Super Bowl: $8m ads, gloomy shoppers

Fox charged a record $8 million per 30-second slot for Super Bowl LIX, a sign that companies will still pay handsomely for a live audience of that size. The people watching are in poorer shape. American consumers have been worn down by years of higher prices, expensive credit card debt and household finances that never fully recovered.

The last mass audience

The price reflects scarcity more than optimism. Last year's game drew about 124 million American viewers, the largest television audience the country has recorded, at a time when streaming has broken most other programming into small slices. Live sport is one of the few places a brand can still reach a large share of the country at once, and the league's broadcast partners price the slots accordingly.

That scarcity is also why the networks pay so much for the rights. The NFL's current broadcast contracts, signed in 2021, are worth more than $100 billion over their life, and the Super Bowl rotates among the partners so that each gets the biggest night of the year in turn. For Fox, this game is the payoff for years of Sunday afternoons that earn thinner margins, and it is streaming the broadcast free on its Tubi service to add viewers the Nielsen count might otherwise miss.

Big budgets, gloomy viewers

The gap between what companies spend on marketing and how consumers feel has rarely been wider. Chief marketing officers are happily committing multi-million-dollar budgets to stay in view, while confidence surveys show households deeply pessimistic about their own finances. The bottom sixty per cent of earners have mostly spent the savings they built up during the pandemic, and they are switching to private-label goods in grocery and general merchandise.

The latest readings did not help. The University of Michigan's sentiment index fell in early February, and households' expectations for inflation over the coming year jumped, with many respondents citing tariffs. Credit card balances passed $1 trillion in 2023, and the average rate charged on balances that carry interest is above 20 per cent, so a household paying down debt has little room for anything advertised during the fourth quarter of a football game.

The companies closest to those households have been saying so for months. Dollar General cut its forecast last summer and described its core customers as financially stretched, with many relying on the chain for basic groceries and cutting back on everything else. McDonald's and other fast-food chains spent much of last year launching value menus after lower-income diners visited less often. Those are the shoppers a mass-market brand needs, and they are the least likely to respond to a celebrity cameo by buying more.

A hard ad to pay back

Spending $8 million on thirty seconds of airtime only pays off if a great many viewers buy something after the game. When shoppers are choosy, pricey awareness campaigns often do little for sales. Divided across an audience of more than 100 million, the slot costs well under ten cents a viewer, which is cheap by television standards, but production budgets and celebrity fees often add millions more. Agencies also count the free online attention that teaser clips attract in the weeks around the broadcast. The awkward question is conversion: a shopper who has already switched to the store brand is not easily won back by a famous face.

The accounting also favours the spend inside the companies that approve it. Brand awareness is measured in surveys and social-media mentions, which a Super Bowl spot reliably lifts, while the link to quarterly sales is hard to prove either way. A chief marketing officer can defend the purchase on the metrics that are easy to count. A finance director asking whether it paid for itself will struggle to get a clear answer, which helps explain why the price keeps climbing even in years when the audience is feeling poor.

When the ads misread the room

The game has a history of flattering advertisers rather than forecasting the economy. In 2000 a string of loss-making dot-com companies bought slots, and Pets.com was liquidated before the year was out. In 2022 crypto firms crowded the broadcast, and FTX, one of the advertisers, collapsed that November. In both cases the spending measured how much cash marketers had to deploy, not the health of the people they were selling to. Buyers of airtime are companies flush with cash or investors' money, and their exuberance can peak just as their customers weaken.

The case for the spenders

The advertisers are not obviously wrong. Consumer spending grew strongly in the final quarter of 2024, according to the first estimate of GDP, and the top fifth of earners, buoyed by rising share prices and home values, account for a large share of discretionary purchases. Brands selling cars, beer and snacks to that group may earn a decent return whatever the lower half is doing. The weakness is concentrated among the households that most mass-market retailers depend on.

That split creates clear winners. Premium brands, travel companies and luxury carmakers selling to asset-owning households can keep raising prices, while discounters and store-brand manufacturers gain the shoppers who trade down. The squeeze falls on the middle: branded packaged goods and casual dining, which charge more than private labels without the pricing power of true luxury. Those companies are among the most loyal Super Bowl advertisers, and they are the ones for whom the $8 million looks hardest to justify.

Signals from the tills

The signals worth watching are retail sales figures for January and the results of the big discount chains in the coming weeks, which will show whether trading down is spreading or stabilising. Walmart reports later this month and Target in early March, and both will say how much of their growth comes from higher-income shoppers moving down rather than from their traditional customers spending more. Credit card delinquency data from the New York Fed will show whether the stretched households are falling behind or merely cutting back.

Until those arrive, the bill for the game says little about the fans. The record price says more about marketing habit than about consumer health, and retailers will probably feel the household pullback in their earnings over the coming quarters, however many viewers the adverts reached, with packaged-food brands and casual-dining chains most likely to cut their outlooks first.