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Becoming a sponsor of Michael Waltrip Racing’s Sprint Cup Series team in '12 helped 5-Hour Energy generate close to $30M in retail sales. The deal allowed the company to get major displays in Walmart, and create a program in which retailers were able to place their logo on the 5-Hour Energy car’s deck lid in exchange for prominent displays of 5-Hour Energy in their retail outlets. That allowed the company to justify its more than $10M sponsorship of the car and team. Speaking at the ’12 Motorsports Marketing Forum, 5-Hour Energy President & COO Scott Henderson said, “This is probably the second biggest spend outside of our general TV advertising. It’s a big deal to us.”
According to research firm Joyce Julius, 5-Hour Energy got more than $200M of media exposure, and that was about double their entire media budget for the year. Henderson: “Even if you put a fudge factor on there and cut it by 10 percent or something, it’s definitely worth it.”
5-Hour Energy got its start in NASCAR in ‘08 after getting a call from Rusty Wallace Racing. The company started with four races in the Nationwide Series and added four more races later in the season. It expanded to a full season in ‘09, added hospitality events in ‘10 and ‘11 and then signed a Sprint Cup sponsorship with Michael Waltrip Racing before the ‘12 season.
The company took a different approach to sponsorship than most brands. Rather than choosing a team, it chose a driver in Clint Bowyer and followed him from Richard Childress Racing to Michael Waltrip Racing.
Living Essentials Exec VP/Sales Risé Meguiar, whose company makes 5-Hour Energy, said, “We didn’t want a logo just to be slapped on a car. The driver selection was very important. The main thing was they had to believe in the product, be an advocate for the product and use the product.”
5-Hour Energy did a single ad for the year that showed Bowyer doing a range of activities, from bow hunting to riding a motorcycle to riding a jet ski.
Henderson said, “One of the things we learned for next year is we need to shoot a couple of extra (commercials). You get limited days with your talent so we have to work that out.”
The company also did four paint schemes in October to raise breast cancer awareness and promoted a special product that raised more than $350,000 for the Avon Foundation for Women’s Breast Cancer Crusade. Henderson: “All of those things were really good and they helped us sell more product. NASCAR was really helpful to us moving more product in that way.”
NASCAR Driver Brad Keselowski’s spontaneous celebration drinking Miller Lite after winning the Sprint Cup Series was one of the most talked about “moments” in motorsports during a sponsorship panel at the ’12 Motorsports Marketing Forum. MillerCoors Dir of Sports & Entertainment Marketing Adam Dettman, when asked if Miller Lite had any concerns about Keselowski drinking after driving the Homestead track, said, “He’s celebrating a championship. It’s a natural ‘Miller Time’ moment. We want him to be genuine.”
Dettman added this was one of the elements that made Keselowski a perfect driver for the brand. He said, “First and foremost is brand fit for Miller Lite. Authenticity is key to that brand fit. And Brad had that. We spotted that early. On-track performance is also going to be critical for us. And trying to identify with the millennial generation is also key to our brand, and we have that with Brad.”
Most of the panel felt Keselowski’s moment was a genuine brand fit, but that it might not work for all brands. Subway Dir of Sports Marketing, PR & Partnerships Paul Bamundo said, “It’s brand dependent. We’re a family brand, so it may not be a fit for us. But it’s going to depend on what you brand it.”
Clements said Mars wants to engage fans at home
Nationwide Insurance Strategic Sponsorship Dir Jim McCoy said, “TV ratings are important for the Nationwide Series. Our brand getting out there to as many folks as possible is important, so television viewership is a key indicator.” Nationwide is reviewing a renewal of its title sponsorship of the Nationwide Series, and McCoy said that no one data point will drive that decision. McCoy: “We will look at a lot of different factors, but the sport is a great fit for our brand and our customer.”
-- Bamundo, on targeting the right driver for the brand: “It starts, with us, to the driver being a true fan of the brand. But it also has to do with on-track performance, and then the ability to carry across the messaging. The ability to carry our messaging across all platforms is very important to us.”
