Commentary
Why Do So Many TV Sports Advertisers Lack A Plan B?
- by Dave Morgan , Featured Contributor, May 14, 2020
We’ve seen a pullback in TV ad spend across a number of consumer categories. Some are quite understandable, such as travel, restaurants and movies. Some are a bit surprising, like automotive. But one is absolutely perplexing: soft drinks.
MediaPost reported that TV ad spend in April by automakers was down 71%. Similarly, according to another report, soda advertisers spent 78% less on national TV ads between March 16 and April 26.
Why cut back so much? For sure, companies faced sales challenges in this terrible crisis, but those cuts were only in the tens of millions of dollars in categories where annual sales in the U.S. are measured as portions of trillions of dollars and single point share gains in billions.
As reported in both stories, the primary reason for the cuts was the loss of live sports programming on TV, where companies had planned to run their ads.
What gives? It’s not as if people aren’t buying lots of soft drinks these days, like the hundreds of millions of Americans sheltering in place at home. Milk consumption alone is up 40% year over year.
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In fact, this is probably the best time in history for a soft drink company to take market share through advertising. Daily, hundreds of millions of consumers in the U.S. are buying beverages in grocery stores, from delivery services and online shopping sources — and faced with much more brand choice than normal, since most of the restaurants, theaters and stadiums where they can’t go now had exclusive deals with just one or two brands.
Yes, losing live sports puts marketers in a quandary, but many of them have put alternatives in place. When one financial securities firm lost its NCAA March Madness and NBA buys, its agency immediately redeployed the marketers’ ad spend in data-driven linear TV ad buys targeted to the same sports viewers in other programming across dozens of national TV networks.
Company strategists knew the lack of sports content wasn’t keeping sports viewers away from TV. Their data showed those target sports viewers were watching more TV than ever, just different types of programming.
Advertisers should fall in love with their customers and their problems, not just some of the content that they like to watch.
Don’t get me wrong. I’m a huge fan of sports on TV. It’s great to watch and a super strong place to advertise. But, when it comes to sustaining and growing your business, you have to have contingency plans. Plus, sports advertising is really expensive. Brands that advertise on sports programming should have back-up plans, if for no reason other than price negotiation.
Maybe all those spending cuts weren't really about lack of sports programming, but about saving money? We know the drill. Media director gives money back to corporate; looks good to boss.
We also know that too much of the corporate marketing world works this way, which is why most large U.S. consumer brands have a growth problem. They stopped investing in growing their brand to grow their sales.
What I know for certain is that people will drinks lots of soft drinks later this year, next year and the next. Those who are able to effectively grow their brands’ mental availability among target customers in this time (thank you, marketing expert Byron Sharp) will grow their sales and own more of those consumers. Those who don’t, won’t.
What do you think?
Dave, the reason why many sports advertisers don't seem to have a "Plan B" is simple. For many, sponsoring TV sports is not merely a demographic or CPM buy. Indeed, with sports CPMs being the very highest, any advertisrer who only cares about reaching mostly males in a certain age group---or even better---males with certain mindsets that might make them receptive to the brand's message---is an idiot for buying into sports. Those same males can be reached at 50% or less cost via other forms of TV content. The real reason why there is no "Plan B" is the fact that sport sponsorships are, in many cases, tied in directly with the brands' image shaping goals and its use of sports celebrities who endorse the brands' products. Add to that the ability to invite key customers and other influentials to the games and afterwards to have them meet some stars, then wine and dine them and you have another oh so important "intangible" that favors "Plan A". .
Ed, great points. There is no question that all of the "integrations" (including the "wining and diing") make sports part of the brand strategy. My point is that too many brands have let themselvs be sucked into a situation that has no Plan B option and is super expeensive. I would argue that the value of sports to the brand is much, much stronger with the media client than it is with the consumer for most of these brands.
Dave, you're right that soda spending is up since the Pandemic hit- last 3 weeks had year to year sales up 15%, 8% and 14% based on Catalina Marketing. The pandemic is bringing lots of new brand buyers. Advertisers should be moving sports dollars to other parts of TV to try and capture these new brand buyers. Building penetration directly aligns with Byron Sharp.
Dave, this pandemic presents marketers and agencies with a monumental test of how best to handle extreme disruption to their business. Many will be caught flat-footed as status quo solutions will likely fail. Some marketers, though, will shine via exemplary creativity, insights and innovation. I look forward to seeing, and learning from, the action plans of the brightest leaders in our industry. Thank you for sharing your thinking and inspiration!
Howard, thanks so much for the emperical framing. This is exactly the kind of situation that Bryon Sharp preaches ... I hope we see some brands act.
Great points Tim. I love your optimism - and share it - I do believe that we will see some leaders at some brands step up and fill the void left by their competition.