on digital.
BS: Is the decrease on Formula 1 website not because perhaps the fact that other people are using other blogs which get the session results before the F1 website?
MA: Not really; YouTube has a significant following even though FOM hasn’t really adopted it. Things that I think are driving it based on the research, is that they haven't really shown and adopted the technology and the way you share content has been lacking on Formula1.com. The type of content they are posting just hasn't quite kept pace to what people expect in the social world, so it’s not shared and it’s not viewed.
If you compare Formula1.com to its peers, it should be developing 300% more shares from its content; that’s not by doing anything clever but by doing what the rest of the market is doing.
DR: For me, what stood out as a fan and someone with a marketing background was how disconnected everything felt… in terms of how the new F1 website was launched…how F1 Access was brought in and the F1 YouTube channel - it was almost as though the right hand didn’t know what the left hand is doing. There was no integrated marketing and for me, that seems like they are doing everything in the spur of the moment and I’m sure FOM has the data on what people want to see.
It was a bit disappointing because they made the effort to re-design the website and to provide content that people have been asking for but it is still falling short. I honestly believe they could integrate a lot more from FIA.com which has a lot of data like fastest lap, fastest speed and penalties etc. and integrate more of that content and be the “one-source hub”.
Q2) No German GP this year - Italian GP (Monza)'s future is uncertain. What is the secret to race tracks survival and profitability?
DR: We really shouldn't be seeing this with historic tracks like Hockenheim and Nurburgring struggling but that being said, there has been some kind of a shift from the pre- to the post-2008 World, in the sense that now people worry about which races to go and what is the return they are getting when they go to that race.
So for me as a fan, going to, say Monza and paying 400Euros for 3 days and just get a race, I would rather look at Singapore or Malaysia and see what 400Euros will get me – just tickets to the race or a week in the country, and the race and a concert etc. So I think a lot of fans are evaluating this when deciding which races to attend. A lot of the newer races which have succeeded are those that say: “what can we provide in addition to the race experience which will improve tickets sales for us and at reduced cost to the fans?“ Whereas a lot of the tracks in Europem it’s always about the race and nothing else, so they need to re-evaluate the model. Bernie is charging them a lot of money and all they can do is pass up the costs and you can’t blame them for that.
MA: I’d agree – this area is our core business; I run a Circuit Advisory company so I'd agree that the ones that are struggling are the ones which aren’t
innovating. Actually that's not quite true - there's some race tracks such as Malaysia that did a pretty good job but suddenly find themselves competing against a regional leader like Singapore but I do think that's innovation in product offering, pricing and structure of agreements with F1 management is essential to the success of modern Grand Prix.
Secondly I don't think Bernie is overcharging; it’s not true. When you compare Formula 1 as a destination development product against anything like FIFA or the America's Cup, F1 is extremely cost-effective. In our (MTC) work for Singapore Grand Prix, we did an economic evaluation of the impact of this event for Singaporean economy. They were up by around 60 million Singaporean dollars per annum as a direct result of hosting Formula 1.
We helped them to renew and optimise their contract with FOM 2 years ago. Singaporean Government questioned it really hard. They would say it has helped to put Singapore on the map - in a range of ways it has direct impact on the economy. If you are in the business of running a company, F1 is an asset you want to be involved in.
What should be happening is that more governments should be supporting F1 because if you look at where the money flows over a race weekend, they are largely the beneficiaries of the sport.
The issue is that promoters aren’t able to structure their agreements with Governments in a way that recognises that contribution to the local economy.
Moderator: I suppose that applies to Silverstone, who is widely reported as not having Government support
MA: To say Silverstone have no Government support, isn’t quite true because they have loans from Government, the road leading into the track is expanded by the Government. Motorsport contributes of £6bn a year to the UK economy but yet Silverstone is finding it difficult to meet its loan payments.
DR: Being Indian, for me there was the big disappointment of seeing the race disappears from India. The race was brought to the country by a private venture and the government did not recognise the sport and treated it as “entertainment”, resulting in them taxing teams for equipment brought into the country for the race. The government failed to see the value of an international sporting event in the country.
