Super Bowl ad policy cost economy $158M, Bell says

Canadians may have enjoyed watching big budget U.S. commercials during the Super Bowl this year, but the broadcast regulator’s decision to let viewers partake in the full American experience cost the local economy an estimated $158 million, according to new research touted by Bell Media.

The Canadian Radio-television and Telecommunications Commission banned simultaneous substitution, or simsub, the practice of swapping U.S. ads for local ads, during the National Football League’s championship game for the first time in 2017. It did so in the name of consumer choice despite opposition from the NFL and Bell, which spent tens of millions on the exclusive rights to broadcast the game and argued it needed to sell local ads to recoup its costs.

Apparently, Bell had reason to be worried. While viewers could still watch Canadian ads on Canadian broadcasts, nearly 3.4 million people — more than 40 per cent of Canada’s Super Bowl audience — chose to turn on U.S. stations instead, according to research conducted for Bell by Communic@ tions Management Inc.

The research, released Tuesday, estimates this resulted in a $45-million loss to the conventional television economy and a $113-million hit to the wider Canadian economy by influencing people to buy from American instead of Canadian retailers. This includes Bell’s previously reported estimated loss of $11 million in advertising revenue from the game.

The research estimates the television industry would lose direct revenue from reduced audiences, which would result in lower spending on programs and purchases from suppliers. It also stated the decision prompted advertisers to buy airtime on U.S. stations just across the border, resulting in money leaving the system.

But it estimated the lion’s share of the loss comes from the U.S. ads tilting consumers’ preferences to buy from American retailers instead of their Canadian competitors. It assumed that removing simsub completely could impact Canada’s retail trade by 0.2 per cent and increase the proportion of online purchases from U.S. sites to 42 per cent from 38 per cent of Canadian e-commerce. It calculated the Super Bowl’s share of this at $113 million.

The CRTC declined to comment on the research and said it is assessing the issue.