Tuesday, October 23, 2012

A Sponsor Surprise: Dale Jr's Pepsi Sponsorship Is Cutting Back

News on the street is that Dale Earnhardt Jr.'s Pepsico (Pepsi based products, aka, Mountain Dew, AMP) are going to be cutting back on how often they back NASCAR's most popular driver.

In previous years they had adorned the hood on 20 races for Earnhardt Jr., and 2 races for Jeff Gordon, under the Hendrick Motorsports roof.

But now they seem to be cutting back and wrangling a deal for next year that will be valued at around $10 million where they will only be on Earnhardt Jr.'s car 5 times in a year, twice on Jeff Gordon's car and once on Kasey Kahne's car.

And for the first time in a long time, I'm surprised by the actions taken by a sponsor.

In all the other race teams, I've not been too surprised when sponsors change up their terms/appearnaces on the metal of a car.  Even when they leave a team or the sport.

These economic times dictate shrewd financial tactics to keep an organization's money used in the best way possible.  The bottom line is profit vs. costs.

For some companies, the money spent to advertise is well spent.  Ask the TV advertising industry, where they spent $19 billion in fees on TV ads for the present season alone.  All to push ads in the viewers faces while watching either basic of cable TV.

It's worth it to the advertisers so they do it.  So too, do advertisers drop bucks to put their logos on car hoods.  Heck if it weren't for sponsors, I'm not sure how NASCAR would survive in the world of TV.  It costs more money then they make with racing prize funds to keep teams afloat.  Which in and of itself, is a precarious business model if you step back and look at it the whole picture.

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But I never considered any of Dale Earnhardt Jr.'s sponsors to be in such a state that they would not stick with NASCAR's most popular driver.  Dale Jr.'s fans, Junior Nation, are part of the NASCAR fan package.  The sport known for having the most loyal fans to sponsors, because we appreciate their monies, keeping our favored drivers in the race.

But when PepsiCo starts restructuring their sponsorship with Dale Jr. and the team in general, I'm not sure if that's saying something about Dale Jr., HMS or the sponsor themselves.

Dale Jr. is in the Chase for the Cup, but he's out of contention due to his concussion  But he was in contention.  That was great for his fan-demographic of the sport.  And this year was looking good for Dale Jr., but now I wonder how folks are feeling about him and his future.  Will concussions end his driving career?  Or will he keep going?  If he stops driving, what happens to NASCAR?  I only ask that because his product sales make up a huge bulk of the novelty sales.

Or is PepsiCo feeling unsure of Dale Jr. and wants to spread the love around on other drivers, while saving money cutting back on Dale Jr.'s sheet metal time?

Or is PepsiCo in enough trouble to warrant this change?

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At the moment, this leaves over 10 (I think 13) races that are not covered by a sponsor for Dale Earnhardt Jr..  I can't imagine someone won't jump on this exposure opportunity.  But then again, I've been surprised by sponsors.

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