Saturday, September 12, 2009

Beer giants keep NFL ad tap flowing during downturn

Anheuser-Busch, MillerCoors up expenditures as other industries ease back

By William Spain, MarketWatch
CHICAGO (MarketWatch) -- As the National Football League's season kicks off in the middle of the worst advertising slowdown in years, the NFL and its broadcast partners can count on one old standby to step up and spend freely: Beer.

Even as they suffer their own volume and profit pinches as cash-strapped consumers trade down to cheaper suds -- or move to the hard stuff -- the nation's two largest brewers are pouring the cash into pro football-related advertising and promotions, hoping that longstanding ties to the sport and its fans will keep sales bubbling during the recession.
That comes as many other sponsors pare media expenditures almost across the board.

Anheuser-Busch and MillerCoors plan to ramp up their efforts during the regular season and playoffs this year, possibly helping a bit to fill an expected gap left by sharp cutbacks from two traditionally big-spending industries currently in deeper trouble than most: Automotive and financial services.

And while the Big Two brewers have been doing some cost-cutting of their own, it does not appear to extend to their ad budgets, at least where the NFL is concerned.

"There is no denying the thirst for pro football among adult beer drinkers," said Dan McHugh, vice president for media, sponsorship and activation at Anheuser-Busch. "To connect with them, we plan to increase our ad spend this season with network and cable broadcast partners."

He added that the enhanced presence will be used to back the Bud Light's "Tailgate Approved" ad campaign. The company also sponsors 28 of the 32 teams in the NFL and will maintain its exclusive beer and other malt beverage category exclusivity in the Super Bowl.

Big Beer's commitment to football is extraordinary. Both Anheuser-Busch and MillerCoors spent about a third of their total media budgets in and around the sport last year.

Anheuser-Busch, swallowed up last year by Belgian-Brazilian brewer InBev and renamed Anheuser-Busch InBev , spent about $153 million in football-related TV programming in 2008, up from $143 million in 2007 and $111 million in 2006, according to ad-tracker TNS Media Intelligence.

MillerCoors, whose domestic operations were combined in mid 2008 by parents SABMiller and Molson Coors , spent $102 million behind their brands. That actually was down slightly from the prior year but up from $94 million in 2006.
For its part, MillerCoors is going to "deliver the biggest football season ever for Miller Lite and Coors Light," said Jackie Woodward, vice-president of media and marketing services for MillerCoors, promising a "fully integrated and fully differentiated" ad campaigns across multiple media platforms.

She said that the NFL is "America's game. It is a fantastic beer-drinking occasion and appeals to legal-age beer drinkers of all walks of life, all ages and all genders and geographies."

The upticks in spending on the NFL comes even as the companies suffer from volume declines, with Anheuser-Busch InBev down 1% in the U.S. in its latest reported quarter and MillerCoors off by about the same.
Brewers big and small have been struggling through the downturn as some drinkers switch to lower-priced, lower-margin brands. Changing consumer preferences have also stung, especially the growing taste for distilled spirits among the younger set.

Football is among the more expensive TV time available, but brewers have little choice to but to smile and suck it up.
"It is critically important for the category," said Benj Steinman, editor of Beer Marketer's Insights. "Their key demographic is 21-to-27-year-old males and football is the No. 1 sport for that. It is where the wars are won or lost."
He noted that MillerCoors has "been making hay with their exclusive sponsorship" deal with the NFL, which is not only driving its spending up but also that of its rival as "I think it sticks in Anheuser-Busch's craw a bit."
NFL games are broadcast on three on-air networks: General Electric's NBC, CBS and Fox, which is owned by News Corp. the owner of MarketWatch, publisher of this report.

Neither NBC nor Fox responded to a request for comment about ad sales trends for their NFL programming but a CBS spokeswoman said that the beer category "is healthy."

Some games are also shown on two cable outlets, Disney's ESPN and the NFL Network.

Terry Lefton, editor-at-large of Sports Business Journal, pointed out that even when companies are cutting marketing budgets, TV time -- especially in high-rating programs -- is often the last to feel the knife.

Compared in-stadium signage or consumer promotions, he said, both produce results that "are relatively intangible but media is easier to justify. Good or bad, it is accepted. No one ever gets fired for buying what their boss bought or their predecessor bought."

Apart from beer, he noted that "I have heard that early-season NFL sales are sluggish but they are still outperforming the rest of the market. They are feeling [the downturn] but any other sports property in the nation would love to have their problems."