Automakers like Ford (NYSE: F), Toyota (NYSE: TM) and General Motors (NYSE: GM), who spend hundreds of millions of dollars to reach pro football’s huge audience and prime demographic, could get sacked if this year’s National Football League season is canceled or even delayed. So the big automakers are banking on not-so-secret talks currently underway to hammer out a deal and end the current NFL lockout.
There’s a good chance things will be resolved, to hear insider reports. But any uncertainty surrounding one of the sector’s best advertising venues couldn’t come at a worse time. U.S. auto sales slipped by nearly 3% in May — the largest drop in 14 months — in part because of supply chain and production problems following the March 11 earthquake and tsunami in Japan. GM, Toyota and Ford are counting on sales to bounce back above 13 million a month in September.
But that may be a tall order if automakers don’t have NFL football ads to drive customers into dealer showrooms this summer and fall. Vehicle manufacturers traditionally have been among pro football’s biggest advertisers — last year, GM, Toyota and Ford ponied up more than $350 million to reach NFL viewers.
Automakers view advertising on NFL games as a strategically important way to reach a huge audience of their best prospects, thereby helping them regain sales lost during the recession. And stronger sales can turbo-charge stock performance – an important consideration with Ford stock and GM shares down by an average of 30% since January and Toyota stock down 15% since March.
Advertising on NFL games delivers a combination punch for vehicle companies in size and demographic. Last year, sports accounted for 11 of the 13 programming blocks that delivered more than 30 million viewers, according to the research firm Horizon Media. Perhaps more importantly, NFL games consistently delivered car companies’ hottest target market: males 18-35. Replacing that audience will be difficult.
Wednesday marked the 100th day since NFL owners locked their players out of team facilities as part of the ongoing labor impasse. In recent days, rumors have surfaced that the league may be gearing up to play a shortened season, cutting the schedule by as much as half if need be.
If the dissenting owners don’t fold in the next few days – or if players resist sweeter terms for the owners – we will soon have to come to grips with the reality of losing preseason games at the very least. After that happens, you can be sure automakers and other top advertisers will start to rethink their fall TV buys, maybe on college football and other pro sports — or end up scavenging for prime viewers on Desperate Housewives and The Celebrity Apprentice.
As of this writing, Susan J. Aluise did not hold a stake in any of the stocks mentioned here.