MA: When I worked for the Williams F1 team, quite a bit of the company's income was taxed out of India so you are absolutely right, they did not want that race and they made it go away.
PC: It's an interesting topic - I agree with Mark that Bernie does not over-charge race tracks but what hasn’t been said is when a racetrack wants to have a concert or paddock-club, Bernie charges them extra. So here’s the difference with MotoGP, WRC, Blancpain or other series. F1 race tracks don't have the freedom to sell real-estate to make extra money.
Another fact is that there are 365 days in a year and F1 is not the only event that can be hosted. A lot of the other race tracks that survived made a decision on if F1 race is going to make a lot of money and we know that most of them barely breakeven on the F1 race. Most of them run at a loss because for them, it’s a promotional weekend. So to answer the question; “how does a racetrack survive?” we just need to ask Silverstone. Northamptonshire has sunk a lot of money to make sure that Silverstone develops a Technological park and this keep the F1 race there and create a 365 days-a year solution.
If you ask Jonathan Palmer who is the owner of the large number of tracks in the UK, he’ll tell you that he's not interested in F1 and most of his race tracks are running positive books without the need of dealing with Bernie.
BS: In terms of what is feasible for tracks to do on a limited budget, especially with the Indian track – there was so much government blockage and it's kind of a fight. If Bernie doesn't want a certain track on the calendar any more then it's not going to be on the calendar. So ultimately even if Monza puts together a good bid but if Bernie is not in the mood to go there, or he’s not getting sponsors/companies to apply pressure on him to stay in Italy then it's not going to happen.
MA: I think Ferrari might have something to say about it!
DC: COTA started in 2010 and funded entirely using private money. There are now getting money from the State but they try to make sure that the track is busy all the time so their goal is to make sure there's an event happening every weekend at the track. We have the F1 race and we also have 4 other major races and events. In the meantime there are concerts, foot-races and track-days to keep them busy. I would say having people who are motivated by potential loss of their own money rather than relying solely government funding – that is very good motivation because they expect their own ROI in their own personal bank account. And they have a lot of people in North America to pull from to ensure that they get a lot of attention and people coming in from around the world to our one track. The main issue that we're seeing this year is the competition from the Mexican Grand Prix. I'm very happy that its back, but it's going to be on one week after the US Grand Prix so will be interesting to see how it affects our circuit - that would be interesting because a lot of my friends are Mexican nationals and to choose between two races a week apart, I'm sure we're going to see a dip this year but it depends, we'll see. They (COTA) are technically still in start-up mode so will be interesting development to follow.
CJ: From what I've been hearing from the people involved in organizing Mexico GP, is that the paddock club is virtually sold out so they are doing very well in terms of it because it has such a motorsport heritage. I think Mark’s point is really valid - unless it’s framed in terms of promoting a region or involving the government or part of a regional strategy, you're going to struggle. Problem is it was never planned that way; tracks like Silverstone, Monza, Hockenheim and Nurburgring, these places are amazingly cultural and heritage places as part of F1’s heritage so there has to be a way to include them. One of the suggestions was to rotate couple of races around the traditional tracks and give them a financial break to keep the heritage. To be honest, do you really want to go to Baku to watch a race? There’s more to be done in terms of safeguarding the cultural and historical races as part of the F1 brand DNA.
MA: There is a provision in the FIA relationships with FOM for the FIA to force FOM to host a GP. I think it’s called “the historical protection” but it’s the tracks that have to apply to the FIA for the protection but they’ve never done that.
At the moment (from Due Diligence work on Circuit of Wales) we are involved with the UK and the Welsh Government and we have full support from both two bodies. (As mentioned before) race tracks as a whole shouldn't lose money – the tracks that lose money are the ones that host Formula 1. The issue is around hosting F1 and circuits find it hard to justify what should be an easy justification. UK and Brazil are the only circuits to make a profit without any government support so if you don't have support, you are going to lose money very quickly.
Q3) Mr Ecclestone has proposed a Female-only championship to run alongside F1 on race weekends; most people on Twitter say it is a bad idea, what are your thoughts on how viable it is.
