Formulate, November 2017

Following the first two editions, in September 2016 and last May, the third instalment of Formulate, a joint production by Right Formula and Nielsen Sports, took place at BAFTA’s headquarters in London on Monday 6th November.

Attended by brands and rights holders, Formulate was once again a forum for discussion about the commercial direction Formula One is taking and something of a progress report, just over a year on from Liberty Media’s acquisition of the sport. Following a scene-setter, detailing the latest insights about Formula One fans, by Nielsen Sports’ UK and Ireland Managing Director Jon Stainer, host for the day James Allen – a familiar face and voice to Formula One fans – moderated four sessions, covering, as he put it, “the whole ecosystem” of F1.

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1. Formula One: The Global Vision for Growth

SPEAKERS:

  • Murray Barnett, Head of Global Sponsorship and Commercial Partnerships, F1
  • Ian Holmes, Global Head of Media Rights, F1
  • Matt Roberts, Director of Research, F1
  • Norman Howell, Director of Global Communications, F1

KEY TAKEAWAYS:

  • A little over a year after Liberty’s acquisition of F1, there is a clear mission to convert casual fans into more hardened supporters of the sport. That strategy is being led, for the first time, by a wave of ongoing research into Formula One’s fan base. “Converting the casuals into avid fans – pushing people up the engagement scale – is something we’re really working at,” confirmed Matt Roberts, F1’s recently-appointed Director of Research. “We’re trying to grow our database, their fan journey, do they buy tickets or merchandise? – and then append our message to them accordingly. We’ve missed out for years on millions of people going to races – we’ve never collected any data – so we’re starting from scratch and from probably next year we’ll have a working database.” Roberts added: “Our fandom has grown by 8% since 2012. When you look at the data, F1 are the second most engaged fan group out there – after football.”
  • The repositioning and repackaging of sports events as entertainment experiences is a major trend across the industry, and under Liberty’s stewardship there has been several notable Formula One initiatives during 2017 – from Michael Buffer’s boxing-style driver intros at October’s U.S. Grand Prix to the F1 Live fan event and street demonstration in central London days before the British Grand Prix. “We think of F1 as the meeting point of sport, entertainment and cutting-edge technology and we want to live everything through that prism, that brand positioning,” explained Head of Global Sponsorship and Commercial Partnerships, Murray Barnett, who cited that future races will be surrounded by a combination of music, esports, food and fashion events. He concluded by telling the assembled brands: “Now is an excellent time to get involved in F1 – and I’ve got business cards in case anybody needs one.”
  • Recognizing that China is a unique marketplace, Head of Media Rights Ian Holmes confirmed that F1 is looking for a partner to help it grow the sport in the country – “whether it’s investing in junior series, or events like F1 Live or media rights”.
  • Central communication is another area of focus for the new executive team. As Director of Global Communications Norman Howell pointed out, that new strategy is based around one central principle: transparency: “Senior people speaking clearly and in an adult fashion to the media about a range of subjects – we’re trying to keep all the avenues as open as possible. I think that’s crucial. I think that’s another lesson we have to learn from U.S. sports. Before it was well-positioned one-liners and we’re trying to get away from that.”
  • As an example of F1’s new strategy for development and distribution of content, Head of Media Rights Ian Holmes added some meat to the bones of the news that the sport is talking to Netflix about a collaboration: “We are trying to put a deal together with Netflix -a behind-the-scenes look at the sport,” he confirmed. “It won’t happen without the teams’ support, so we have a bit of work to do. It will hopefully give people more of an understanding and appreciation of the sport. They will film throughout next year – an in-depth look, covering all the teams – and probably drop just before the 2019 season.”

2. Premier Partnerships: Maximising Partnerships and Driving ROI

SPEAKERS:

  • Mehul Kapadia, Vice President – Global Marketing, Tata Communications
  • Mike Dobby, Partner, Deloitte
  • Kristian Tear, Vice President – Head of EMEA, Logitech

Session two featured three brands active in Formula One and activating in different ways. Tata Communications has been engaged in the sport for past five years, as Formula One’s official connectivity partner, as a partner of the world champion Mercedes team and as the driving force behind a global innovation contest (the F1 Connectivity Innovation Prize). Deloitte, meanwhile, entered the sport as a partner of McLaren – the two companies are working to develop a business and range of products – earlier this year. Logitech is another recent McLaren partner, primarily working with the team on its ‘World’s Fastest Gamer’ esports contest, which launched earlier in the season.

