Why are website companies spending millions on Super Bowl ads?
For Wix, Squarespace, and GoDaddy, broad awareness trumps initial expense.
Super Bowl advertisements tend to feature products related to watching football. This year, like every year, we will see ads for chips, candy, soda, and beer. And there will be car ads. Many, many car ads. But in addition to the usual fare, this year, there will be three ads for three different companies that help you build your own website.
It’s a bizarre category to flock to Super Bowl ads, which are not cheap. (A 30-second spot costs $4.5 million this year.) Young tech companies have shied away from Super Bowl ads since the dotcom bubble in 2000, when 19 tech startups advertised during the big game. Many of those startups no longer exist, and the Pets.com sock puppet ad became a symbol of the dotcom bubble’s money-burning excesses.
This year, Super Bowl ads are back in vogue for the very specific category of website development companies.GoDaddy, Wix, and Squarespace have purchased 30-second spots which will run alongside Fortune 500 (andFortune Global 500) companies like Anheuser-Busch InBev ABI , Coca-Cola KO , and General Motors GM .
There’s one big difference between the Super Bowl ads from Web startups in 2000 and those of today: Their addressable audience is much larger. In 2000, only 122 million people, or 43% of the U.S. population, even had access to the Internet. Today, that market is much larger—87% of the people in the U.S. are online. Squarespace, Wix, and GoDaddy are betting that many of them are looking for a cheap way to build a Web presence.
But directly converting viewers into paying customers isn’t all that important to Squarespace, GoDaddy, and Wix. The three competitors are scooping up Super Bowl ads for a simple reason: brand awareness.
“We really are super confident that our product is absolutely the best out there right now and it comes down to an awareness game,” says Anthony Casalena, founder and CEO of Squarespace. “We want to see [brand] recall around Squarespace to go up. We want people to have heard of us.” The company ran its first Super Bowl ad last year; Squarespace’s brand awareness increased by 50% afterwards, according to a study by Ipsos Marketquest.
Wix is also chasing name recognition. “We want people to understand who we are as a household name and as a major brand,” says Eric Mason, the company’s director of marketing communications in the U.S. Wix WIX' went public last year, and Mason says that even though the company is the largest in its category, it is the least known. This its first Super Bowl ad. “Many people who will be watching the Super Bowl have never heard of us before,” he says. “We want to help get into a narrative and get into conversation with those people.”
They’re competing with each other for brand awareness, and they’re competing with the predominant notion that the average person can’t set up their own website. Both Mason and Casalena stressed the importance of showing people that DIY websites are inexpensive and simple.
Both Wix and Squarespace have plans for promoting their ads online and through follow-up ads after they air during the game. Wix has a team of editors and social media workers maintaining a five fake websites that it built to go with its campaign. Squarespace hasn’t revealed the details of its campaign yet, but Casalenas says this year’s campaign will “have a bigger tail” after the ad airs during the game.
If any company knows the value of a viral hit online, it’s a startup. In 2012, Dollar Shave Club became widely known after releasing a clever YouTube video for its launch. It went viral, and the company followed it up by promoting it on TV. Likewise, earlier this week, Vox Media “accidentally” published a clip of a Super Bowl ad for its website The Verge—then clarified that it paid $700 for a spot that would only run in Helena, Montana. It hardly mattered. The news ricocheted around Twitter and was picked up by the New York Times, Adweek, Ad Age, Slate, International Business Times, and the Wall Street Journal, earning The Verge a day’s worth of PR before a dollar was spent.
And yet Squarespace has learned the value of paid marketing. The company, which was founded in 2003, has a large marketing budget and buys up ads on public transit, atop taxi cabs, during podcasts, on the radio and on network television. Casalena expects to spend $60 million on advertising in 2015. That’s an eye-popping number, but Casalena insists we’re not repeating the mistakes of the dotcom bubble. Squarespace has raised $78.5 million in venture backing and has been operating at break-even.
“We could be very profitable if we wanted to,” Casalena says, “but we are re-investing in the business.”