The Economics of Super Bowl Ads

Written by nickel - 5 Comments

The other day I wrote up a short piece about the cost of Super Bowl ads — $83k/second, or roughly $2.5 million for a 30 second spot. This got me to thinking… How does a company like GoDaddy.com justify this sort of an expenditure? I saw at least two GoDaddy ads during the Super Bowl. Given that their main business is registering domain names for $8.95 apiece, I can’t figure out how this is a good move on their part. Yes, they’re building a brand. But… They’d have to sell close to 280,000 domain names over and above what they would have otherwise sold in order to generate an extra $2.5 million in revenues, and this doesn’t take into account their expenses (or the fact that they ran more than one ad). Granted, domain registration isn’t their only business. They also offer hosting and a bunch of different ‘upgrades’ when you register your domain name, but still… This seems like an awfully big expenditure for a business like GoDaddy. Then again, they’ve got people like me talking about them, so maybe the buzz that they created is worth it in the end.

Published on February 6th, 2006 - 5 Comments
Filed under: Miscellany
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Comments (scroll down to add your own):

I like to use GoDaddy for all my domains, but domains aren’t where they make their money I’m sure - it’s all the little addons they try to push every time you sign up.

That said, it is pretty insane to pay an advertising cost of that level, but being a dotbomb survivor, they apparently must have some clue of what they’re doing!
Comment by sean — Feb 6th 2006 @ 10:52 am
Domains are their loss leaders but I wonder how many people buy other services from them… I suppose it’s they make enough to pay for all this because they did have ads in last year’s Super Bowl as well.
Comment by jim — Feb 6th 2006 @ 1:28 pm
Well I wonder how yahoo stays in business. I’ve been using their free email system for years and I’ve yet to buy a single related yahoo item. I don’t have anything against yahoo I just usually get better deals elsewhere…
Comment by Guest — Feb 6th 2006 @ 2:18 pm
Yahoo serves ads in your email, and the advertisers pay yahoo for your email service.
Comment by Blaine Moore — Feb 7th 2006 @ 10:53 am