Super Bowl: Will companies benefit from $7M ad spots?

With Super Bowl LVIII just days away, companies are considering costly advertising strategies to reach the event's 115 million-plus estimated viewers. A 30-second commercial slot costs around $7 million this year. Perion CEO Tal Jacobson joins Yahoo Finance Live to discuss the marketing dynamics around Sunday's Big Game.

Jacobson says the $7 million price tag "pushes a lot of advertising budgets." Companies not accustomed to Super Bowl ads are now "thinking about the bigger picture" given the exposure they could gain. However, he notes there are opportunities beyond just TV ads, like social media and CTV streaming ads.

As demographics shift, Jacobson expects a wider array of companies to run Super Bowl ads this year.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video Transcript

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AKIKO FUJITA: Companies are investing big in advertising ahead of the big game this Sunday. The average cost for a 30-second Super Bowl commercial is reaching $7 million for the second consecutive year. And brands are looking to get their money's worth, with Forbes forecasting viewership will exceed the record 115 million.

For more on this, we are joined by Tal Jacobson from Perion, CEO. Tal, it's good to talk to you. $7 million is a lot of money. How significant is that return still? Is this the broadest audience that brands can reach?

TAL JACOBSON: I think it's absolutely amazing that it went up to $7 million, but look at the Sphere at Vegas. It now went up to $1 million for a spot. $1 million for a spot on the Sphere? I think, obviously, Taylor Swift did an amazing job getting a lot of new audience to see the Super Bowl. More females, more Gen Z, more Millennials. But absolutely, I think this pushes a lot of advertising budgets.

We at Perion are constantly looking at how do we get those promotions across all channels. That's what we actually focus on with our technology. And specifically with the Super Bowl, companies-- e.l.f. Cosmetics, NYX cosmetics-- would never think about advertising in the Super Bowl.

20 years ago, it was mainly Budweiser, right? But they're shifting into that. And they're constantly thinking about the bigger picture. So they're going to do TV ads, CTVs. They're going to do out-of-home like the Sphere or other programmatic home, but also a lot of social.

And this is where actually our company gets into play. How do we connect all those channels? How do we actually make sense out of all those channels so the advertiser actually makes sense.

RACHELLE AKUFFO: So, Tal, how are advertisers planning on dividing up the pie of where they're spending this money, given the range of ways that they're trying to reach viewers?

TAL JACOBSON: So it all starts with demographic, right? The fact that Super Bowl is now 46% females, that's a big shift. So that's why you're going to see a lot more ads for cosmetics, a lot more ads for lifestyle. But again, social is booming. CTV, which is TV ads for streaming, is booming now. Everybody is going to look for that.

On a $7 million for an ad, that's for linear, but it also happens on CTVs on streaming. But with streaming, you can actually customize the message through the location. So with linear TV, you would normally get the same message nationwide. With CTV, you can actually customize that based on location. So people in different locations are going to get different messages.

AKIKO FUJITA: Yeah, that's interesting to hear more targeted ads available on that front. Tal, we've been talking a lot about what the digital ad space landscape is right now on the back of these earnings results we've gotten from companies like Meta, Alphabet, Snap, Pinterest after the bell today. As you consult with brands, how do you advise where they should take their money?

At the end of the day, is it a name like Meta, because you've got such scale across their platforms? And on the flip side, given where Snap moved yesterday-- I mean, what is the case to take your ad to Snap when you've got so many other platforms to go to?

TAL JACOBSON: Right, I think that's an excellent question. So with Snap, they have a younger audience than with Meta. So Snap, also TikTok have younger audience. I think the issue with those type of platforms is you have global tensions, wars and stuff like that. You're also turning those social platforms into a news portal. So, companies, big brands don't want to be associated with that type of content.

So it depends on the audience, depends on the level of the brand. You want to make sure that you have brand safety filters. You want to make sure you have the right audience. And you always want to diversify the spending. You always want to have more than one channel, and to be able to measure all those channels to make sure that you're getting the right ROI that you're looking for.

AKIKO FUJITA: Tal Jacobson, Perion CEO, it's good to talk to you today. Certainly timely conversation given Sunday's game. Thanks so much.

TAL JACOBSON: Thank you.