In an interview published today by Ad Age, Cadillac marketing chief Uwe Ellinghaus added his voice to a growing chorus of executives who feel advertising during sporting events might be getting too expensive.
Ellinghaus told Ad Age that the luxury car brand will “reassess everything we do in sports” because he doesn’t know whether it’s worth it to advertise in an arena where his competitors are also spending lots of money.
“If our competitors spend 20-40-50-times as much as we do, is it wise to go there just to show we are in their league? Isn’t experiential a better opportunity?” he told Ad Age. “To surprise people positively about Cadillac’s presence? Nobody is surprised if you come to a golf tournament and see a luxury-car brand advertising there. It’s exactly what you expect.”
Cadillac’s contract to sponsor the WGC-Cadillac Champion golf tournament runs through 2016, Ad Age reports.
Ellinghaus’ words come three months after another high-profile auto executive, Honda assistant VP-advertising Tom Peyton, said that a “day of reckoning” is coming for sports networks who raise advertising prices without providing larger viewerships to justify the increases.
“There has to be a point where the price of sports properties on TV, the price of tickets for consumers to games, is truly affecting the amount of sports we can engage in — and the type of sports we engage in,” the Honda executive told Ad Age in March.
What’s happened is that the advent of the internet and the explosions of cable television options have created a fragmented media environment where people are much less likely to all be watching the same thing at the same time.
As a result, live sports are valuable to advertisers because they now represent some of the only places brands can reach a large number of people at the same time. For instance, live NFL games accounted for nine of the 10 most-watched TV broadcasts of 2013.
And with DVRs and illegal download sites stealing viewers from live television, sporting events are some of the only programs people feel they need to watch live.
This has caused ad rates to skyrocket, creating bidding wars between networks like NBC and ESPN looking to get a piece of the bigger advertising pie. The upshot, of course, is that the only way for the networks to make a profit after paying exorbitant licensing fees is to raise ad prices further.
Now, it seems, major brands like FedEx, which in 2014 skipped out on the Super Bowl for the first in two decades, are threatening to stop paying more money for the same audience.
Whether the rates actually come down or not remains to be seen. After all, Ellinghaus might find that his reassessment of Cadillac’s marketing budget reveals a reality so many other brands have already accepted — that in today’s fragmented media landscape, sports are too good a deal to pass up, no matter how much the networks and leagues are charging.
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