Why Super Bowl ads are worth the sky-high premiums, according to one analyst

The 30-second ad interrupting your Super Bowl watch this weekend is actually worth a lot of money—and has a lot of value.

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The current price for a 30-second Super Bowl ad is around $7 million—up from $4 million a decade ago in 2014, according to researchers at Cornell.

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Graphic: Jura Liaukonyte, Cornell University

The price jump shows just how much advertisers are willing to pay to reach millions of people at once, in an era of television that has seen the fall of cable and broadcast viewership, and the rise of streaming platforms.

“The Super Bowl provides this rare opportunity, allowing advertisers to deliver their message to millions of viewers simultaneously,” Jura Liaukonyte, a professor of marketing at Cornell University’s SC Johnson College of Business, said in a statement.

And because millions of people are seeing the same ads at once, Liaukonyte said being part of a “communal event” makes the ads “more memorable and effective.”

A likely reason companies are willing to pay steep prices for ads is due to the secondary return-on-investment, she said.

“You pay for a Super Bowl ad once, but you get free viewership, media coverage, and chatter on social media for free,” Liaukonyte told Quartz over email. “This increased chatter and media coverage starts before the Super Bowl and continues over several days after the Super Bowl.”

Liaukonyte also said that while viewers typically skip ads when they’re on TV, there is evidence showing the opposite effect during the Super Bowl.

According to Liaukonyte, Super Bowl viewership started declining in 2015, but started climbing again last year. This year, viewership is expected to be even higher, likely due to the “Taylor Swift effect,” Liaukonyte said.

Another possible reason for the higher price of Super Bowl ads can be attributed to a strong economy, Liaukonyte said, noting that the supply of ad slots is mostly kept constant over time, so prices increase when there is more demand from companies who want a spot.