Sports advertising, sponsorships may go flat with AB-InBev merger

With the AB-InBev acquisition apparently set, everyone from the TV networks to event marketers to sports properties are trying to calculate how this is going to impact their business.

First, recognize that Anheuser-Busch is one of the largest spenders in advertising and sponsorships with an annual spend of $475 million on advertising in the U.S., of which an estimated $218 million is spent in the world of sports.

Now, compare this to what InBev currently spends on advertising here in the U.S. - approximately $58 million annually for brands like Bass, Beck’s, Stella Artois and others.  It's easy to conclude that the AB model of “spend money to make money” will drastically change. 

As an efficiency expert, InBev has a reputation of cutting unnecessary spending, which is pretty much the opposite of the AB model.  Combine this with InBev’s traditional opposition to sports spending and you can see why the sports industry is getting a little nervous.

Look at what other brands are spending in sports.  Chevy is the second largest spender at an estimated $45 million annually.  You might say, "Sure, but that's one brand.  AB represents several brands." 

True, but it paints a picture of just how committed AB has been to sports advertising and sponsorships. 

Just looking at the beer category we can see that -- combined -- Coors and Miller spent only $172 million in sports, which further highlights the significance of AB's position in sports. 

If InBev does what it traditionally does and significantly cuts back on AB's advertising and sponsorship budgets, we could expect to see as much as a 50 percent reduction of this $218 million annual spend. 

If InBev takes a more modest approach, we might see a 25 percent reduction in sports spending to begin with, and a slower pace of these reductions.  But even at that rate this cut would surpass Chevy's annual sports spend. 

Everyone in the industry will feel this at some level.  I predict the impact will be felt first in second- and third-tier markets, and later with a new or revised strategy in key major markets.

The bottom line is this:  The days when AB outspent everyone to maintain its "King of Sports Sponsorships" crown are likely over. -- DP

Comments

[G. Clooney]

DP - How do you envision potential AB spending cuts affecting existing team & venue sponsorships?

[Nicholas]

I'm curious to see how this works out. It is a big budget but some of these brands have a strong brand heritage with sport.

InBev has to be really clear before they do anything dramatic or it will have serious consequences for their brands.