Tuesday, December 02, 2008

Cars, banks and ad performance: The Sporting News

The Hollywood Reporter (no, I don't usually visit, but this is research!) has an article about a report on ad spending among financial services firms: down 10% this year through 3 quarters.

Of course that's overall. Ad spending by formerly fat cats like Bank of America (the #3 financial services ad spender), is down 30% this year...shareholders can only wish the stock price was doing as well (BAC down 70%).  Financial Services firms and the other major beleaguered industry, Automakers, represent two of the big three TV advertiser categories (consumer goods being number 3). 

Automakers have reduced TV spending in 12 consecutive quarters. Even supposing they successfully lobby for taxpayer money, it's hard to imagine those funds will be put to use paying advertising bills.   

So what?

Financial services and Autos represent the two biggest spenders in televised sports (10% of all sports advertising according to Steve Lanzano of ad group MPG North America). Should spending on sports wane, then inventory becomes available. And with any commodity whose supply exceeds demand, prices will drop (see here for a take on ad deflation).

It may be that sports sponsorships and advertising will become affordable for second tier advertisers...now defined as those who have cash. 

It might also be that those with now-scarce cash for advertising demand something more for their money than their name on a 'sponsored by' screen: namely, they may demand performance. 

A recession in ad spending may move all industries once and for all toward performance based models of advertising...the kind direct response marketers have lived with for years.  

How many Buicks did GM sell because of Tiger Wood's celebrity? How many leads did the stunning ad during the Master's generate? In the future, one might expect that question to be answered by a marketing executive in front of his shareholders, in front of the campaign...not by a CEO in front of Congress after the money is gone. 

It would be only sporting:  advertisers pay not just to have their ads show up, but like the athletes they are underwriting, for actually performing. That's a game that's not limited to professional sports.

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