Sports sponsorship Those who wanted to quickly build brand awareness in the racing circus paved the way to the top class of motorsport with millions of euros. Now the frenzied marketers are pulling back and making way for a new modesty before the first Grand Prix.Prize question: How do you become a millionaire in Formula 1? Answer: Quite simply, by becoming a billionaire! For years, sponsors have smiled at this joke in the VIP lounges of motorsports - mildly, knowingly, confident of victory. Formula 1 as the biggest money-destroying machine in global marketing? So what? The main thing is to be there. And better still, right in the middle of it instead of just being there. This was the motto of the board of directors and their marketing managers and the associated agencies, who brought suitcases full of money to the racetracks. But now the mood in the pit lanes is gloomy. Many sponsors have turned their backs on Formula 1.Michel, you go aheadAs if on cue, German sponsors have left the Formula 1 circus after the end of the 2002 season. Deutsche Post, the Veltins brewery, Telekom, Infineon and Ratiopharm are among those who have left. Other financiers, such as Becks-Bier and competitor Warsteiner, have slashed their Formula One budgets for the start of the new season (March 9 in Melbourne).
Insiders believe that the top class of motorsport will have to do without at least 50 million euros in the coming season. The loss of this prestigious tranche of capital has left some team bosses reeling. With cost-cutting programs and aggressive sponsor acquisition, they are trying to compensate for these losses in other ways. The question remains as to why the German industry has turned away from Formula 1 in such a massive and concentrated way. Has this marketing platform lost its international advertising impact? Is the PS boom over? One thing is certain: The limits of growth have also been reached in Formula 1 - at least in Europe.
One trigger is certainly the crisis in the advertising market. This was compounded last season by the dominance of German Ferrari driver Michael Schumacher, who was crowned world champion after just seven races. The rest was boredom. Instead of ten million viewers, as in the 2001 season, the average rating for Formula 1 station RTL dropped to less than nine million per race. And in a survey by TNS Emnid on the most popular sports in Germany, motorsports had to relinquish its second place behind soccer to ski jumping for the first time in November.
"Is the TV sport of Formula 1 about to take the kind of deep fall that tennis experienced at the end of the 1980s? "No, certainly not," says Harti Weirather, head of the Liechtenstein agency WWP.
The ex-skiing world champion has been one of the leading sponsoring agents in Formula 1 for years. His company looks after Red Bull, BMW, Siemens and Allianz, among others. Weira-ther sees the departure of the Germans as a "healthy cooling of an overheated market." He adds, "Two or three years ago, when so many German brands wanted to compete in Formula 1, prices exploded."
At the end of the nineties, there were hardly any price limits. What had previously cost two million euros could only be had for five million during the boom phase. "It wasn't until the recession that the question of cost and return came up," says Weirather. "Before that, the gigantic wastage and the efficiency of the effort put in were not an issue."
Christian Geistdörfer, Managing Director of P&W Sponsoringconsulting, Munich, compares the run by German companies on Formula 1 to the boom in the Neuer Markt: "Everyone wanted to be there, no matter what the price." There, he says, a customer event in Monte Carlo was more important than linking Formula 1 involvement and classic advertising. "It's disproportionate when medium-sized church tower breweries cavort in global motorsports and haven't even solved their sales problems in the national market," Geistdörfer quips.
The agency boss, who this season is looking after the Toyota and Hugo Boss brands, nevertheless still considers Formula 1 to be the "royal class of sponsorship. Those who have long-term strategic goals can achieve them optimally on and off the increasingly dense racetrack network. However, the advertising agencies involved would also have to prove that they have an idea of the subject matter.
Unbelievable things have happened," says Hans-Willy Brockes, managing director of the European Sponsoring Exchange in St. Gallen, about how advertising agencies deal with Formula 1. For example, one sponsor would have found out after transferring three million euros that he had acquired neither photo rights nor the rights for a TV spot with it. "He should pay extra for these services," Brockes said. WWP boss Harti Weirather confirms the dubious practices of some agencies: "All that was sold to customers for vast sums were stickers and hospitality tickets. And that was it."
Those times are over. A new modesty has taken hold. The car presentations for the new season are designed accordingly. Instead of champagne, mineral water is served. And the pompous noble locations have been exchanged for a less expensive garage ambience. Katja Heim, head of the London-based sponsorship agency KH-Promotion, sees the recession as a "brand shakeout" in Formula 1, saying that racing is simply too expensive for sponsorship experiments. "Companies and agencies alike know what's at stake today," she says. Besides, big German players like Siemens, Allianz, SAP and Reemtsma are still very successful in Formula 1.
Heim, who also works for Formula One boss Bernie Ecclestone, notes that sponsorship is increasingly valued on the basis of performance. "It's calculated hard as nails according to the sales opportunities of the respective products in the Formula One environment." Ford, for example, is specifically trying to increase car sales in various core markets this season through integrated motorsport campaigns.
There is no bigger and more expensive marketing platform in the world: Last year alone, Formula 1 generated 54.5 billion TV contacts worldwide. Whoever creates the link to the target group here builds image and awareness for their brand in gigantic dimensions. New rules - a ban on electronic driving aids and bo-xen radio as well as the abolition of the replacement car - are intended to inject new momentum into the "Formula Boredom". Ferrari and figurehead "Schumi" are to be given competitive opponents again this season. Ecclestone has also already reacted to the fast-approaching ban on tobacco advertising in Formula 1: In the 2004 season, races are to be held in Bahrain and Shanghai for the first time.
