Motorsports Business Forum Austin: Sponsorships

The Motorsports Business Forum holds regular events around the business of Motorsports (unsurprisingly). The latest edition was held in Austin, where there were 200+ attendees, most of them local. I went along to listen to teams and sponsors talk the business of F1, rather than the sport, which was the topic of the previous day’s FOTA Fan Forum.

The second session addressed sponsorship with Paul Hemberey Motorsport Director, Pirelli; Graeme Lowdon President & Sporting Director, Marussia F1 Team; and Pablo de Villota, F1 Sponsorship Manager at Santander

As usual, liveblogged, so mistakes possible

Q: So Pirelli, what was critical to bring you back?

PH: as a biz,a global business. It is unique as goes around the world. it happens every year, has focus in markets where Pirelli has interest. So fit is there. So we make tyres, not the most exciting. You don’t tell your friends you have bought some tyre.s To try and make them black and round. Pirelli has worked hard at marketing and branding, Try and looks at cool, sporting, prestigious. etc. ALl key for brands. That was a key driver. As we have changed biz strategy, to be leading in premium tyre,s to dominate in 2015. Biz focuses on prestigious manufacturers around the world, we work with the and F1 allows us to qualify that position, leader in segment.

Q: have you seen volume in sales, in OEM contracts…

PH: yes, complex, taking from sport to final sale. OUr brand value has grown (use interbrand) in 6 months, grown 300m. Has seen significant brand growth on end users and doing analysis F1 has had an impact. It is very strong. They are strange role of sponsor and tech support. We were asked to make more interesting racing, make talking points. FOr tyres, challenge, no car ever wins with tyres but they do lose., Or you have problems. Hard to sell that you make the difference. Worked with Nick for years., had to sell that we won champs with tyres. A hard sell to convince the public you had a major impact. Found that they talk about the tyres, as part of tactical decisions of weekend, we have our profile to increase presence, that gives value to us as a business.,

Q: so Graeme, tough business, sponsorship

GL: yes, but guess everyone here has tough challenges. We live in tough market place and we were a brand new team. We were effectively a start up business in 2009…when we got entry Jun 12 2009 we had a 2 page business plan and a successful Manor team. Had bought through a lot of drivers on the grid. We had a lot of experience of racing, but highly competitive market place and build strat to ensure funding. The tyres require money so have to generate income and as a new team can’t do it by asking people to play for stickers. So we create a business ecosystem around the team. Have large organisations that are partners, eg Virgin group was one of the first. Could take that association and start networking and as we got more, we could create more of a theme. A challenging team, We have not scored a point in 3 years, not a bad thing..that is the pinnacle of what we are in…if you could come in and win then reflects bad on spot. We have to balance the entertainment and costs..have to work together. to supply that. The TV coverage, we get 1.2%. Not an asset we can sell. Look at a lot of the sponsors, they do biz s is beneficial from B2B,. A different approach. In first year, brought a lot brands that had none been, and that they stuck with us.

Q: Santander, 2 teams and 4 races. Talk through relationships

PV: how do we manage both teams…have to switch the T-Shirts and jackets. From t he sporting point of view..very interesting, McLaren vs Ferrari is biggest rivalry. Amazing the different teams how they works etc..they are very close on track Amazing to see diff ways of working,not one better than the other. We start in 2007. With McLaren, good decision, started with big programme. Had to learn, we were new in sponsorship areas. It came as part of big rebranding global process. Decided in 2004 to go to single brand as so many benefits of single brand worldwide. We realised there was no better platform than F1, particularly as popular in key markets. Brazil, UK, Mexico and Spain, US, Germany, Poland. Had option of football or F1. The reason was obvious, to sponsor soccer..in UK, if you sponsor Liverpool rather than Everton..the animosity is issue. Don’t sponsor teams due to polarisation. We decided F1 was the best platform to work with. Our decision, after being with McLaren, go to Ferrari gives more flexibility with opportunities. You have so many opps to activate, more than other sports, than with Ferrari..eg in US, F1 not that popular, but Ferrari is aspirational and popular. Interesting..opens up new markets…also with Ferrari they have aspirational brand…but also have passion of fans, fans painting faces in red, like with soccer. The best of both worlds. When we started, we decided to maintain link with McLaren due to Uk being second biggest market it was important to carry on the elements. When decided to carry on rebranding in 2006, we went from unprompted of 9% to 90% just though McLaren in 3 years. It is easy to track, you can follow trend. When we do British GP, with big moments of McLaren, you can track how the trend is going up. associated with F1 and proper sponsorship package.

Now for Audience Questions

Q: Interested in qualitative benefits…but media metrics? hard numbers? looking at and how this gets reported. Comparative to TV etc, are you being asked to deliver that.

PH: have quite sophisticated fo measuring TV, one of easiest. Struggle with printed and internet based conversation, struggle to take in everything that is going on. There are lots of bloggers etc that do that. You have to be aware,t here are positives and negatives, you can say what you want unregulated (online..bloggers) but you can monitor what people think you are doing as a brand. If you do things, it is online very quickly.

