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How Super Bowl Commercials Work

Super Bowl = Big Money

To understand the cost of a Super Bowl commercial, we need to figure out all the factors that affect that cost. The first is the advertising inventory that's available. That simply means the amount of time during a Super Bowl broadcast that can be filled with commercials instead of football. The NFL typically allows one minute and 30 seconds per commercial break. Over the course of the game, that adds up to roughly 45 total minutes of commercials [source: Schy]. Not all of that time is available for sale to advertisers. The network broadcasting the Super Bowl will use up to a quarter of the ad spots to promote its own shows.

The Price of a Super Bowl Ad
The Price of a Super Bowl Ad
Lee Dempsey/HSW

Of course, acquiring that inventory isn't free. Its cost is rolled into the overall contracts that CBS, NBC, and FOX negotiate with the NFL (ABC ended its contract with the league and handed broadcast rights to "Monday Night Football" to sister network ESPN in 2006). The three networks rotate Super Bowl coverage over the years of the contract. In 2011, those networks signed a nine-year contract that costs each network about $1 billion per year [source: Deitsch]. With the rotating schedule, each network gets three Super Bowls over the length of the contract. Networks make back most of that money (and eventually, profit) by selling ads during regular season games. This is no surprise; after all, NFL games are among the highest-rated programs on television each fall.

A single Super Bowl broadcast will bring in around $250 million in advertising fees to the network. Remember, however, that they only get to do that once every three years. So, while the Super Bowl brings in a ton of revenue for a single game, it's still just a piece of a very large pie.

That still doesn't really answer the question of why Super Bowl commercials cost as much as they do. In truth, the cost of that contract signed between the networks and the NFL was driven by the value of the advertising, not the other way around. That brings us back to our original question: Why are Super Bowl ads worth $3 million per 30 seconds? We'll explain that next.