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F1: India Inc ups stakes

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Force India car with lots of sponsors

This special guest Article is written by Vinod Jacob, an automotive engineer and a freelance journalist covering travel and automotive topics.

Have you ever wondered how the racing car mounted cameras brings to you the driver’s view without any vibration of the car when it goes flat out? Onboard cameras capture to such an extent as to feel the effect of G-force on the driver and the support he takes from the cockpit sidewalls to withstand the lateral Gs. For a sport like Formula One, it is more about capturing and bringing it to home on full screen the close-up of a car along with its sponsor logos and the helmet stickers while going at speeds of 360 kmph.

These make sure that the 360 million viewers experience and identify the driver or the team by the brand the car sports. Even during a crash when the car drags in the runoff areas and hits the barrier, cameras capture such as to make the viewers recollect the trackside ad boards as they relate the incident replay after replay.

Formula One is a television sport as most of the sponsorships get brand visibility through television to millions of viewers across the globe. As per the 2005 FIA/AMD survey, 99% of the fans watch the races through television. The sport is regulated by the FIA, presided over by Max Moseley and the commercial rights of the sport are with the Formula One Administration (FOA) managed by the pioneer and visionary Bernie Ecclestone. They net in around 47% of the global television rights revenue as per the Concorde agreement, all track side advertising and race hosting fees.

This year marks India Inc’s giant leap in brand building with this technologically challenging and expensive sport. Formula One sponsorship is nothing new in India after Tata, Amaron and Bharat Petroleum sponsored Narain Karthikeyan as a driver for Jordan. But the confirmation of the much awaited India Grand Prix debut, Ogilvy Sport’s roping in Kimi Raikkonen to represent India for its brands, the partnership deal of the Toyota Racing team with the Kingfisher Airlines recently culminating in Dr Vijay Malya becoming a co-owner of Force India, all these have put India Inc to a new and high level of sponsorship using F1.

Racing to the next level

Formula One has been one of the most professional, glamorous and the longest established in the motorsport championship series. It is a real time strategy sport where decisions are taken instantly to save every fraction of second. It is a highly challenging sport at the pinnacle of technology which relies on the entire team. A seven second pit stop is served by 21 mechanics positioned around the car with layers of backup plans. It is a race which pushes the team to the limits working under the most precise deadlines with rewards substantial and penalties punitive.

The teams are companies of niche industry employing half a thousand who are driven by passion to compete and succeed, funded by enormous budgets on an average of $300million. The teams rollout a hefty payment for their engineers and spend heavily for the advanced manufacturing facilities, wind tunnels and composites.

In Formula One, the teams get a major part of the funding through sponsorship, which in turn gets brand visibility by team name, car livery, overalls and merchandise. The cost of sponsorship varies which goes as high as $120 million for a single main sponsor like ING, Lenovo making their mark across the world. According to a survey by Performance Research, a sports sponsorship evaluation company, motorsports have the highest brand loyalty over tennis, golf, Olympics and NBA.

The manufacturing teams get funding including engines from their parent car manufacturer who in turn leverage the brand and receive technology from research. Some sponsors gets involved as partners just like EADS assisting Force India for the car’s aerodynamics.

Last year Kingfisher Airlines had a multiyear sponsorship with the Toyota F1 team. The “Fly Kingfisher” logo was prominently displayed on the sides of the car, a lucrative brand location. For a domestic airline it is good to promote globally before it launches its international operations. Viewers in countries like Japan or Australia or in Brazil might not have seen the airlines, neither experienced it but they know Kingfisher now.

Currently the Kingfisher brand is switching to its home team along with ready to go global brands like ICICI, Reliance, Medion Group, Kanyan capital. The new sponsors should have the patience for brand visibility as Formula One shifts to new destinations with changes in viewership and most importantly the exposure which varies exponentially with the position in the grid. A team in the front of the battle gets more television coverage, thus brand impact, than the team at the back of the grid.

Dr Vijay Malya has made a driver line-up based on experience for necessary feedback to improve the car. An Indian in the lineup would have improved the popularity and increased the TV ratings for India like in the case of Lewis Hamilton whose entry and performance has increased the ITV ratings by 47% for UK last year compared to the previous year. However Dr. Vijay Malya has given the saffron, white and green tricolor for the car’s livery thus putting brand India in the forefront.

Taming the tracks

Race circuit business is the least economical in the business of F1. The race circuits have to pay enormous amount to the FOA as rights to conduct the races. All the trackside advertising is sold by Allsport. The tracks have to depend solely on the ticket sales which the new circuits in Asia are finding difficult to generate. The track owner has to depend on track rides, simulators, carting and vehicle amusement parks similar to the Ferrari theme park coming up at Abu Dhabi.

Government is apt to own a track as it can benefit from taxes, travel and tourism and finally putting Delhi to the global map especially when the auto industry in booming in India. Most of the loss making tracks like the Australia, Shanghai, Bahrain and Malaysia are topped by the government at the behest of tourism.

Last year Jaiprakash Associates Limited bagged the rights to conduct Formula One races at the track to be built by them at Noida on the would be Taj Expressway, a high speed corridor connecting Delhi to Agra. A race there for Jaypee means more tolls along the expressway, high traffic at the Greater Noida airport, more tourists at the group’s shopping malls and hotels which it will line along the expressway all operated by them on built-operate-transfer basis. Thus Jaypee will make sure to offset the revenue from the ticket sales and most importantly impounding on the brand value of Formula One. India will see the F1 race debut on 2010 if all goes as per schedule.

Even though 75% of the race viewership is from Europe, Asian countries are catching up. The CVC, the investor of Formula One rights holding company, acquired a loan of $2.9 billion to fund for its expansion in Asia and Latin America. A major movement of destinations gives off from being a spectator sport to a television sport as fans are confined not only to the heartland of Europe but throughout the world.

In a nation like Japan where Formula One moved just thirty years back, 87% of the fans watch all the races on television as per the 2005 FIA/AMD survey. To enable the majority European television audience to see the race in prime time, Singapore GP will be held during the night under floodlights.

Sponsorship doesn’t always relate to the grid position. Rather it depends on brand chemistry. Different teams present this sport in different ways to suit their positioning and values. But the core F1 values remain the same even though the team brand equity differs in different markets. Formula one as a whole has a varied viewership ratings throughout the world for different championships mainly dictated by popularity, the leading team and the driver.

Human billboards

Narain’s Formula One action during 2005 saw brands roping him for advertisements in between his busy schedule. Motor sports especially Formula One mostly use the sponsorship route. But with Ogilvy teaming with Kimi will see Formula One in the advertising front.

Racing is considered a fast, aggressive and a tough sport. Having a cool driver like Kimi in its pool, Ogilvy will be looking for brands who want to match their chemistry in such a competitive market. “Any brand associated with number one will leverage the brand equity of Kimi Raikkonen, the leading driver in the world”, says Prashant Singh, Business Head of Ogilvy Sport and confirms signing him for this season as well.

Ogilvy will be using Kimi for imaging, mobile content and for endorsements. He further states that any Indian brand can reach out to the global audience with Formula One. It is the most viewed television sport by the upwardly mobile people and spans five continents.

The ad world and the sponsor partners should be quite enthusiastic to capture the young, brand conscious 300 million Indian hearts yet to become 400 million by 2010, as Dr Vijay Malya counts, with huge disposable income.

Written by Formula One Addict

March 26th, 2008 at 5:08 pm

Posted in F1 News

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