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Sponsor trouble ahead?

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Anyone else see the reports about GM pulling back on sponsorships?

GM to Cut Sports Ties, Refocus Marketing

July 15, 2008

-By Steve Miller

General Motors said today that it would cut and consolidate its marketing and sales budget, including motorsports activity that will likely involve Nascar sponsorship.

The automaker's marketing focus going forward will be "protecting launch products and brand advertising," GM chairman Rick Wagoner said in a statement.

The automaker, whose stock dropped Monday to $9.38—its lowest in 50 years—is seeking to boost liquidity by $15 billion through 2009 via cutbacks and job cuts.

Some of GM's eight brands have increased ad spending, even as sales have faltered, but not all of them. Its best-selling brand, Chevrolet, increased spending through April by 19% (not including online), per Nielsen Monitor-Plus, even as sales dropped 13%. GM overall spent $1.89 billion on ads last year and $641 million through April, as total sales dropped 12.3%, per Autodata, Woodcliff Lake, N.J.

GM already started pulling back from some of its sports ties. In January, Cadillac opted out as a sponsor of the Masters golf tournament. GM also said it would not to renew its $1 billion sponsorship of the U.S. Olympic Committee when its contract ends after this year's games. And Chevrolet recently ended its primary sponsorship of the Nascar Childress Racing team.

The cutbacks on motorsports and Nascar are significant, considering GM, and particularly Chevrolet, have been involved with auto racing since the mid '60s.

The predicted decrease in racing spend overall could account for 20% of an annual motorsports budget that was nearly $100 million, said Peter DeLorenzo, a former auto ad executive and editor of the blog.

"I don't think [a cutback in Nascar affiliation] will make a [PoorWordUsage] bit of difference," DeLorenzo said. He added that the Nascar's "Cars of Tomorrow" initiative—which GM took part in along with Chrysler, Ford and Toyota—"reduced its brand recognition with the sport to the point that Nascar is irrelevant."

IMO this is a sad deal. The Ford vs Chevy vs what helped make NASCAR popular.

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