As broadcast TV and newspaper advertising loses impact for automakers, the auto companies are spending more to sponsor special events.
Advocates say event marketing allows car companies to get their vehicles and brand names in front of the consumers they want to reach. It also enables the companies to develop tie-ins with Internet, TV and product-placement promotions.
IEG, a marketing research firm in Chicago, estimates that the six largest automakers spent more than $565 million in 2005 on sponsorships in the United States. Those sponsorships included such events as professional sports events, concerts and youth athletics.
Automaker spending on sponsorships rose by 8 percent last year over 2004, IEG says.
"Everyone is talking about the diminished impact of traditional media," says William Chipps, senior editor of IEG Sponsorship Report. "The automotive category is certainly following that trend, putting more focus on events where people can get inside cars."
GM spent between $220 million and $225 million last year on U.S. event sponsorship, IEG says - the most of any automaker. That spending increased from an estimated $205 million to $210 million in 2004.
Steve Tihanyi, GM's general director of marketing alliances and regional programs, says he expects the company's sponsorship budget to remain flat this year. GM is cutting its overall marketing budget this year by more than $200 million.
'Best of the best'
Cadillac's former marketing chief Jon Brancheau says GM's luxury division aims to "align with big promotional properties that are the best of the best." In January, Brancheau became director of Cadillac retail development.
Cadillac's sponsorships include the Super Bowl, the Academy Awards, the Grammy Awards and the Ryder Cup golf tournament. Affiliation with those high-visibility sports and entertainment properties attracts upscale consumers, Brancheau says.
IEG estimates that Cadillac spent $3 million to $4 million to be the official vehicle of last week's Super Bowl. Its sponsorship gave Cadillac exclusive rights to use the phrase "Super Bowl" in its advertising.
Cadillac presented a 2007 Escalade to the most valuable player of the game. The company provided 700 courtesy vehicles to dealers, celebrities, athletes and NFL officials who came to Detroit for the Super Bowl.
The cost of sponsoring such high-profile events is rising, Brancheau told Automotive News. But he says Cadillac does not plan to cut back on event sponsorships.
Daimler Chrysler was the No. 2 automaker last year for event sponsorship. It spent $145 million to $150 million on its sponsorships, IEG estimates.
Jeff Bell, former vice president of global marketing for Chrysler and Jeep, says event sponsorship serves several purposes. It introduces vehicles to customers and provides footage for TV commercials, he says.
Event marketing also generates subject matter for the company's Web sites and opportunities for product placement, says Bell, who now is the Chrysler group's vice president of product strategy.
Jeep sponsors "King of the Mountain" skiing, mountain-biking and snowboarding competitions. Among Chrysler's sponsorships is the Bob Hope Chrysler Classic professional golf tournament.
IEG's Chipps says import-brand automakers such as Toyota Motor Sales U.S.A. Inc. are spending more on event sponsorships.
Jim Lentz, general manager of Toyota Division, says his company prefers sponsorships that allow its dealers to tie in locally. He notes that Toyota dealer marketing associations sponsor 14 of the National Basketball Association's 30 teams.
Says Lentz: "That's why we entered into a national NBA sponsorship and tied our arms around it."