F1 Grand Prix - Way Beyond The Race Track

Source : The Business Times, October 12, 2007

CHRISTOPHER LIM pounds the ground at the Shanghai Grand Prix to learn how far F1 sponsorship extends and what the payoffs are for sponsors

FORMULA One racing cars sound like screaming banshees, and any city bathed in that thunder cannot help but be transformed. We're talking about viewership figures that eclipse those for any other sport, tourists galore and some serious sponsorship money.

Now that Singapore is set to host its first F1 grand prix, BT visited this year's penultimate race - in Shanghai - to get a feel of how corporate sponsorship dollars will extend here beyond the race track in terms of merchandising, parties and events such as driver appearances.

Watching an F1 race live is a heady experience and, as with any large-scale sporting event, the air sizzles with excitement as fans root for their heroes. With the introduction this year of hand-held TV units, live spectators get everything TV audiences do - and more. Singapore audiences should be able to look forward to these same devices to enhance the race experience next year.

Johnnie Walker's corporate sponsorship in China this year included a huge party in Guangzhou for a crowd of 1,500, comprising trade partners, consumers and media

But what is going to happen beyond the race track? Whisky brand Johnnie Walker's recent activities show just how far one can exploit one's sponsorship dollar with a bit of imagination. At first blush, whisky may seem anathema to high-speed racing, but Johnnie Walker has cleverly played the corporate social responsibility card, and built a brand campaign around responsible drinking, with race drivers as mascots.

Johnnie Walker's sponsorship deal with the Vodafone McClaren Mercedes F1 team has proved so successful that, last Sunday, both parties announced an extension of their relationship for another three years till 2012, from the original deal for 2005-09. Johnnie Walker invested £pounds;20 million (S$60 million) in sponsorship for 2006 alone.

'One of the reasons we went into Formula One is that it's the most global sport,' says Nick Rose, chief financial officer of Johnnie Walker's parent company, Diageo. 'We regard Johnnie Walker as the most global brand in our portfolio, so there was a natural fit.'


Direct leverage with consumers

He adds: 'Obviously, sponsoring the team allows us to use the cars and drivers in markets where we can really leverage the sponsorship with consumers directly. It's fantastic to see Johnnie Walker on the cars, but we get much more than just that, because of what we're able to do in the market.'

Events-wise, Johnnie Walker's China campaign gives an idea of what the brand's idea of maximising its sponsorship dollar is. Johnnie Walker threw two huge parties in August, in Guangzhou and Beijing, with a third and final one to be held next month in Shanghai.

The Guangzhou party attracted a crowd of 1,500, comprising trade partners, consumers and media. Hong Kong singer Hacken Lee fronted a performance involving 200 dancers, and Chinese entertainer Huang Xiaoming led 70 drummers in Beijing.

Celebrities definitely help drive brand growth, but some of the most famous names have been transformed into eager fans by F1, and celebrity interest is another return on sponsorship dollars. 'I think teams these days are not only positive about, but actively pursue, things around the event, because that's the way to generate interest in Formula One,' says Nick Fry, Honda Racing F1 Team chief executive.

Matrix star Keanu Reeves visited the Honda F1 team in Shanghai to get his first-ever taste of the sport up close. Although he maintained a calm demeanour in front of the press, BT witnessed a private meeting between Mr Reeves and Honda's Mr Fry, where the actor's genuine enthusiasm was unmistakable. 'Keanu has been really amazed at the level of technology that goes into the cars,' Mr Fry says. 'It's definitely good for the sport to have big names interested in it, and these people have really enjoyed the experience.'

Numbers are the most obvious measure of the success of corporate sponsorship, and Diageo CFO Mr Rose points to Johnnie Walker's 13-14 per cent annual growth. 'For a brand as big as Johnnie Walker, with 15 million cases sold yearly, that is quite an extraordinary level of growth,' he notes.

But numbers never tell the whole story. ING and Honda both have their own metrics for measuring non-monetary return on investment. 'We do market research in five countries around the world, at least twice a year, to evaluate the impact of our Formula One programme, and every time we've looked at this, we've found that return on investment with Formula One is very positive,' Mr Fry says.

Honda, being a vehicle manufacturer, is an obvious participant in F1. BMW is another name you'd expect to see in the sport. 'The biggest brand awareness generator is the race itself,' says Jorg Kottmeier, BMW's manager of sports communications. 'But besides that, BMW has a lot of things, particularly the Pit Lane Park, which we invented at the beginning of the 2006 season.'

The Pit Lane Park is like a miniature race track, which lets fans get up close to the cars and technology. The prospect of one being set up in Singapore is tantalising.

Modern vehicles are controlled by computers, and since F1 cars have as much in common with fighter jets as consumer vehicles, technology is a huge focus in the sport, which is why computer manufacturer Lenovo decided to sponsor the Williams F1 team.

'We call our approach 'From ignition to inventory', so the Williams car can't even start without Lenovo Thinkpad laptops plugged into it,' Geraldine Kan, programme director of Lenovo's Asia-Pacific communications, says.

While lifestyle brands like Johnnie Walker and motorsports brands like BMW, Honda, McClaren and Mercedes are obvious candidates for F1 sponsorship, global bank ING, which sponsors the ING-Renault F1 team, stands out as a bit of a maverick.

But Isabelle Conner, the ING-Renault F1 programme's managing director, doesn't think that consumers need to make a mental leap between F1 and banking services. The visibility is what counts. 'We use Formula One just as a platform to gain access to 850 million people that we don't normally have access to. When you become a player in F1, it just puts you on another level,' she points out.


Reaching a broad audience

For both ING and Honda, this kind of brand cachet means breadth of reach, but not snob appeal. 'It's a platform for us to begin dialogues with many kinds of different people, but it's a very mass retail approach to sponsorship. We're trying to go after a very broad audience, not an elitist audience,' Ms Conner explains.

'That's why golf didn't work for us, because golf is way too high-end, and we needed to bring it down to something much more mass. We didn't go for athletics because there just wasn't enough TV coverage; it wasn't global enough. So F1 really has all the global and mass appeal that we were looking for.'

Mr Fry says that as a mid-price vehicle manufacturer, Honda needs to appeal to as wide an audience as possible. 'What we need to be today is to be more accessible to our fans,' he says. 'We have a wide range of customers. Allowing those people to understand a little bit about Formula One is important.'

Diageo's Mr Rose promises that Johnnie Walker will be putting a lot of effort into its activities surrounding the Singapore race. 'You can look forward to the whole package that comes with our sponsorship,' he says. With the huge parties Johnnie Walker has thrown in China as a yardstick, I think it's safe to say we can expect 'the whole package' to be pretty impressive.

Mr Fry offers this interesting perspective on sponsorship dollars spent outside the F1 races themselves. 'I think, as a rule of thumb for most of the bigger sponsors, the amount they spend on supporting their team's race needs to be matched by pretty much the same amount spent outside the race to bring the sponsorship to life,' he says. By that logic, we should see F1 sponsors spending many millions in Singapore outside the main event.

For BMW, Mr Kottmeier emphasises that his team has no firm plans yet for Singapore at all. Lenovo's Ms Kan is also cautious about speculation, but says: ' I can tell you that in the other countries we've had the races, we've worked to do a mixture of external events for our customers and business partners, internal events for our employees, and also charity events.'

If Shanghai's grand prix last week was any indication of things to come next year in Singapore, we should be in for quite a ride.