Why might a firm choose to spend over \$5 million for a 30-second advertisement on television during the Super Bowl?

• A. Because advertising during the Super Bowl is less expensive than advertising at other times
• B. Because Super Bowl ads guarantee an immediate increase in sales for all advertised products
• C. To comply with government regulations requiring advertising during major sporting events
• D. To reach a large and diverse audience, maximizing potential consumer exposure to its product or brand

Answer: (D)

Verified step by step guidance

1. Understand the context: The Super Bowl is one of the most-watched television events, attracting a very large and diverse audience.
2. Recognize the firm's objective: Firms aim to maximize the exposure of their product or brand to as many potential consumers as possible.
3. Analyze the cost-benefit tradeoff: Although the cost of a 30-second Super Bowl ad is very high (over \$5 million), the potential reach and impact on brand awareness can justify this expense.
4. Consider alternative options: Advertising at other times may be less expensive but will not reach as large or as diverse an audience, reducing the potential effectiveness of the ad.
5. Conclude that the primary reason for spending such a large amount is to leverage the massive viewership of the Super Bowl to maximize consumer exposure, rather than cost savings, guaranteed immediate sales, or regulatory compliance.