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Arindam Chaudhuri, Editor-in-Chief, 4Ps B&M Chief Consulting Editor's Desk
Rajita Chaudhuri
K.K.Srivastava Guest Column
Rajita Chaudhuri
The Chief Consulting Editor's Desk
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Move over cricket, here come the cars

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We are a nation that lives and breathes cricket, yet many feel that they are now getting an overdose of it. The 15-20 year olds today do not identify so much with cricket. They want something different, something fast and something trendy. Formula One seems to be the answer.

Cars vs cricket for sponsors

Kingfisher went ballistic with the promotions of its beer at the Indian Grand Prix held in Noida last month. Airtel was the title sponsor of the event. It ended its sponsorship of the Champions League Twenty-20 cricket even before the three-year deal ended. For a nation that is obsessed with cricket and for a sport that dominates advertising in India, when a big sponsor like Airtel backs out, is it an indication that things are changing? Is cricket facing boredom? Is there oversaturation of cricket? Perhaps. Think about it, Neo Sports, the official broadcaster of the India-West Indies series gave a 40-60% discount for a 10 second ad spot; add to that the falling viewership rating of the sport and you have your answer. Today, advertisers are looking for big sports properties other than cricket. Agreed, cricket was and will remain a religion in India, but the youth wants something more, and F1 is the sport that’s fashionable to follow and appeals to the young and restless.

In spite of initial scepticism, the inaugural Formula One race was a success. To the surprise of many, the 3-day event drew a crowd of 95,000 spectators on race day.

Formula for success

When it comes to sports, India has never really left a lasting impression. Except for cricket, there is hardly any other sport where it stands out. When it comes to international sporting events, then most often we have been left red-faced. Take the Commonwealth Games for instance, which generated a lot of bad publicity for India, and showed us in shoddy light. In contrast, the inaugural F1 race was loved by all. Finally, an international event was executed flawlessly by India. With only private players and with no government support, the event did well.

It makes complete business sense to be a part of the Formula One event. It offers global reach to both sponsors and fans alike. F1 is a far more lucrative sport than cricket. It has a reach that is much wider than cricket. The Indian Grand Prix was telecasted to 550 million viewers in 200 countries. It provides a global platform to brands, which events like T20 cricket fail to do. Consider this, there is zero audience for cricket in major economies like France, Germany, Italy, Brazil and Russia. At the end of the day, it is imperative for any sport to reach out to more people and F1 has that mass appeal.

Today, growth in businesses is going to come from emerging market like Brazil, China etc, and cricket does not excite many of them. If a global sponsor has to reach them, he needs a sport like F1 with a more global appeal. Indian companies are going global too. Many of our home-grown brands are growing fast and becoming big players in the new emerging markets.

Bagging the ‘title’ sponsorship was definitely a big deal for Airtel. For a game like Formula One, where team title sponsorships are rarely available, this was a golden opportunity for Airtel. Being the title sponsor gives one the maximum branding presence. The advantages are huge. Petronas, the international oil and gas corporation, last year renewed its title sponsorship of the Malaysian round of the Formula One and will hold the rights till 2015. In fact, this year the championship will be known as the ‘Petronas Malaysia Grand Prix’ (just as the Indian one is known as the Airtel Grand Prix). Not only will the event give Petronas huge visibility and global appeal, but will position Malaysia as a major motorsport hub and tourist destination.

In fact, that is why it is so difficult to get the title sponsorship, and it is usually contracted for a minimum of five years. The big title sponsors of Formula One have been, Vodafone, Renault, Virgin, DHL, Etihad Airways and Red Bull.

Red Bull in fact is an interesting case study. The sports drink manufacturer has spent more than $600 million in the last five years on F1 sponsorships and has its logo emblazoned on two teams’ cars. It was worth the money and effort for last year Red Bull received more than four hours of ‘free’ television airtime during the first fifteen F1 races. No one even came close to that amount of coverage save LG (LG incidentally did not invest much in cricket in India this festive season in spite of being a key player in IPL 4). More than being seen, it’s also important to be seen in the right places and F1 is ‘the’ place to be seen at for everybody. No wonder the US company Gulf Oil, which believes in being at the right place at the right time, decided to make its presence felt at the Indian F1 too.

F1 is bigger in all terms. Be it the money involved, the viewership, or even the duration of the event , it beats all sports including cricket or football. Many sports events finish in a day. F1 is a three day event where the biggest of sponsors, the biggest of companies and the biggest of business leaders hobnob. It’s a sport of big monies. Delta 3 is a company that receives all its revenues from fees that TV stations pay to screen F1 as well as the fees paid by circuits and sponsors of the sport. Despite facing the worst recession in living memory, in 2009, Delta 3 saw its revenues grow 6.4% to a record of $1.1billion. Bernie Ecclestone the founder of F1 and the CEO of Delta 3’s ultimate owner Delta Topco sure knows what will work and he definitely has a winner in his hands.

F1 needs Asia

However, with Europe reaching its saturation, with France backing out from the GP, Bernie needs a new and thriving market. Add to this the fact that UK has abolished tobacco advertising, along with the European Union , that has banned tobacco companies from sponsoring or advertising within sporting events, leaving Marlboro (from the Philip Morris International group), one of the biggest sponsors of F1, looking for new places to advertise. In fact, Marlboro had to remove its logo from the F1 Ferrari cars due to this ban. However, so high is the advantage of being associated with this sport that neither Ferrari nor Marlboro want to end their association. So they have found a new way to get out of this tricky situation. The Ferrari cars now do not (or rather cannot) carry the Marlboro logo but they now carry a ‘bar code’ design which is exactly like the bottom of the Marlboro cigarette pack! The team, after all, has a contract with Marlboro till 2011 worth a total of $1 billion and the team’s official name even now is “Scuderia Ferrari Marlboro”. Seems like a tough association to break.
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