With the 2016-19 Premier League broadcast rights selling for a record £5billion and those costs expected to be passed on to advertisers, we ask the question; when will brands stop advertising?
On the 10th February 2015, a fierce bidding war ensued between Sky Sports and BT Sport for broadcast rights to the English Premier League. Sky was forced to spend a staggering £4.176 billion to retain the maximum possible number of matches (126 games). BT Sport won the remaining games (42 games).
TV advertising and Football/soccer has become so powerful a combination that the English FA with a good team of lawyers and rights experts were able to secure this 70% increase in revenues from the two broadcasters. All 20 Premiership clubs will be queuing up to congratulate the FA for such a vast increase in wealth.
However when broadcasters are forced to pay more to televise a sport, brands have to pay more to advertise. The broadcaster has to make their money back somehow. In an interview with Ad Age, Honda’s assistant vice president for advertising, Tom Peyton, argues that the cost of advertising is now so high that they are forced to choose only a few events to engage with. Honda spends more than $600 million on U.S. television advertising annually, sponsoring the Honda Classic golf tournament, the Rose Bowl’s Rose Parade, and the NHL’s Anaheim Ducks.
FedEx are another brand which had advertised in the US Super Bowl sports event for 19 years consecutively until 2009, but then stopped. They have never returned. It simply costs too much and is no longer returning a profitable ROI for their brand.
The vast amount of choice available to consumers now with the internet, cable TV and other entertainment options, consumers are rarely watching the same TV channel. Brand advertisers aiming to reach a large amount of people have until now paid the increasing rates to advertise, but with the rise of competitive offerings from online channels like Facebook are their days numbered?
YouCom Media and its subsidiaries focus on planning media advertising that will meet a client’s ROI targets. There will come a time when we tell clients who represent some of the major brands that the ROI of advertising on Sky Sports or BT Sports for the English Premier League no longer delivers against their ROI targets. And if the advertisers stop advertising, Sky will struggle to survive a £4 billion debt.
YouCom Media News article, Feb 2015, London, TV Advertising in the Premiership’