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Advertisers back off NASCAR

Most of the biggest-spending TV advertisers in NASCAR are cutting back because of the economy or changes in their business, which could leave the sport’s broadcasters exposed in an already soft ad market.

Fox, which broadcasts the season-opening Daytona 500 on Feb. 15, says sales for its marquee race are pacing about the same as last year. But the network’s revenue projections for the first and second quarter are about 25 percent behind last year, motorsports industry sources said.

A Fox Sports source said the network is holding the line on the $550,000 rate that it charged for 30-second spots in last year’s Daytona 500. However, multiple sources said the rates are sharply less and range from $350,000 to $450,000. One source who has bought time in the Daytona 500 said the higher rates include additional units in the prerace and postrace shows.

Other Cup races on Fox are selling from $75,000 to $125,000 for a 30-second spot, down slightly from last year, depending on the day and time of the race and the advertiser, sources said.

Many of the traditional sponsors, such as Sprint, Budweiser, UPS, Craftsman and the automakers are on board for the Daytona 500, as are PepsiCo’s Amp Energy, Aflac and Ask.com. In fact, UPS and Craftsman say they intend to spend more on media this year, while Sprint plans to slightly increase its advertising.

But spending for the rest of Fox’s 13-race schedule, which runs through the end of May, is expected to be down, sources said.

Traditional sponsors are on board for
Fox’s Daytona 500, and some
say they’ll spend more.

“NASCAR is more exposed because of its relationship with the auto manufacturers,” said Larry Novenstern, executive vice president and director of electronic media for Optimedia. “And there’s also a trickle-down effect, from the automotives to the after parts. 2009 is going to be a tough year all the way around.”

Three of the top six NASCAR advertisers in 2008, according to Nielsen Media Research, were automakers — Ford at No. 2, Toyota at No. 4 and General Motors at No. 5 (see chart). Those three combined for $44.2 million in spending with NASCAR’s broadcast partners, ABC/ESPN, Turner and Fox, but they aren’t the only sponsors facing troubled business times.

Sprint, which recently announced 8,000 employee layoffs and posted $1.18 billion in losses in the first three quarters of 2008, ranked first in NASCAR advertising last year.

AT&T, the No. 3 spender last year, no longer sponsors a car in the Sprint Cup. Anheuser-Busch, No. 6 last year, has undergone an ownership change, as well as a change in sports marketing leadership with Tony Ponturo’s departure.

All of it amounts to a shaky ad landscape with the season less than two weeks away and helps explain why broadcasters have been trying to cut costs around their race production.

“There was a time when NASCAR was expensive and high-priced,” said Gary Carr, TargetCast’s director of national broadcast. “But now the ratings are down and the market is soft. You can get in there and find bargains as a scatter advertiser.

“The fact is that the sports business is hurting a bit because autos are such a big part of it, and domestic auto spending is down.”

Not all NASCAR advertisers are cutting back. Craftsman is going deeper with a media spend on ESPN and Fox to reach a broader audience than it found as title sponsor of the NASCAR truck series (see related story). UPS is another advertiser that plans to increase its spending as it introduces a new relationship with driver David Ragan.

Sprint’s advertising spending increased over the third and fourth quarters of 2008, company insiders say, and will follow that trend in 2009. Like most NASCAR official sponsors, Sprint’s deal with the sanctioning body includes an advertising commitment, but the company says that it has spent in excess of those minimums in the past and plans to do the same this year.

A chief competitor, AT&T, has not revealed its plans, but industry insiders say they expect it to continue advertising.

NASCARs Top Advertisers in 2008
Rank Company
NASCAR advertising spend
1 Sprint
$17.2 million
2 Ford
$16.6 million
3 AT&T
$14.8 million
4 Toyota
$14.2 million
5 GM
$13.4 million
6 Anheuser-Busch
$12.0 million
7 Allstate
$10.7 million
8 Shell
$9.58 million
9 DirecTV
$9.57 million
10 Claritin
$9.47 million
11 AutoZone
$9.02 million
12 Coca-Cola
$8.25 million
13 Subway
$8.09 million
14 Home Depot
$8.07 million
15 NAPA
$7.95 million
16 State Farm
$7.91 million
17 Proctor & Gamble
$7.40 million
18 PepsiCo
$7.25 million
19 Sears
$6.33 million
20 FedEx
$5.79 million
Source: Nielsen Media Research

DirecTV, which was the No. 9 advertiser last year, will spend significantly less in 2009, its officials said. Home Depot, another NASCAR team sponsor facing hard economic times, just announced a layoff of 7,000 employees and its advertising plans remain uncertain for the year.

ESPN, which has been more focused on the lower-cost Nationwide Series, typically doesn’t start selling the Cup Series until the spring. ESPN executives are hoping the economy starts to turn around by then.

“Budgets are tight,” said one network sales executive. “It’s challenging. There are some guys who are walking away from it. There are some guys who are staying. It’s rough out there.”

It’s certainly rough in the auto sector. GM is in the midst of making $600 million in across-the-board advertising cuts, and officials confirmed that its NASCAR advertising will be part of those cuts in 2009.

Ford has bought some ad time on Fox, its officials said, and is negotiating with broadcasters on future ad buys, but they were uncertain whether Ford’s spend would match 2008 figures or drop.

Toyota won’t be spending what it has in the past on its NASCAR marketing, said Les Unger, the company’s national motorsports manager, but its ad spending will be comparable to last year.

One network sales executive pointed to a silver lining, saying that even though the auto advertisers are cutting back, they aren’t pulling out of the sport entirely.

“The big categories that support the sport — clearly the automotives — are affecting every part of the advertising business,” the sales executive said. “At some level, they’ve all said that they are decreasing some part of their commitment. But they’ve all said that they are going to stay with it, at some level.”

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