-- Clements, asked if he would be insulted if a driver didn’t mention the M&M brand after getting out of the car, said, “Yes. It’s a personal thing. The great thing about NASCAR is the sport truly builds on relationships. So the acknowledgement is a thank you to the folks back home, if you will, the people who are putting the logos on the car and doing all the little work. Kyle Busch really does get this and truly understands that it’s a true 'thank you' to the brand and his fans.”
Three top motorsports team execs stressed the importance of winning and top performance in managing a successful operation in today’s challenging marketplace. Speaking for more than 45 minutes at the '12 Motorsports Marketing Forum, leaders from Joe Gibbs Racing, Richard Childress Racing and Hendrick Motorsports discussed the day-to-day challenges they face.
When an audience survey suggested that obtaining sponsorship support would be the biggest challenge, Joe Gibbs Racing President J.D. Gibbs pointed instead to performance. He said, “Week in and week out if you’re not performing well, the sponsors become a moot point. So if you have that good performance, then you can go out to your partners and tell a better story. You have to perform, if you don’t perform, you won’t get the right sponsors.” Hendrick Motorsports President & COO Marshall Carlson agreed. Carlson said, “The partners who are involved in this sport want to perform and want to run strong. When you run strong, that trickles down to attracting drivers and crew members.”
But the focus on obtaining sponsorships is still a large part of the top execs’ duties and for Gibbs, he said it all comes back to showing value. Gibbs: “You have to show sponsors why this is a good investment. One of the things my dad [Joe Gibbs] still talks about is that in the NFL, you can’t get near the coaches or the players. Here, people get autographs before the Daytona 500. That’s really valuable.” Carlson stressed that despite perception, there are still sponsors aligning their brands with motorsports. Carlson said, “We have signed up Farmers Insurance, Time Warner Cable and Great Clips. We’ve got big companies investing in this sport, in a big way, now. We have all had to become more advanced marketers than just race team operators. We’ve had to learn the language of the sponsors and we’ve had to service them better. Now we have to support these very segmented targets these sponsors are looking to reach. We are having to get better at that, just like improving at the race track.”
Carlson gave examples of how teams have to be more sophisticated marketers. He said, “We are doing a whole lot more tailored and customized programs than ever before. So if a brand doesn’t find TV advertising is important to them, then they don’t need the production days. Maybe they want more on-site visits. So we’re doing much more customized programs and that’s increased the value and it’s driving a lot of innovation in the sport.” But RCR VP/Competition Mike Dillon acknowledged sponsors still hold the leverage today. Dillon: “Sponsors control the show today. They can wait on any deal.”
Carlson believes legislating team cost containment
NO FANS OF COST CONTAINMENT: While many have called on NASCAR to take a more active role in reducing costs for teams, the three execs didn’t see that as practical. Carlson said, “You can’t legislate cost containment very well.” Dillon pointed to the fact that teams will spend whatever they are allowed to in order to win. He said, “If the cars all cost the same, if we all spent the same amount of money, we’re always going to spend everything they allow us to spend toward racing. Gibbs added, “As time goes on, you’re going to spend whatever you can to go fast.” But there was praise for NASCAR for taking a more active approach in sharing research and best practices with teams. Carlson said, “NASCAR is really leading from the front now,” We are having more collaborative meetings with other teams and NASCAR today -- and in the last two years -- than in all the other years before that. I have been very impressed with that. That’s a real seminal change that [NASCAR Chair & CEO] Brian France envisioned.”
-- Gibbs, on working with his father, the legendary football coach: “When I get in an argument with my dad, he’ll pull me aside and say, ‘Whose name is on the building?’ And I’m like, ‘I get it, Dad. I get it.’ We don’t always agree, but we always come to a consensus.”
-- Carlson, on NASCAR’s TV ratings: “I think some of the flux in our numbers gets over-analyzed. Live sporting events carry a lot of weight today.”
-- Dillon, on if he would support a salary cap on drivers: “There is a cap at RCR! They told me not to answer some of these and I don’t want to answer that!” Gibbs: “That would be hard. Who’s going to do it and how would you do it? That’s going to be too hard.”
