SBJ/March 5 - 11, 2007/This Weeks News

Shell vs. Sunoco: Fuel on the fire

Shell/Pennzoil is standing its ground in its turf war with Sunoco, saying that while it changed the markings on NASCAR driver Kevin Harvick’s suit, it won’t change a $30 million campaign tied to its sponsorship with Richard Childress Racing. Sunoco, meanwhile, continues to argue that its competitor is encroaching on its exclusive rights as the official fuel of NASCAR.

Harvick’s suit changed in California, but
the disagreement between Shell/Pennzoil
and Sunoco remains.

While the buzz surrounding the Shell-Sunoco feud dissipated after the Feb. 25 Nextel Cup race at California Speedway, where Harvick donned a new fire suit with Pennzoil lettering instead of just a large Shell logo, the companies remain at odds about Shell’s activation, both at retail and through its mobile marketing unit.

Sunoco, which is four years into its 10-year, $100 million deal with NASCAR, says Shell is treading on its territory by associating Harvick with the gas brand as opposed to its motor oil brand, Pennzoil.

Today, as part of its yearlong plan to promote its gas quality, Shell is scheduled to launch a television ad on ESPN, CNN, MSNBC and a variety of other networks that depicts Harvick driving with Shell lab technicians. The commercial concludes with Shell’s slogan “Made to move” and “Kevin Harvick and Shell” scrolling across the screen.

“We’re still trying to understand the need for permanent change,” said Kevin Ilges, Shell’s sponsorship director. “Everything we’ve done has been within the parameters given to us by NASCAR. As we put this program together, we were in conversation with NASCAR.”

Other than confirming that NASCAR is working to resolve the issue with both sponsors, the sanctioning body had no comment. Sources say that NASCAR President Mike Helton is working directly with Childress on how Shell presents its sponsorship.

Sponsor flaps are nothing new, especially in NASCAR, where sponsorships are sold by the sanctioning body, by teams and by tracks. In 2004, driver Jimmie Johnson was fined $10,000 because he covered up Powerade bottles in victory lane to protect a competing sponsor. Powerade had official status in victory lane.

Often, sponsor spats are resolved behind closed doors, but there are occasions when they become public and sometimes wind up in court, said Hill Carrow, CEO of Sports & Properties Inc., a consultancy that handles everything from marketing to naming rights.

Kevin Harvick wore the Shell logo for his Daytona
500 victory. In California it was still there, but the
name of motor oil Pennzoil had been added.

And with Shell in the early stages of a $30 million campaign around its sponsorship, this instance presents a rare feud over long-range creative involving retail and a traveling unit.

“You’ve had State Farm and Hartford as NCAA partners, the NFL has different apparel providers, you had Visa and MasterCard at the World Cup involved in lawsuits, so I wouldn’t say it’s exclusive to NASCAR,” Carrow said. “I’ve seen situations where a sales guy sold one thing and then when you see the contract, you say, ‘No, you can’t do that.’”

The flap between Shell and Sunoco reached a boiling point at the Feb. 18 Daytona 500, which was won by Harvick in a fire suit with Shell markings and lettering. Sunoco complained to NASCAR that the RCR sponsorship was sold in the motor oil category and that the Shell lettering on the fire suit breached Sunoco’s exclusivity in the fuel category. Pennzoil lettering replaced Shell at California Speedway.

Malcolm Turner, a senior vice president at OnSport with an extensive background in contract negotiations, wondered if there was a breakdown in communication at the league level or the team level. Or if there was a different motive.

“Was it a situation where it was easier to ask for forgiveness (after the Daytona 500), or was someone asleep at the switch?” Turner said.

“In this environment, where you have sponsorships through the league, through teams, through tracks, it certainly creates the potential for this kind of conflict and it calls for greater vigilance. There’s always going to be gray areas, and the optimal solution is to work through these situations by communicating.”

A TV ad in which Harvick drives
with Shell technicians is scheduled
to debut today.

NASCAR intervened before the Feb. 25 race at California Speedway, where Shell officials said they were told to change the lettering on Harvick’s suit to Pennzoil and to shrink the size of the Shell logo. Shell complied, but not without making it clear that it would carry on with its marketing plans.

Central to Shell’s activation is a program called “Passionate Experts,” a yearlong program designed to educate consumers on gas quality. It launched the week before the Daytona 500 with an interactive mobile marketing unit in the parking lot of a popular restaurant/bar across the street from the speedway.

The unit, which will visit a handful of NASCAR races during a 15-city tour in the coming months, must remain outside the speedways because of Sunoco’s rights.

“Sunoco has everything inside the track,” said Karen Wildman, Shell’s brand manager. “We’re very careful to respect that. We’ve worked closely with NASCAR and RCR to do everything the right way.

“We think we can be very effective outside the track. You’re probably a little more effective activating inside the track, but we’re still going to be very impactful with what we’re doing. You’ll see a lot of other vendors in the same area. A lot of sponsors have run very effective campaigns outside the track.”

Inside the mobile marketing unit, consumers are invited to “Be a star” by shooting a mock commercial with a virtual image of Harvick. The final product is uploaded to YouTube.com, where consumers can access it when they get home. The idea was created by Shell’s experiential marketing agency, The Kerry Group, St. Louis.

Wildman said Shell hopes to reach 2 million consumers through the unit. The ultimate goal is to convince consumers that Shell’s gas is higher in quality than the competition’s, which is exactly what has irked Sunoco.

Shell also has placed point-of-purchase materials, including life-sized, talking Harvick cut-outs, at retail sites. To celebrate its Daytona 500 win, Shell also plans to roll out championship merchandise and signage.

Sunoco maintains that Shell’s efforts to associate Harvick with the fuel brand violate its agreement with NASCAR.

“We think that’s a problem,” said Cynthia Archer, Sunoco’s vice president of marketing. “We’re confident NASCAR will sort out who is entitled to do what.”

Officials at three other NASCAR teams confirmed that their sponsors in the gas category — Marathon, Exxon and Texaco — are required to market an affiliate brand, usually lubricants, not the gas brand.

“In a situation like this, NASCAR doesn’t just have to look out for Sunoco, but also three other sponsors,” Carrow said.

What remains to be seen is how NASCAR and Sunoco will react to the activation Shell has planned.

“NASCAR has assured us that every team knows the guideline in regard to promoting the fuel brand,” Archer said. “You can’t do that. That’s been known for a long time.

“We’ve been aware of (Shell’s retail activation) and NASCAR has been aware of it. We’re simply working through NASCAR on this and our impression is that NASCAR is working to enforce the rules.

“The community works a lot better when everyone abides by the letter and spirit of the agreement.”

Sunoco, as NASCAR’s official fuel, supplies gas in the Nextel Cup, Busch and Craftsman Truck series at no cost to the teams.

Sunoco also has offered research-and-development support as NASCAR considers alternative fuels. NASCAR ran its first Cup race with unleaded fuel at California Speedway.

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