does a few rewrites and it keeps rewriting until it feels like it's a 90 out of 100. And I can actually tune it even more, but I have a prompt before that that does like a page CRO thing, right? So my point of saying this is that this, if I can get something at a 7 or 8 with copy, me as a marketer, I can refine it to 8 or 9, right? I just need a starting point. Oftentimes, like we just, like even with the ideas from this podcast, we just need a starting point, you know?

Yeah.

And then we can work off of it. So Now, not only did I do that, Neil, that's not the point that, hey guys, oh, I did this, like this copywriting piece. My point is the SEO work, the $45,000 of programmatic SEO work that I did in 20 minutes the week before that actually ended up being like, you know, 4 times the amount. So let's call it $180,000 or something like that because people like big numbers. That was done in about an hour or so, right? The thing is earlier this week, we were supposed to, because I did some math on Care. I'm like, dude, it keeps driving more customers, but we're not driving any ads on it. I'm like, am I stupid? And so I did a— You're not driving any ads on it? weren't driving ads for Carrot. Remember the account-based marketing tool?

Oh, you're saying you're not running any ads?

We're not running ads for it. Yeah, that's what I mean. Thank you for that. So I'm like, I went to Claude, I'm like, hey, based on all my goals and you know how we're trying to hit revenue higher for tech-enabled services this year, like, am I stupid? Like, what, shouldn't we be putting more dollars towards it? It's like, yes, you should be putting dollars towards it, right? So anyway, I create this whole go-to-market strategy with Carrot ads and then it's nicely done together. I do it very quickly, probably 20, 30 minutes or so. I'm like, this looks good. I refine it a little bit. I send it to my CTO. He sends it to the person working on ads, right? And I poop you not, okay, I'm not even gonna cuss. I poop you not, right? That was 2 weeks ago. Like 2 days ago, it was still not up. I was like, you know what? What's the holdup, guys, right? So I check in, I'm like, oh, the creative team, you know, they're They're behind right now, whatever. I'm like, okay, that's fine. I'll tell you what, I got it, right? So I was just reminding, I got it, right? It's like, oh, I have a planner. Don't worry, I got it, right? 20 minutes goes by, I'm on Manus and I'm like looking at the ads and all that. Boom, 4 new variations. I just get the ads up, right? So my point of saying all this is not necessarily my team. My team's very busy. They're great, right? It's not, I'm not even blaming them, right? I'm just saying that the world that we're going into is not so much about the tasks that we do right now. The evolution of tasks is changing. And if anybody says like, you tell me, like imagine if I'm working for you, working for me. You can't say that anymore because the tasks are changing and you're able to do a lot of these things quicker. I'm not saying it's top-tier quality initially, but the speed, right? It's no longer about— we talked about this, like radiologists and nurses, like it's not about reading charts anymore. It's about now, it's about other tasks that you're working on. That's my point. And that's where this is going is I'm just going to make a lot of videos on how I'm doing these tasks quickly now. I'm just going to keep publishing them.

I thought it was a good piece of content that you published. I didn't know how you got to the $45,000 worth, but I can see companies spending an arm and a leg on it. Bless you, Noah.

Bless you.

You know, but I know internally you can do it for much cheaper than $45,000 or $15,000 or even $10,000. But I know a large company would pay even more than $50,000 for a homepage copy. And I look at this, the bigger issue here, you may disagree with me or not, I look at it as a team problem in which your team should have had better copy in the first place. But I know your pain because when you As you grow and scale your organization, it's hard to hit up a random person or a few random people and always get what you're looking for.

Yeah.

But because of AI, there's no excuse for them to not give you the stuff really quickly, and there's no excuse for them to not run your ads ASAP.

That's why our mandate is cloud— it's not even AI fluency, it's cloud code fluency in the next 6 months or so, because it's unacceptable to say these things, right? So I'm still not going to blame the team because they're still kind of figuring this stuff out. And so But in the next couple months or so, like, yeah, like the chickens will come to roost, right? Like this, this stuff matters. And let me just ask you real quick, 'cause we're like, my point initially was like, hey guys, like you have to figure out how to, if you're still doing the same task in 12 months or so, that's actually a very negative signal, right? So let me ask you, you have, let's just give or take, you have about 1,000 staff right now. What percent of your staff do you think are on top of these things?

Uh, as in learning cloud code or just learning on top of things and getting like stuff done?

Acceptable AI fluency.

I would say the majority, more than 50%.

That's interesting because our other mutual friends who I talk to, they're like, they might have different standards than you, but they're like, it's like 5%, 10%. And when I talk to like Zapier or Gamma, it's like, it was maybe it was at like 5%, 10% before, but even right now it's like 65%.

So to be very clear, when I look at AI fluency internally, we measure it based on do they have AI fluency for what their role is in the organization and what they're doing?

We look at it the same.

Yeah. Like Eric has amazing AI fluency. We do not expect someone who's just focusing on on-page SEO to have the same AI fluency as Eric because Eric is doing a lot of stuff, design, copywriting, developing products, coding, building free tools. He's doing a lot of stuff that we wouldn't have a certain specialist do. But if they're specializing in a certain thing, whether it's creating content or creating social content or doing on-page SEO and they're not using AI really well, we got a problem. And they either, A, need to learn it and we help them learn it. And if they can't get there, then there's a bigger problem.

All right, bye.