PC: I did manage a female driver and I did manage 8 racing series and we asked ourselves this question every time - should we have something different, should we have a female-only race series? So the idea has been around for a while. I think it's an awesome idea in principle but it’s never going to work – it’s not the right time; it’s not the right economy or place. Female drivers are as great as male drivers but there are not enough of them but it wouldn’t be fun to have just girls racing each other. Also, sponsors wouldn’t pay to get represented by girls only. When we managed a female driver, there were loads of sponsors since she was the only one so it was fantastic for them to showcase to the audience a female on the race track.
DC: Wow, there are a lot of women in motorsport on the news lately. We are highlighting them in F1 and removing them from WEC. I’m not really a fan of female-only sub-league – once you segregate, how do you de-segregate the series later, or why would there be a reason to? Looking at the headlines it seems like Bernie was the enemy, when you actually read what he said. That wasn’t the case – he said women deserve to be noticed. It’s tricky but at the same time we don't want something like Affirmative Action for women. It begs the question of are people here based on merit or just because of their gender.
BS: I think it’s a bad idea because as Danielle said, it’s an act of tokenism. 37% of F1 Audience is likely to be female and this will alienate them. It would say: “Oh, look you are so special and disabled, you have to have your own race”. It really stuck in my throat because of that.
MA: I couldn't agree with you more, Bridget. I think car racing is one of the sports where men and women could compete on equal terms and I see this idea of a female-only series is so pointless. This is about horsepower and skill not about muscle-mass. This is the area where we should be competing on a like-for-like basis.
BS: Susie Wolff is exponentially stronger than the average woman. She's been training for it. Once she puts her helmet on, she is a racer. It’s not like she wears a pink triangle to denote that she’s female and let other drivers avoid her. They engaged with her when she was racing in DTM.
CJ: Sometimes Ecclestone says these things to provoke. So all your comments are totally correct - it would be a circus to do it (female-only series).
MA: On the general point of Women in Motorsport, as someone who has worked in high value engineering at Williams and is building hubs around this, we need more women to be driven towards engineering and to feel attracted to engineering careers. Role models like Claire or Kirsty are great but they are few and far in between. With the cost of CFD etc., we need more women to get into these roles.
DC: (As an aside) on the subject of “Grid Girls”, I'll speak about my experience because in the last six race events that I've been to, I haven’t been as a spectator - I've been working either as media or to support my own company which sells hospitality. What I find is that especially in MotoGP, it is quite alienating for me because the majority of women in the paddock are grid girls - there are a few PR and Hospitality girls but in general there aren't many professional women walking around by themselves. So I find that I have to explain myself and what exactly what I'm doing here and the worst part is, if I'm talking to a guy either a business contact or just making a friend in the paddock, if we are introduced to someone else, I'm automatically regarded as a girlfriend. It’s never that I’m there on merit or because I have something to do or that I'm interested or knowledgeable about motorsport. So this is very frustrating and I do feel a little bit disheartened when I'm working and 30 incredibly hot Red Bull girls start walking in skimpy outfits, and my presence is disregarded. That makes you think; “well, there is the role of females in this race!” it is kind of odd.
And I do find that I have to work a little bit harder which isn't a bad thing, but just to make sure that people know that I'm there for a legitimate purpose and I wanted to be. Not just because someone said “she looks like this, so let’s install her there”.
Q4) In your experience, what is the best measure of Return on Investment (ROI) in motorsport?
MA: There’s a long way to go. There are a lot of agencies that count sponsorship logos, exposure etc. but right now what people are looking for is how best to apply the benefits to your business and make sure that it’s done in an acceptable way around the world and that is a tough thing to do.
CJ: When you talk to sponsors as well, there is a lot of “quackery” from various agencies measuring this and that. The basic fact is that the people involved in marketing themselves aren’t satisfied about how things are. The most upfront answer I ever got was from Jordy Cobelens, the CEO of TW Steel who basically said he just looks at turnover. If turnover increases because of the sponsorship then it’s a good thing. But that’s a simplistic vision of it. There are so many different indicators you can use. Equivalent Media Value (EMV) and Social Media Impressions are probably the two that are used the most. I think it’s more about looking at the the use of the sponsorship as well – that is the most crucial thing but I've learned speaking to these people is that they want to be connected to the right people and in terms of Formula 1 as opposed to other sports platforms.