The glamorous world of Formula 1: Without a clever marketing strategy, many companies are wasting millions.
The withdrawal of well-known sponsors is leaving a clear mark on the Formula 1 circus.
Formula 1 advertising: In pole position, pleaseThe fact that SRG has acquired the live broadcasting rights for the Formula 1 races until
at the end of 2004, a look at the company's financial statements shows that the
Rates charged by airtime marketer Publisuisse. For 30 seconds of advertising before the start of the respective races, advertisers will have to pay around 8,000 Swiss francs in the first half of 2003. While the races starting overseas can be booked "cheaper" - 3500 and 4250 francs respectively - advertisers have to pay 8250 francs for 30 seconds of TV spots before the engines rev up in Europe. And they are happy to do so: Peter Kaufmann, Head of PR and Sponsoring at Publisuisse, confirms that the advertising blocks shortly before the live broadcasts on SF2 were 100 percent booked last year, while two-thirds of the advertising time was sold during qualifying. For the current year, booking has just been opened, Kaufmann expects revenues to remain the same - with hopefully more exciting races than in the past "Schumi" season. (cb)
Case Study: Credit SuisseWhile many German financiers have written off Formula 1, the globally active Swiss bank Credit Suisse is sticking by its sponsorship of Sauber. "Our commitment fully meets our expectations," explains Alexandre Fasel, Head Formula 1 Affairs at Credit Suisse. And, "We see no reason to pull out at the moment." The bank transfers around 17 million dollars to the Swiss racing team every year, as the British magazine EuroBusiness knows. With all the additional communications expenses, CS's Formula 1 budget is thus around 30 million dollars a year.
The managers at Zurich Paradeplatz are proud to be the first bank to compete in Formula 1 since 2001. Fasel: "It gives us an effective communications alternative to traditional advertising." Because Formula 1 offers a global presence on four continents. Credit Suisse is using this to expand its name recognition and client base. With its partner Sauber, Credit Suisse does not have a world champion in its sponsoring stable, but it does have a team with a high level of popularity and respectability. Credit Suisse has integrated Formula 1 into its overall communications. In addition to an image campaign, customer loyalty is a central element in the strategy. "We take our clients to the factory, we invite them to tests or races, we organize discussion forums with Peter Sauber," explains the Formula 1 boss of the major bank. This, he says, gives the brand a strong emotional charge. The bank also has its own employees in its sights as a target group. They are kept fully informed about the Formula 1 world via the intranet. This strengthens motivation and corporate identity.
The Swiss sponsorship, which is handled in-house, is not only recognized by customers interested in motorsport. Christian Geistdörfer, head of the Munich-based agency P&W Sponsoringsconsulting, explains: "Credit Suisse's commitment is credible and authentic. At
many a German bank active in sports should take a leaf out of their book." The major Swiss bank, which also holds a 63 percent stake in Sauber, regularly conducts surveys and studies to determine the impact of sponsorship. According to Fasel, in the five European core markets, sponsorship expenses have long since been recouped through on-screen time. (pe)
Clean career "In terms of his habitus, he doesn't really fit into the glitzy world of the
Formula 1," jokes the Austrian Niki Lauda about the Swiss
Racing team boss Peter Sauber. Lauda had been dismissed as head of the Jaguar team just two months ago, accompanied by many headlines.
Goal-oriented, precise and, above all, successful, Peter Sauber has
positioned its trademark in Formula 1. The special hallmarks of Sauber Motorsport AG: seriousness and stability. Attributes that enjoy the highest priority, especially with sponsors. And so, unlike many other Formula 1 racing teams, Sauber has no shortage of sponsors. With Credit Suisse (the main owner with 63 percent of the racing team), the Malaysian energy company Petronas and the Austrian beverage company Red Bull, Sauber can rely on a team of financial partners that has been working together for years. New sponsors such as the Russian mobile communications provider MTS and the Bavarian mineral water company Adelholzener secure the budget of the Swiss racing drivers in the Formula 1 circus. "From Hinwil against the rest of the motorsport world" - loosely based on this motto, Peter Sauber succeeded in making the leap from underdog to establishment in Formula 1. Sauber finished fourth in the Constructors' World Championship in 2001 and fifth last year. The places behind Sauber are occupied by Jordan-Honda, Jaguar and BAR-Honda. Racing teams that rolled up to the starting line with budgets more than twice as big.
Once again, Sauber Motorsport AG will be racing on a "lean budget" this year. Insiders assume
a Sauber budget of $100 million. By comparison, BMW-Williams is estimated by motorsport experts to have a
Annual expense estimated at $230 million.
But what is even more important for the marketing of the Sauber cars and for the sponsors involved: With the German drivers Heinz-Harald Frentzen and Nick Heidfeld, Peter Sauber has already secured a high TV presence in the key market of Germany. Perhaps one of the two drivers will fulfill Sauber's heart's desire: after 163 Grands Prix completed, he still lacks a victory in his palmarès. (pe)
Peter Ehm