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The Economics of Go Daddy's Super Bowl Ad

Was Go Daddy's $2.7 investment in a Super Bowl commercial money well spent? We run some numbers.

Domain registrar and web host Go Daddy paid $2.7 million for its Super Bowl ad, which steered people to the web site to view a humorous video featuring Danica Patrick - and maybe even buy a domain or web hosting plan, too. Go Daddy CEO Bob Parsons says the ad generated 1.5 million visits to the web site. The company bought only one ad, unlike past years when it has purchased up to three spots. Did the investment pay off for Go Daddy?

Let's compare the Super Bowl ad with other popular customer acquisition channels in the domain and hosting business. Two popular methods are pay per click (PPC) ads placed on search engines, and cost per action (CPA) campaigns using affiliate networks.

The cost per click for the term "domain name" in a Google AdWords pay per click advertising campaign is about $8, according to Google's external keyword tool for AdWords. That means you could buy about 337,500 clicks for $2.7 million - well below the 1.5 million visitors generated by the Super Bowl ad, which works out to about $1.80 per visitor.

In the cost per action channel, Go Daddy pays Commission Junction affiliates roughly $65 for a one-year signup for one of its basic shared hosting accounts. Thus, Go Daddy's $2.7 million investment in the Super Bowl equates to about 41,500 affiliate signups. With 1.5 million visitors from the ad, that would mean Go Daddy would have to convert a little less than 3 percent of those visits into sales to improve on its CPA campaign costs.

Of course, there are many intangibles. Go Daddy's benefit from the Super Bowl ad wasn't just measured in visits and transaction, as it gained brand promotion, as well as tons of attention from media and blogs. The math is also imperfect in that there are cheaper PPC campaign options (both Yahoo Publisher Network and Microsoft AdCenter are often cheaper than AdWords), and other CPA commission options that pay more or less.

But since many pundits have questioned whether Go Daddy's edgy commercials are a good investment, I thought it would be interesting to test it against other channels. The big question is whether Super Bowl viewers who came to watch the Danica Patrick video are likely to buy domain names or hosting accounts. Go Daddy's initial 2005 commercial was followed by substantial growth in domain registrations.

Perhaps Parsons will share data about the sales gains realized from the 2008 ad in coming blog items. Or perhaps he'll keep us in suspense and repeat the exercise next year.