Ogilvy & Mather North America Chair & CEO John Seifert, the keynote speaker at the ’12 Motorsports Marketing Forum said the key to brand success in today’s world of social media is authenticity, not smart marketing or clever creative.
Seifert said, “Tricks are over. It’s going to be about what you do, who you are, what you believe and how you operate. That is going to be the way you build your brands going forward.”
He pointed to Apple’s success and the work of the late Steve Jobs as an example. Seifert said Jobs built a culture, and it was a culture where “everyone understood what their purpose was, what they believed, what they thought was good.” That allowed all of Apple’s employees to design and market products that fulfilled the company’s mission and drove them to the success that Apple continues to enjoy today.
Seifert recommended that everyone read two memos written by communications and branding experts. He said the first, “Authentic Enterprise,” was published in ‘07, and “the central truth of it is that if you’re in the communications biz, forget about changing perceptions. Change reality.” The second, “Building Belief: A New Model for Activating Corporate Character and Authentic Advocacy,” was published this year and provides a playbook for how a company can achieve authenticity. Seifert: “The best companies ... create value for society, solve the world’s problems, and they make money, too.”
Seifert highlighted P&G’s work on the Olympics and its “Thank You, Mom” campaign as an example of a company that developed an authentic mission -- making products that improve people’s lives -- and incorporated that into a brand message that it conveyed through a sports platform. He also pointed to IBM’s “Smarter Planet” campaign. He closed by offering recommendations for brands that want to achieve success and be authentic:
1. “Have a point of view. The most powerful thing you can do now in brand building is know what you believe in and have a point of view that’s bigger than yourself.”
2. “It’s about showing and telling. Don’t call up Ogilvy & Mather or any other advertising agency and say, ‘Let’s just go do print ads and TV commercials.’ This is about what experience are you creating, what engagement are you building and what makes people believe you based on how you operate and perform.”
3. “That leads to engagement. No one is out of your target audience now. And your target audience is everyone. It starts with your employees and goes to everyone else you can do business with.”
4. “It’s an ecosystem. One of the reasons I was so excited to be part of the NASCAR process was you are thinking in the largest context of what makes your brand. You’re not saying, ‘Oh we’re just an organizing body that makes rules for a sport.’ You’re thinking about everyone in it and everyone’s role in it. That is an incredibly progressive way of thinking of how you’re going to build this brand in the future.”
5. “Finally, it’s about content and how you manage that content and distribute in this new age when your audience has all the choices.”
6. “It’s about not just building value for yourself. This is also about the value you can build for others.”
Track operators know they need to provide fans with better mobile connectivity at their facilities, but they are wrestling with the costs and the complexity of making the facility upgrades to deliver it.
Las Vegas Motor Speedway President Chris Powell said, “Ultimately, we’re going to pay for it, and our company is working towards that now.” He acknowledged that connectivity was becoming a necessity for fans. Bristol Motor Speedway Exec VP & GM Jerry Caldwell added, “The biggest challenge is finding what the real answer is before you spend money on something that’s not the real solution and waste millions and millions of dollars.”
Pocono Raceway President & CEO Brandon Igdalsky agreed that paying for it is not simple. He said that tracks not only have to find someone to provide the service, but they have to work with telecommunications companies to deliver the wiring to the track. The plan at Pocono, a 2.5-mile track, is to improve connectivity in sections. He said, “Every little piece is going to help. You can’t get to the end goal if you don’t do all the little things that add up.”
Indianapolis Motor Speedway Senior VP, Chief Strategy Officer & CMO Mike Redlick said the track is finalizing a partnership with a distributed antenna system that will boost cell service during races. He said, “It’s not going to be any expense to us. It’s going to be a carrier-neutral solution.”
But that is not the only issue tracks are facing. They still hear complaints from fans about the traffic leaving races, and they also are trying to upgrade certain areas of their facilities and improve hospitality.
Caldwell said that Las Vegas Motor Speedway also has plans to convert some existing seats in its lower bowl into corporate hospitality areas where companies can host smaller groups of clients than they would in a suite. Caldwell: “We’ve had success with a lot of the individual premium options. The haves … are willing to spend the money, but they want to change it up and not do the same thing year after year.”