Ian: Repucon…$10 per 1000 viewers per 30secs exposure?

GL: we are less orientated to more traditional metrics. There are lots of well utilised services. But one of the key challenges, look at future of media, huge changes going on…more trad channels become fragmented, more difficult to analyse in comparable way what is going on. Article in WSJ should advertisers measure delayed transmissions 3 or 7 days. Look at new media. A challenge for industry to come up with metrics…that are relevant. For us. our success is simple, the financial success. We subscribe, but don’t play as big a role in executive thinking as building our role as F1 team

PdV: ongoing battle in every sponsor. With tv fragmentation, decline of print, a personal view that it is not fair just to consider ROI just measurement as media. YOu get so many benefits. How do you measure the # of models that Shell has with Santander on. or Ferrari sell worldwide. The reputation is important and how the sponsorship, the investment of scholarships helps. Key elements for a company like us..ROI is often about media impact, but need to take in other measures.

Q: Can you measure difference between product and driver (eg is driver is the one who is important in sponsorship).

PdV: so Lewis has been the best ambassador for Santander. Going to Mercedes. THe driver is important, the sporting hero, the people that fans are paying their tickets for. But team is very important, we have best example. Before Alonso., F1 not popular in Spain. Looking at research, Ferrari was as powerful as Alonso..when we had opp to so Alonso merchandise with Santander….no value unless with Ferrari. IN UK, with McLaren, with opp for merchandise with Lewis alone…or with team…did not get full impact on own. What makes important is the bond…Ferrari insist the team is first.

GL: a bit of a catch 22 for F1 teams. It is the ultimate team game. THere is no other sport that has teams have quite the size. But the drivers are the heroes. The Teams works towards winning champs..you build the currency of driver, but they may go to race for rival. An interesting side effect. But fair price to pay for best team sport tin world

Q: do you share out? Or geographically specific

PH: we do find national interest driven by driver. So big interest next season with Perez. If Ferrari winning, Italian TV figures. Working with Petrov, does have huge impact in Russia. Local hero can drive interest. Would love to see US, Chinese, India etc. But also important for teams. Not ness all the big teams are good at marketing, some of the smaller out in a lot more effort and innovation and that can be successful. You have to create a system that is sustainable for all the teams. Thinking of rallying, there were teams that were not wining but still managed to create excitement. So F1 need to do this, create excitement for all teams. We see a lot of new circuits. Some new are suffering. coming into Austin, the enthusiasm is great..we are not saying that as we are here. We want to be coming back, it is important to create sustainable events as well and as a sport we have to look more into

Q: for GL, about Maria de Villota. Can you talk about the crash from marketing…

GL: Maria is a very valued member of team, well liked. Why was she in team? We offer a rare selection of services, only 12 F1 teams. Maria a good racing driver, had a career, like most drivers. Most reach stage when cannot progress further…to progress you have t learn a set of skills..you can’t jump into a an F1 car..

Q: do you think Danica has what it takes?

GL: saw Danica in junior, had great reaches, chose to take her career in one route and it has been successful. Back to skills needed…extremely complex. Maria was immersing herself in a rare environment and learning skills of trade. Accident was unfortunate…still a real part of teams, was personal setback for team. There in professional capacity, progressing her career in difficult sport. The hollywood version, you go out dancing then jump in car next day..a million miles away. Complex and highly technical. Unless you understand the complexities nad how to interact with engineers, the team…she was doing a great job of progressing in that area.

Q: F1 has spent a lot of time marketing itself…curious from a fan persepctive…so much said about F1 needs to do a better job of selling itself? Is there a unified approach...

GL: It may sound simple and it is. Listen, Listen, Listen and then do something about what we have heard. Have spent a huge amount of time talking to people, In street, restaurant, at FotaForum..These events are so important…you have to listen to me but I want to hear from you as well about what is important in your biz for F1. We have to satisfy a demand and biggest mistake is to assume we know what the demand is. We have learnt things, fascinating to learn of different perspectives.

Ian: Feels very different in Austin. Asked in Houston in customs about coming to for F1. instant excitement

PdV: when they city embraces the race, it is a completely different thing. F1 wants to be seen as the first motor racing series in world. F1 has done the right steps…the show that we are having this year is unbelievable. Different teams winning, away from top teams, other teams winning races. Think FIA has done right steps and the show is much better

GL: agree completely. I flew in through Dallas, the customs guy was coming to race etc. Giving people access is something we try hard as a team..but eveyone we met was coming!

PH: being aloof is an issue..in US they like an event, not just turn up on Sunday, not just about the race, about being entertained. See in Melbourne, Canada, Silverstone for other reasons. All the signs that the enthusiasm created..great…it is clear coming in that there is an event going on, that there is a lot of enthusiasm, we can tell the difference, Whatever is being done to start with, then clear great start

GL: the fans are very well educated on the sport. You would be surprised how many markets that know there is something but they don’t know the sport, the nuances. That is something the teams value.