iMedia Connection

What $4 million can buy you in digital advertising

Peter Vogel

It's been well reported that the average 30-second Super Bowl ad cost advertisers close to $4 million, but what do brands actually get for this small fortune?

Hyundai's Santa Fe commercial has been touted as one of the big winners generating 738 percent increase in interest to its Edmunds.com pages and a rise in interest on AutoTrader.com by more than 1,000 percent.

Volkswagen was ranked by the Brand Bowl 2013 as the overall winner with sentiment up 69 percent.

Bud Light was the most "talked about" brand in social media with nearly 87,000 tweets.

Interest, sentiment, and tweets are great, but what about sales?

Traditionally, it has been difficult to tie advertising to actual offline sales, but like advertising on the web tied to performance, offline advertisers now have that same opportunity. The emerging category of offline performance-based advertising has the ability to reach millions of consumers and track their offline purchases, usually via a consumer's credit card or bank account.

Advertisers typically then pay just a percentage of the total sales generated or pay a set fee for a minimum sale (just like online-performance-based marketing). Online marketers have paid for advertising like this for more than a decade, but the offline model has just recently become popular with consumers.

For brands with physical locations, it's an attractive advertising model, because they only pay for actual sales. Fast food restaurants would typically pay 5 to 7.5 percent of sales that is driven by a partner. A clothing retailer might pay between 10 and 12 percent of total sales a partner can drive.

The model is attractive to consumers because they typically get some sort of loyalty, points, rewards, or cash back as a reward for engaging in these promotions. Some recent offers that were promoted on an American Express "Link, Like, Love" program (now referred to as Sync) on Facebook have included:

A consumer has to register or link their American Express Card and then they are eligible for these deals at offline locations.

This model represents a risk-free way from advertisers to drive offline sales, an opportunity normally not possible for offline brands without engaging in a daily deal type model with huge discounts and potential devaluation of their brand.

So what could Super Bowl advertisers have purchased for $4 Million?

If McDonalds was paying a 5 percent commission on sales they could have driven $80 million of sales into its restaurants for $4 Million. That's the equivalent of selling 38,277,510 Fish Filets ($2.09 each) or 16,032,064 20-piece Chicken McNuggets ($4.99) or a whopping 320,641,280 individual McNuggets.

Skechers would likely pay advertisers a 7.5 percent commission on sales, so for $4 million it could have sold $53,333,333 worth of shoes, which is equal to 666,666 pairs of Men's' GOrun running shoes ($80 each).

Even a car manufacturer like Volkswagen could motivate offline sales at its dealerships. Cars would likely fetch a lower commission rate of around 2 percent. For $4 million, Volkswagen could sell 10,104 Volkswagen 2013 Beetles (Base MSRP - $19,795).

Although I do have to admit I'm impressed by Jared's ability to keep the weight off for 15 years at Subway, at a 5 percent commission, for $4 million,  Subway could have sold 1,600,000 of its well-advertised foot-long subs, equivalent to 19,200,000 inches of subs.

These are dramatic examples but help exhibit the power of a type of advertising where every dollar an advertiser spends is tied directly to sales.

It won't be long before offline performance-based advertising becomes just as big as its online counter-part, typically referred to as affiliate marketing, which has grown into a $3 billion business since it began in the 90s.

Offline performance-based advertising may still be new to offline advertisers, but consumers are becoming accustomed to registering a credit card or linking their bank account to "offers" and brands are beginning to take notice.

Peter Vogel is co-founder and CEO of Plink.

You can reach Peter via email at peter@plink.com

On Twitter? Follow Peter at @pvogel. Follow iMedia Connection at @iMediaTweet.