A New Race Strategy

$8bn: The amount paid by Liberty Media to acquire the commercial rights to F1
$750m: Sponsorship revenue in 2015, down from $950m in 2011
400m: F1 television audience in 2016, down from over 600m in 2008

Formula One can be a contradiction — cutting-edge on the track, a marketing anachronism off it. But 2017 is the year when the speed of change off the track may outpace the cars on it. New owner Liberty Media has bought the commercial rights to the sport for a sizable chunk of change ($8bn) and has started detailing where it sees the chance to make good on that investment.

The new management team of Chase Carey (CEO) and Sean Bratches (MD Commercial Operations) have outlined clear plans to revolutionize the way the sport is marketed and experienced. Carey has spoken about creating ’21 Super Bowls’, while Bratches has laid out four priorities, including refreshing the F1 brand, embracing digital channels, democratizing decision-making and re-imagining the race experience.There is no doubt that there are plenty of players in F1 that will find change hard when many teams and sponsors have been following the same rules for such a long time. But equally this is music to the ears of many people in F1, who have been arguing for years that the controlled and conservative commercial model it had pursued was causing F1 to fall behind in the race for consumers’ attention.

The new model is looking to build and market the F1 brand — not just the sport. One of the most exciting implications of this is F1 sponsorship becoming more attractive to consumer brands (it’s no coincidence that many current sponsors are B2B brands). I can speak from personal experience that, with a creative lens on it, F1 can open up huge consumer marketing opportunities.

When I was at Martini, our focus when we returned to the grid as title sponsor of the Williams Martini Racing team in 2014 was to disrupt the traditional sponsorship model. We sensed there was a real opportunity to shift our focus away from the track and towards the city centers where the races were being run. Similarly, our campaign didn’t rely on traditional TV-led media channels to drive exposure, but used digital and social channels to engage with our target Millennial consumers. After all, we knew that they were unlikely to be solely at the track or watching the race on TV.Rather, our activation exploited the opportunity afforded by the extraordinary race locations from Milan to Sao Paulo as playgrounds for non-traditional F1 marketing. We treated the race like a city-wide festival, targeting not only the race weekend, but also the week-long build-up, when the energy of the city noticeably rises with the anticipation of the race coming to town. We fed that excitement by creating Martini Terrazzas in Millennial-dense city center locations, fusing music, food, art and, of course, F1 to create the ultimate physical manifestation of the Martini lifestyle. We then drove the unique content it generated around the city, country and world through on-site, live social war rooms. It was disruptive and effective. We were not only able to create buzz and energy around the brand, but drive sales among a new and younger audience.

It wasn’t always easy and it wasn’t always perfect, but we learnt a hell of a lot on the way. Most importantly, it proved the power of F1 to reach a younger, more connected audience away from the track and traditional channels. With sound data and powerful insights giving us a good understanding of our audience’s behavior, we were able to use F1 to create something that differentiated us from our competition and brought new fans to our brand and the sport.

The idea of bringing fans closer to F1 was also a core element of our recent activation with Bose and the Mercedes AMG PETRONAS Formula One team. Our ambition was simple — to use the power of sound to transport people into one of the most exclusive places in all of sport: the triple world champions’ team garage in the moments immediately before the cars go out onto the grid.The Garage was a truly ground-breaking multi-sensory, immersive experiential activation that we created in Austin, Texas to demonstrate the industry-leading Bose QuietComfort 35 Wireless Noise Cancelling Headphones. We used the true sounds of the team garage to create a 360° soundscape, and a custom-developed play-back engine used the Bose headphones to deliver exactly the right sound to each ear as the fan moved around the space. We took nearly 4,000 fans (plus Lewis Hamilton and Nico Rosberg) inside the inner sanctum of F1, while the digital content was shared by millions.In my view, Casey’s ‘21 Super Bowls’ is spot on, and Liberty Media’s stake in Live Nation further enhances their credentials in the space. They have created the opportunity, but now it’s down to the teams, sponsors and agencies to make the most of it.