MA: On Business-to-Business aspect of F1 and motorsport in general – it’s a huge reason for doing deals. When I was at Williams, we were back of the grid and we positioned ourselves as the Business to Business Team. We went out and found a deal for Philips in the 1st year of the Philips sponsorship, they sold 60million euros of TV to Hilton hotels (McLaren sponsor). MTC did some work on this – we asked how many CMOs would say what would happen if they reduced their marketing budget – less than 10% knew what would happen if you reduce your marketing budget. They are in a very tough world and it is really difficult to do. I think there are certain things that you can do as Chris was saying but that’s not even scratching the surface of the corporate accountability.
DR: Most of my experience has been with this working with sponsors. I've done some consulting projects with them it's interesting to hear both Chris and Mark’s views because I worked with the old Lotus CEO Patrick Louis and he kind of said the same thing in terms of they have a B2C focus but the big huge part of their focus is B2B because they always looked at connecting their own sponsors.
(Which is why these 3 days of a Formula 1 weekend and having the paddock club access was perfect for them.) You are going to throw multiple ideas and a lot of people together and to see what works and that's how to build relationships. On the B2C side from what my experience, whenever a sponsor goes into Motorsports, a lot of them don't have a clear idea what they want to do. They get in mainly because someone to President is the head of a brand who loves F1 or and I want to sponsor “Team XYZ”. they don't go in with clear KPI's of what they want or what they want their investment to achieve and how they're going to calculate that ROI and what are the areas they want to spend in to get that benefits so a lot of problems occur when brands go in and say we want to be in Formula One but we don't know what we want to get out of it. The brands that to do with well and are able to eke out that value from their sponsorship are the ones that go in with clear goals and are able to understand how they do it going to measure them.
MA: Maybe that's true of small family owned businesses but of the 200 businesses that make up the paddock and contribute about 7% of the global GDP, they simply can’t go spending shareholders money without clear rationale.
PC: There is a big distinction to be made between F1 and the rest of motorsports. F1 has its own rules, values etc. but there is a paper from Jensen and Cobbs, 2014 who has developed a model on Return on Investment in Formula 1 – it goes through the mathematics, financing etc. but at the end it says most of the F1 sponsors spend more money than what they have made out of the sponsorship.
What I always say to prospective sponsors is the key word “NETWORKING”. I promise you, you're going to have a stage and have 3 days of undivided attention for your peers or from potential client or supplier and in an emotional environment you are going to be able to talk about business and in the end this was for me the main reasons why people should get into motorsport.
DC: For me quantity is important but also it depends on the value of what I'm selling so it's not a tangible object. It is an experience that I'm selling. I’ve noticed that more people are interested in top of the line items – things that are priced similarly to paddock club in the $4000+ range or just General Admission; there's been a drop off in the middle at least at the Circuit of the Americas for me personally. That's something very interesting and I think it's just difficult to measure ROI on a passion experience which is why you see a lot of people do experiential marketing which is great but you can't always measure every return on people's experiences. In fact, it is something I'm interested in studying a lot more because I’ve been watching it for a while now and clearly there are several businesses set up for the purposes of measuring ROI in these sports so it's very interesting for me.
CJ: There is some really interesting stuff particular to F1 that comes out Repucom and Nigel Geach. One of the interesting things we talked about when I launched Chicane, we talked about attitudes toward the brand. It is fairly likely that in a B2C situation that a F1 fan is more likely to buy a F1 sponsors’ brand than a non-sponsor but more importantly it doesn't happen in other sports. There is an interesting company called YOTA that has a lot of interesting technology but no-one knows about them. Formula 1 is their way of getting everyone to see that they are global, not just Russian. So although it may not lead to more sales, it does a lot to change attitudes and awareness towards their brand.
Qualcomm is another really good case study because they are involved in two series (FormulaE and now Formula1). Why did they feel the need to get involved in F1? Principally because they wanted to activate in key markets and they wanted to globalise what they do so as to not stay too niche.