KEY TAKEAWAYS:

Mehul Kapadia, Tata Communications:

“The aim was to play a part in every part of the ecosystem – working with F1, working with a team – Mercedes – and working with the global rights holders, broadcasters like Sky Sports….Every weekend, like the teams, we have to deliver a performance.”

He added:

“We run a quarter of the world’s internet routes – but how do we take that story out? Working with F1, doing innovations…it’s all been about doing it and then talking about it. Technology should enable you to reach people who are not your hardcore fanbase… People who really want to watch it for two hours on the TV are going to do that. But other people want micro-experiences.”

 

Mike Dobby, Deloitte:

“We’re not a joint venture, we’re signed partners [with McLaren] and we have a revenue targets over five years – we’re trying to build products and we’re hoping to build a business of between 75-100 million dollars. It will, for example, allow real-time changes to production lines – we can sell a product that helps with that to a customer and run it. We’re seeing lots of B2B opportunities. Early doors, we’ve got two products we’re about to sign.”

 

Kristian Tear, Logitech:

“We measure [our partnership] in sales, obviously, but we also activate with retailers – it helps our retailers to get footfall; F1 and McLaren are a great help for that. In the past we saw our gaming steering wheels, which we have been selling for 17 years, sold twice a year – at Christmas or when a new game was released; now we have a cadence of 20 F1 races and we’re seeing spikes coming when there’s a race on. Some of these peaks are up to 8x what we would normally do. It has been very good from a sales point of view.”

3. The team principal perspective: Christian Horner, Red Bull Racing

SPEAKERS:

  • Christian Horner, Red Bull Racing

Red Bull Racing’s Christian Horner is the longest-serving active team principal in Formula One, having assumed the role in 2005 when energy drinks brand Red Bull arrived in the sport. Since then he has overseen four successive drivers’ and constructors’ world championships, between 2010 and 2013, as Red Bull Racing established itself as one of the series’ heavyweights. His on-stage conversation with James Allen covered a range of topics:

KEY TAKEAWAYS:

On the sport’s new owners and their management style:

“What Bernie achieved for the sport is phenomenal…there’s always evolution, there’s always change. He ran things in a very dictatorial way. The way that the new owners, the new management structure that’s in place, are more forward-looking. That’s really exciting. We’re just starting to see that roadmap.”

 

On sponsors and activation:

“Sponsors are the lifeblood of the team. For sponsors and partners, what’s so important is to be able to give value in that return. There’s so much competition in sport now – there’s so much choice for the consumer – F1 has to be engaging, it has to be accessible. The Liberty guys get that and certainly life has been easier in terms of accommodating partner wishes – getting the right people on the grid, in the garage, generating more eyeballs, more following for the team and partners through social media.”

 

On maturing as a team:

“We have some great brands that we’re working with. We position ourselves differently – we’re an energy drink company that goes racing, we are a racing team. It’s a lifestyle brand, an edgy brand and that’s the way we conduct our business as well. We want brands with similar values and aspirations. As the team is growing, the brands we’re working with have matured and become premium brands and that’s fantastic to see.”

 

On engaging younger fans:

“I think it will evolve and we need to use social media. Through social media platforms, through esports and other interesting initiatives, we’ve got to be engaging people. The drivers need to be the heroes – and villains. F1 is a lifestyle brand and it’s so important to engage in that. The Red Bull running showcar for us is so important for us to take F1 to the people – it’s running over the bridge in San Francisco in a few weeks. Until they see it, hear it, smell it – TV doesn’t always convey the sheer power of these cars – so it’s been a key tool for us over the last ten years.”

 

On upcoming discussions on how the sport’s revenues are distributed:

“Ferrari and Mercedes seem so aligned at the moment. It’s going to be fascinating. The commercial rights holder are coming in a cohesive manner with proposals, aligned with the FIA. Their approach is to drive costs down, make a franchise a valuable entity and then the argument about income will become a de-sensitivised issue. Everything we see Liberty doing looks great for the sport, looking forward. You have to look at what the sport will be in 2030 – will people be driving cars in 2030? First and foremost, F1 is entertainment – man and machine, maybe women and machine, going wheel to wheel; the drivers have to be the heroes and to have a glimpse behind the scenes as to how it happens is so important.”