Another item that will no doubt be right on top of the new American owners’ agenda will be breaking the USA — the toughest (and most domestically saturated) sports market on the planet — but also the one with the greatest growth opportunity. As Bratches has said: ‘Having the theater of Formula 1 in the backdrop of the iconic US cities could be very attractive’, and it’s not hard to see why. For F1 to call itself truly global, and to reverse a downward sponsorship income from $950m in 2011 to $750m in 2015, it must become more than a niche sport in the world’s biggest media market, with the vast eyeballs, engagement and sponsorship dollars that entails.

Even though it is still largely viewed as an unknown curiosity, it is associated with a mixture of cutting-edge technology and old world European glamor, which is not a bad place to start. NBC, the domestic F1 broadcaster, has showed some growth in F1 ratings over the last few years, albeit off a low base.
And the good news is that Bratches, a 27-year veteran of ESPN, knows better than most how to build a sports fan base in the US. He knows the power of storytelling to capture the imagination of the audience. Focusing on the personalities of the drivers, the intense rivalries and the rich history of the sport (including two American world champions in Mario Andretti and Phil Hill), F1 provides an extraordinarily rich vein of content for an audience that can’t get enough of sports history and stories.

Of course, for a country that loves a winner, it will also be critical for the US-owned Haas team to see some success, while getting home-grown and competitive drivers behind a steering wheel as fast as possible is also imperative. It would also not be a surprise to see the introduction of some technical and format changes that would spice up the racing and make it more appealing to a US audience.

All of this might mean that sponsors — many of whom are based in the States — might need to invest a little bit ahead of the curve, but with so much to play for, surely it’s a risk worth taking. Week-long festivals, which combine world-class sport with technology, music, fashion and celebrity, based around street circuits in New York, Miami or LA and heavily marketed to a Millennial audience through re-vamped social channels and distribution platforms. Now that’s a future for F1 that’s easy to buy into.

When the cars take to the grid in Melbourne, it will officially signal the start of a new era of leadership for F1. Liberty Media has talked an impressive game in terms of up-front investment, focus and desire to expand the sport. Now the race is on for teams and their sponsors to rise to the challenge.

Gearing up for Formula E: Sustainability Gets Sexy.

It is generally overlooked but nonetheless undeniable that innovation in the form of new product development (NPD) has been the lifeblood of top sport worldwide in the modern era. Football’s all-conquering Premier League (created in 1991) and Champions League (1992), cricket’s revolutionary Twenty20 format (2003) and resultant cash colossus the IPL (2008), rugby union’s game-changing World Cup (1987) and European Cup (1995) are all standout NPD examples, but there are many more.

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Next off the production line in 2014 is an innovation which has the potential to have the most profound impact of them all – not just on sport, but on society as a whole. Formula E, motorsport’s most radical innovation in generations, is the first world championship race series for electric cars, and will hit cities from London to Los Angeles after its debut in China in September.

Although it’s still early days, even at this stage Formula E is showing all the signs of becoming a major success.

It’s backed by the considerable weight of the Fédération Internationale de l’Automobile (FIA). The cars and tech are being developed by companies with serious racing credentials such as McLaren, Williams and Michelin. And the starting grid is full, ten teams having signed up to take part from a combined eight countries – five from Europe, three from Asia, and two from the US.

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There’s also already a tangible feelgood factor in Formula E’s commercial programme. Team investors include Leonardo DiCaprio and Richard Branson’s Virgin. Broadcast deals (Fox, TV Asahi) and sponsorships (DHL and Qualcomm) are flowing, with more in the pipeline. All driven by an astute marketing and PR strategy led by CEO Alejandro Agag, the latest example of which saw the first public demonstration of a Formula E car at CES in Las Vegas.

But the big question, of course, is whether Formula E will prove a hit with fans.

