Why Brands Pass on the Super Bowl

This article originally appeared in the Huffington Post on January 29, 2016.

By Tim Calkins and Derek Rucker

This year a number of well-known brands have announced that they will not show up to advertise on the Super Bowl. Ford, Nissan and GoDaddy, are among the brands passing on purchasing spots. Why have these brands bowed out of this year's event?

To start, it's useful to recognize the lure of the Super Bowl as a marketing event. It has enormous reach, with more than 100 million viewers. It receives an incredible amount of media focus. People pay attention to the ads; viewers often comment that they are more interested in the advertising than the Super Bowl itself. It is a platform for both social media and campaign launches.

All of these facts help explain why the price of a Super Bowl ad continues to climb.

Still, many marketers will pass on the Super Bowl. There are some very good reasons to skip the game:

The cost is high 

People were shocked when the price of a 30-second spot surpassed $2 million. This year the price is $5 million, and that's only the entry price for the event. Advertisers have to produce the ad, which can cost $1 million or even more. A celebrity spokesperson will increase the cost further, as will licensing a well-known song. Then there are all the other bells and whistles of a Super Bowl marketing campaign: the PR effort, the social media programs, and the monitoring and the promotions.

All in, a company could easily spend $10 million or more around the Super Bowl. For most brands, this is a significant portion of the entire year's marketing budget.

It is hard to stand out

Despite all the attractive elements of being on the Super Bowl, it has an enormous amount of clutter. Even with viewers excited to see the ads, to be noticed and remembered is a competition. During the game, people will see 60 or 70 ads, not counting network promo spots. In 2015, there were 71 national spots. Many people will be at a party, eating, drinking and talking. There will be a lively half-time show. There will also be a football game. With all the clutter, some brands often find it difficult to have an impact that lasts beyond the 30-seconds of airing.

It isn't a strategic fit

A brand should only advertise on the Super Bowl if there is a clear reason. The event has to be a strategic fit. It can be a terrific tactic for brands trying to quickly gain awareness, brands introducing new news and brands defending their business. It can also make sense for brands trying to build and maintain relevance.

However, for many brands, a compelling reason to advertise on the Super Bowl is lacking. This is particularly true for brands that target a niche target market and brands that don't have news to announce.

It is risky

Super Bowl ads are risky. The financial investment is significant, so the economic risk is clear. What people sometimes forget in haste is that the money is just a part of the risk. The bigger issue is that every Super Bowl advertiser receives an incredible amount of scrutiny. People are quick to criticize and protest. A Super Bowl spot that offends people can generate a significant backlash, forcing the brand to apologize and scrap the campaign. Everyone in a company has an opinion, too. A weak effort on the Super Bowl will not enhance a career, and in some cases can end it.

The pressure to stand-out increases the risk. To be creative, brands sometimes air spots that are striking but polarizing. This is what happened to Insurance giant Nationwide in 2015; the company ran a spot featuring a child who died. The ad had a significant and important message: Nationwide is working to reduce childhood accidents. Unfortunately, people were appalled at the ad's dark theme and approach to spreading this news. Nationwide eventually apologized for the event and this stalled what could have been an opportunity to build the brand in the hearts and minds of consumers. The company's chief marketing officer left the firm a few months later.

Despite its attractions, the decision to advertising on the Super Bowl is complicated. For some brands, the event plays an important role. Other brands will stand aside: the investment is only justified if the event is strategically important and the brand is confident it can stand out. Super Bowl advertisers have to been comfortable with the scrutiny, pressure and risk.

- Tim Calkins is the clinical professor of marketing at Kellogg School of Management of Northwestern University. Derek Rucker is the Sandy and Morton Goldman Professor of Entrepreneurial Studies in marketing at the Kellogg School of Management at Northwestern University.