4. Team tactics: attracting partners, delivering value

SPEAKERS:

  • Dominic Reilly, Mercedes-AMG Petronas F1 Team, Head of Global Brand Partnerships
  • Richard Berry, Williams Martini Racing, Head of Commercial
  • Antoine Magnan, Renault Sport Racing, Head of Partnership

The final session of the day brought together commercial chiefs from three Formula One teams – Mercedes, currently celebrating its fourth successive championship double; Williams, one of the sport’s most storied teams and an ‘independent’ team without ownership links to an OEM; and Renault, which has been active in Formula One for four decades as an engine supplier and full team owner – it returned to the latter role at the start of the 2016 season.

KEY TAKEAWAYS:

The Mercedes perspective – Dominic Reilly

“Every team enters the sport wanting to win…there’s no question that it helps me in my job. To say the phone is ringing off the hook with people calling about sponsorship propositions is not the case. Clearly we get more coverage and exposure, which benefits our sponsors, but equally people expect more of us and greater delivery. On top of that Mercedes-Benz only want to partner with the very best brands in the world and many of those do not necessarily need the exposure. It’s competitive in the commercial world, just as it is on track.”

“Unquestionably Lewis [Hamilton] is the most popular driver in terms of followers. 25% of all followers of F1 follow Lewis. One of the reasons we’re so keen on his social media is we give him the freedom of what to do… he also has the most fascinating life, fashion shows, royalty, celebrity, sporting events – his content is extremely engaging. What Lewis fits into the time that he has is extraordinary. And it’s terrific for us because it drives engagement – 2.5 billion people were touched by his content last year. People want to see what he’s doing, which makes my job a whole lot easier.”

 

The Williams perspective – Richard Berry

“The values are consistent and that’s one of the beauties of Williams – it’s very much a family. It’s set in Frank’s image, a lot of people are there for that very reason. There’s a different ethos and feel about it, we’re not backed by one manufacturer. To put that in current context, times have changes. We have to find a place in that modern world. There’s very much room for us, the promoters want that, the fans want a variety in the type of teams in the sport. What we need to do is get better. It’s incumbent on us to improve.”

“My personal view is making sure we’re not leaving old people like me behind. What we need to do is get the distribution platform right so everyone is engaged, whether that’s free-to-air or social media – we need to cover all of that. What’s vital is not to forget about the main platform as we chase a new audience, it’s that we deliver in a broad context – make sure we’re in all the right places where people can access us.”

 

The Renault perspective – Antoine Magnan

“It’s been a long process. We’ve been in F1 for 40 years as a fully-fledged team or as a manufacturer. In 2005, with Fernando Alonso, we weren’t ready to activate the title – we weren’t ready. Everyone knows how hard it is to win in F1 and how rare it is to win titles, so it demonstrates that marketing and communication is key to our return. Central marketing spent two years assessing whether to come back fully or to withdraw from Formula One – should we invest in China in badminton, or do as Nissan is doing with the Champions League? But we decided to come back. It’s for sporting reasons, but mainly marketing reasons and to make sure we get the maximum return on investment we need to work together with partners and we need to win at some point. The important thing is to win. It will take time, as it took Mercedes time in the past. We believe that F1 was the best platform to raise brand awareness where we are not known, in Asia-Pacific and Infiniti in US, and improving brand preference where we are known, in Europe and South America.”

“When we acquired Lotus 18 months ago there were 350 people there and now we are 650. We have invested. We have strong support from Renault, but the difference is to get to the level of a top team is through getting more sponsorship and partnership revenue. F1 can offer money-can’t-buy-experiences like no other sport – time with the team, time with the drivers or Alain Prost, collaborations to target Millennials like we did with Star Wars in Monaco. We are looking at sharing our values with partners and making sure they can benefit. It’s like being in the dressing room at halftime, speaking to the players. We want to be inclusive – and in the past Formula One has tended to be a bit exclusive.”

 

For further information on this topic, please see our whitepaper: Commercial Trends in Motorsport.

And for more information on any of the day’s panel sessions, please contact jerome.quartey@nielsen.com.