The U.S. recession has led a company that tracks North American sponsorship spending to halve its growth estimate for 2009, the first time the firm has ever updated its projection mid-year.
IEG, a unit of advertising giant WPP Plc, on Wednesday said in a report obtained by Reuters that it now expects spending this year by North American companies on sports, arts, cause and entertainment marketing and other sponsorships to rise 1.1 percent to $16.79 billion.
In January, the firm forecast growth of 2.2 percent, which was then the smallest projected increase since the firm started tracking such data 24 years ago. Last year, spending rose by 11.4 percent to $16.61 billion.
“There’s so much conversation within the industry about how are we doing, people wanting to take the temperature,” IEG senior vice president Jim Andrews said. “Is anybody seeing any green shoots in terms of sponsors willing to pay more or do more deals?
“If we look back over the last few months, there was not as much activity as we thought there would have been and certainly as people would have liked to have seen,” he added.
IEG said in January no other downturn in the past 20 years has had such a negative impact. Spending even rose 3.7 percent in 2002 after the September 11, 2001, attacks on the World Trade Center and the Pentagon.
The revised 2009 estimates show similar declines across all categories, including the largest: sports, where IEG now sees 2009 spending of $11.48 billion, down from the $11.61 billion it predicted in January.
The sports and entertainment tours categories also are expected to show the smallest rate of growth with an increase of 0.7 percent, according to IEG. In January, predicted growth rate for sports was 1.8 percent.
Major sports marketers like General Motors Corp and FedEx Corp have cut spending on such sponsorships, as well as advertising, due to the recession.
Other categories include causes, arts, festivals, and associations and membership organizations.
IEG expects a similar slowdown in sponsorship spending globally as it cut its 2009 estimate to $44.4 billion, or an increase of 3.1 percent. In January, the estimate was $44.8 billion, or an increase of 3.9 percent.