Playoff payoff: Super Bowl advertising for movies

Abstract

Marketers are increasingly making use of major TV events, such as the Super Bowl, to advertise their products. However, the economic value of such advertising is highly uncertain. Since an ad during the Super Bowl costs 2.5 times more per viewer reached than an ad during a network TV prime time show, developing methods for evaluating such advertising and for measuring its effects seems particularly important. Using the setting of the movie industry, this paper develops and estimates a model that includes both direct (on potential moviegoers) and indirect effects (on exhibitors) of regular and Super Bowl advertising. The model recognizes the endogeneity of advertising, and in particular develops a discrete choice model to control for the endogeneity of the Super Bowl advertising decision. The results indicate that Super Bowl advertising has a positive effect on box office revenues, but primarily through an indirect effect on exhibitors. In addition, regular TV advertising is more effective than Super Bowl advertising for initial advertising spending; a counterfactual analysis, by contrast, shows that for a movie already spending at our sample's average TV spending level of $13 million, Super Bowl advertising has a greater effect on revenues than regular TV advertising.