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GroupM Unit: Motorsports Braces For Crash As Sponsors Hit The Brakes

MediaDailyNews , February 13, 2009

By Joe Mandese

At a time when most forms of ad-supported media and other forms of marketing are expected to decline sharply due to the downturn in the general economy, a key segment of sports marketing - motorsports sponsorships - also is bracing for a crash, according to new estimates released Thursday by GroupM unit IEG Sponsorship Report.

North American companies will spend an estimated $3.3 billion to sponsor motorsports teams, tracks and sanctioning bodies this year, a nearly 6% decline from the $3.5 billion spent in 2008, according to IEG. That would be the first decline for that sports marketing category since IEG began tracking motorsports spending 1985.

"As automakers and other sponsors look for ways to reduce spending, the big-ticket prices associated with major racing sponsorships have become harder to justify, and many companies have backed away from previous levels of commitment," the report finds, concluding, "Where earlier periods saw a pipeline of other companies willing to step up and take their place, today the overall economic picture has dried up the stream of potential new dollars, at least for now."

While motorsports sponsorship deals are "still being done," they have slowed down considerably, according to the report's editor William Chipps, who noted that primary team sponsors are likely to try to sell off some of their inventory during the year ahead. He also projected that new deals would likely be done for less than a full season, and in some cases, for "as little as one race."

The projected spending amount reflects both reductions in spending and elimination of programs from previous sponsors such as Domino's Pizza, Kodak and others, but also some new sponsor dollars that have served to prevent the decline from being even more severe.

One of the sector's few bright spots, ironically, will come from the world of online media. Search engine plans to launch a multi-faceted NASCAR program that includes a tie to the sanctioning body and title of a Hall of Fame Racing Sprint Cup Series entry driven by Bobby Labonte.

Snack and pet food marketer Mars has also signed a multiyear extension with NASCAR spanning four categories: chocolate, chocolate bar, cheese-filled snack and pet food.