AUTO - FORMULA E TESTS 2013

We think it will.Formula E cars will be as good-looking as F1 cars, and seriously fast. 0-60 in 3 seconds, and a top speed of 150 mph. That will feel blindingly fast on the closed-off city street circuits Formula E will use.

F1-type cars racing at over 150 mph through the streets of iconic cities such as London, LA, Monte Carlo and Rio at night will clearly be an amazing spectacle.

Add to that the interactive innovations Formula E is working on – including enabling fans to actually influence races online while they are taking place – and it’s clear that it could also be a revolutionary fan experience.

What's not to like?

Along with the fact that it will all be delivered with minimal climate pollution, and raise awareness of the benefits of driving zero-emissions electric vehicles in congested cities, and it’s also clear that Formula E could be instrumental in making sustainability sexy, worldwide.

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This piece features in the 2014 edition of #NowNewNext, Synergy's annual look ahead at trends in marketing and sponsorship. 

The Missing Formula

Analysis of industry data suggests that the F1 ecosystem raises over £1b per year from sponsorship. This includes Team Sponsors and Suppliers (ranging from £100m for the big boys to £20m for the smaller teams), F1 Partners (around £25m per year in cash or Value in Kind from each of the 6 global partners) and Race Sponsorship (around £10m for each of the races with title sponsors plus trackside advertising).

To put that into context, the London 2012 Olympic and Paralympic Games raised around the same amount (£750m from domestic sponsors plus around £250m contribution from the IOC for TOP partners) – but that was for a 4-year cycle.

So here’s a question: Given how much is spent on it from some of the world's leading brands, why is F1 Sponsorship not at the leading edge of sponsorship thinking and activation?

It’s fair to say that F1 is ahead of the game in virtually everything else it does. So surely F1 Sponsors should be cleaning up at the major sponsorship industry awards.  In fact, over the past 5 years, an F1 sponsorship has won only once out of a possible 47 SIA awards (Vodafone’s Best Sponsorship of a Team or Individual in 2009). Case studies from F1 should be inspiring sponsors in other sports.  Here at Synergy, we should regularly be showcasing examples from F1 in the ‘What We Love’ section of Synopsis. But this just isn't the case – at least not to the extent that one would expect.

Don’t get me wrong, there are some great pieces of activation in F1 (I’ll point out some of them later), but as a whole, F1 sponsorship is pretty uninspiring.

Having run the Reuters sponsorship of WilliamsF1 from 2000 - 2003 (yes - I agree - it was nowhere near 'award-winning'!), I thought I would have a go at answering that question based on my own personal experiences.

1. Most Formula One sponsorships are B2B

Reuters primarily used F1 for B2B relationship building. A quick scan of F1 sponsors shows that over 40% have significant B2B businesses. There is little better than F1 if you have a relatively small number of high-value, global customers who you reach through targeted sales and marketing programmes.  Travelling around the world to all the key markets, Formula One and Paddock Club™ are the absolute gold standard of corporate hospitality. With this being the focus of the brands' activation programme, it is little wonder that it remains unseen by the mass audience, award panels and the Synopsis editors.

The activation challenge for the B2B partners, however, is to create the most compelling brand stories and event experiences to attract their audience.  Because the fact is, especially in the small markets, most of the B2B sponsors are going after a very similar audience, in some cases exactly the same people.

2. There is too much focus on brand exposure and logos on cars and not enough on activation

Whenever brand exposure is such a critical part of the sponsorship package, it is easy to rely too heavily on it at the expense of all the other things you can do with the sponsorship. I absolutely hate the “media value” figures that are at the heart of so many F1 sponsorships.  However, it is easy to measure and as long as the media value is bigger than the cost of the sponsorship, brands can be tempted to think “job done”. In comparison, Olympic sponsors can't rely on any media value to justify their sponsorship.  That's why they have to work much harder and be far more creative with their activation.

