Sunday, 12 October 2008

In a recession/depression who does better? Internet advertising, print advertising or sponsorship?

Good question. Certainly, in the last recession display advertising overall went badly downhill, but the key point here is that when the economy rebounded, print display advertising did not in the same quantity as it had done before. Media buyers, looking to maintain brand visibility on lower budgets migrated heavily to the Internet. If the same thing happens again this time, newspapers are in even greater trouble. It's not the 2009 advertising budget the NYT needs to worry about (well, they do, but you'll see my point), it's the budgets post-recession/depression.
Another problem, and this is very specific to the IHT, is that in a recession advertising budgets contract (or in 2009 perhaps implode) so media buyers go the bottom of their scheduled buys (by bottom I mean the marginal add-on spends that in flush times they can afford) and cut them.
And the IHT, because of its poor performance on research (which Goldmark - see previous post - tried to fix but then gave up on as cost-cutting became his way to serve his masters), is one of those marginal, add-on spends.

Some excellent IHT material regarding sponsorship to reflect on in the two IHT articles posted below.
The first article is interesting in that Richard Scudamore, the English Premier League's cheif, manages to talk about revenue and over-leveraged debt without mentioning the words 'sponsorship revenue'. As if the clubs problems were consumer confidence (buying tickets to games) and high salaries.

He is presumably aware that West Ham's sponsor, Excel, went bankrupt?

English Premier League chief says game is sustainable

LONDON: English Premier League chief executive Richard Scudamore said Thursday the structure of the game is sustainable despite the global financial crisis.

"People need to be realistic. We are entering interesting financial times. But football is very sustainable. Club names are very sustainable, they don't disappear. Revenues are very sustainable," he told Sky Sports News.

"We are not complacent, I am not saying we won't at some time feel the wind of the consumer crunch, but generally we are not in such a bad condition."

FA Chairman David Triesman said Tuesday English football had amassed debts of about three billion pounds and a top club could fold in the current financial climate.

But Scudamore has moved to calm fears that a leading club could go bankrupt and put the debt situation into perspective.

"Debt is neither good or bad, it is inevitable," he said. "It depends on the value of the asset the debt is against, and some of our clubs are hugely valuable assets, certainly the biggest clubs."

It is also a product of whether you can service the debt. And that is a debate that goes on.

"I'm not saying we don't have concerns, but it is also dangerous to be alarmist in the current financial conditions."

We have always worried. Football has always spent a little bit more than it has earned."

However, Scudamore ruled out a salary cap in the Premier League although he said it had been debated for some time.

"We have discussed it on and off for 10 years but we don't believe that, with the range of clubs we have, you can come up with a meaningful salary cap," he added.

"There are only two ways of doing it. A percentage of turnover -- where the likes of Arsenal, Manchester United and Chelsea would have a huge potential wage bill."

Or to put a fixed amount in, what would you fix it at?"

In hard times, who's in the mood for Volvo's high seas adventure?

We know they are resilient. How could they not be as they prepare to leave Saturday from Alicante, Spain, for the Volvo Ocean Race, a grueling round-the-world event that will take them to five continents and eventually to the finish line in St. Petersburg, Russia, in late June?We know they are intrepid. How could they not be if they choose to take part in a 35-year-old race that remains one of sailing's supreme tests as crews push their boats to the breaking point or beyond with wind shrieking and waves breaking across their decks?But the real question, with all the danger on shore and on Wall Street these days, is whether anybody in the all-too-real world is much in the mood to keep close track of sailors courting danger for the sake of a mere sporting event.One suspects not.


International Herald Tribune
New York Times

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