The Super Bowl ads were decent this year. There wasn’t anything very memorable, but remember this: according to Business Insider, a “day of reckoning” is coming for networks who continue to charge brands extraordinary prices to advertise during major sporting events. That was the message from Honda America’s assistant Vice President-advertising Tom Peyton last week. The irony of the situation is Mr. Peyton’s company spends more than $600 million annually on various advertising campaigns including the Honda Classic golf tournament, the Rose Bowl’s Rose Parade and the NHL’s Anaheim Ducks.
Peyton told Ad Age: “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 trend has already begun. There are some companies that have already completely ruled out some major sporting events in which they previous advertised. For example, Cars.com skipped the 2014 Super Bowl after appearing in every big game since 2008, Subway has been opting for regional commercials as opposed to paying $4 million for a national spot, and FedEx broke a 19 year streak of running ads during the big game this season.
The impact of this dramatic change could spell serious trouble for networks like Fox, ESPN and NBC who all secure billions of dollars by airing every big sporting event in a given calendar year. It’s an interesting dynamic at work because there are several upstart sports channels like FoxSports 1, NBC Sports and CBS Sports that are increasing competition (and upping the price) for sporting events. Will the ad revenue be there when a station pays mega dollars for the rights to an event in the future? It’s easy to see that it just might not be….
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