A knock-on effect of this over-emphasis on media value is the fact that it can lead to an under-investment in activation.  Typically, the rights fee is so high (because brands are paying for the exposure) that there isn’t enough left over for activation. I’m not a big believer in any rule-of-thumb ratios, but the proportion of rights fee to activation spend when I was at Reuters is definitely not going to make it into any how-to textbooks. I suspect this isn't unusual for F1 sponsors up and down the Paddock

3. The calendar gives you no time to plan and develop great campaigns

The F1 season is relentless. The first race is in early March and the last race is in late November. In between is a never-ending cycle of travelling and managing the day-to-day execution of race weekends. Everyone goes on holiday during the 4-week summer break and at the end of the season, which then leads into Christmas. Trust me, if you want a year to fly past, get a job in F1.

Which basically just leaves January and February to do any sort of campaign development. But even those months tend to be dominated by tactical planning for the season ahead. There just isn't the time to think about a season-long campaign or a brilliant piece of activation.

Another challenge is the global scale required by an activation campaign. Japan, Abu Dhabi, Britain, the US and Brazil have very little in common with each other from a marketing perspective.  So as an F1 sponsor you are sort of in limbo between creating and delivering a global campaign that doesn't quite work in loads of markets and developing local campaigns which feel a bit 'small' and short term.

4. The F1 community is too closed

There are some great people who work in F1.  However, it needs more ‘churn’.

For example, when I needed a sponsorship agency, everyone I invited to pitch was effectively a specialist F1 agency. I understand why most sponsors do that, but it leads to a form of 'groupthink' where new ideas are thrown out in favour of "what we did last year" or "what we do with our other clients".

This happens up and down the paddock. If an F1 team needs a new Account Manager, they are likely to hire someone from one of the other teams. If a brand needs an F1 Sponsorship Director, they are likely to hire someone who has done a similar job at another sponsor. If an F1 agency hires a new Account Director, they typically hire someone who already has F1 experience.

The danger of this 'closed' community is that it loses the fresh influences and perspectives that drive creativity.

I know it’s tough (I’ve been there myself) but I think F1 sponsors need to be braver and set the bar higher for their activation campaigns. The benchmark should not be: “we want to create the best F1 sponsorship campaign”, but rather “we want to create the best sponsorship campaign”. And to do that, I think that it is critical for sponsors to look for inspiration outside the very small world of F1.

The point of this blog is not to say that there are no good F1 activations - because clearly there are some great examples.

My point is simply that given the number of world-class brands who are sponsors in F1, the amount that they invest and the possibilities of F1 as a platform, there should be far more ground-breaking activation programmes than there are.

Some of our Favourite F1 Activation Case Studies:

Johnnie Walker - Step Inside the Circuit Series

Johnnie Walker extended this campaign with some experiential activity in Travel Retail environments but at its core was some great behind-the-scenes content, from Monte Carlo (below), IndiaSingapore and other races

Vodafone:

One car, no team:

Camping:
Santander:

London Grand Prix:

The Silverstone Chase

Hugo Boss - Dress Me for the Finale

Using a special online configurator, consumers in each country could create bespoke designs of the drivers’ race suits. The drivers wore the designs during qualifying for each race, while the best two designs as voted by the audience were worn on the Sunday during the Brazilian Grand Prix. Boss also did a good job of connecting this activation to their social media and retail channels:

Red Bull - Faces for CharityIn exchange for a donation to charity (which Red Bull matched), consumers could upload a photo which was then put on the car for the British Grand Prix.

Vodafone -  Drive to the Big League

Vodafone introduced this initiative at the British Grand Prix in 2010 which offered one of their small business customers the chance to put their logo on the car for the British Grand Prix.  Vodafone have taken it to a whole new level in India now, where they have combined it with a Dragons Den style TV programme to select the winner – watch it – it’s brilliant!!!

See - it is possible - more of that please!!!