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AOL will pay $8 million to $9 million to occupy the primary position on Jeff Green’s car. |
The whiz-bang marketers at America Online have developed a straightforward way of analyzing the return on their investment in a NASCAR Winston Cup team this year.
Though they won't discuss the specifics publicly, it goes something like this: Calculate how many NASCAR fans sign up for AOL this year. Multiply that by $288, which is the typical annual fee for unlimited AOL use. Add in the e-commerce AOL generates thanks to its NASCAR-happy new users, the fees that NASCAR fans will pay for the broadband access they'll need to watch customized race coverage, and the advertising revenue bump that AOL subsidiary Turner will collect if AOL can drive its members to NASCAR telecasts.
If the take is more than AOL spent on the sponsorship — estimated to be between $8 million and $9 million per year for the primary position on a car owned by Richard Childress and driven by Jeff Green — it will deem the program a success.
"We did the sponsorship to gain new subscribers," said Jimmy Lynn, who as director of account services for AOL Sports oversees the company's NASCAR sponsorship. "If we do that, we're doing the job."
For all the investment that AOL Time Warner has put into NASCAR broadcast rights and Internet rights, the additional expense of a race team was not an automatic spend, particularly with the parent company coming off losses of $4.9 billion last year and AOL stock recently hitting a three-year low.
NASCAR provides programming for Time Warner unit Turner Sports, which shares the second half of the Winston Cup schedule with NBC. And with more than 1 billion page views and a 34 percent increase in unique users last year, nascar.com generates enough traffic to make business sense on its own.
AOL gets its share of visibility on NASCAR telecasts through "AOL Keyword" mentions without spending millions to slap its already recognizable logo on a car.
So who needs an $8 million a year billboard circling the track?
As Lynn saw it, there still was something missing: a more direct connection between America Online and fans. As he heard others hail NASCAR consumers for their brand loyalty, Lynn considered how that might translate for AOL. The service already was investing heavily in sports in an effort to latch on to 18- to 34-year-old males, an elusive market sought by many advertisers.
A closer look at NASCAR's fan demographics revealed an attractive match.
"It showed that there are a lot of NASCAR fans that aren't on AOL yet," said Lynn. "What we already had was great, but having the car out there is that much more of a connection to market AOL to those fans.
"NASCAR fans connect with the drivers. And once they connect, they're loyal. We believe that people will sign on to AOL because of the car and because of Jeff Green."
Because AOL collects so much about its customers and their preferences, it figures to have a better chance than most companies at quantifying whether the sponsorship results in new business.
NASCAR fans already have proven to be a valuable online audience. The most ardent NASCAR fans spent one hour a week following the sport via the Internet last season, an increase of 150 percent over the time they spent following stock car racing online in 2000, according to a brand study NASCAR commissioned through Edgar Dunn Co. And that block of hard-core fans is substantial. NASCAR says 40 percent of its 30 million fans fit into that group.
That group, which NASCAR calls its "true believers," spends an average of 9.3 hours per person following NASCAR on TV, radio, print and the Internet each week.
With so many of its communication avenues tied into one company, NASCAR believes it has the opportunity to benefit from cross-promotion more than other sports.
"They definitely cross-promoted very effectively between TNT, the AOL system and nascar.com last year," said Paul Brooks, NASCAR's vice president of broadcasting. "And then AOL did a lot at all the tracks, on-site promoting to the fans.
"They're an incredible global brand and company that has an incredible amount of assets and resources. To have so many of their assets touch our sport is a huge plus. Whether it's TNT or nascar.com or their involvement with the teams and tracks, there are so many elements where they can promote themselves and we can promote ourselves through them. We've really only begun to scratch the surface."
Like many companies, AOL began its NASCAR partnership conservatively last year, signing on to sponsor a Richard Childress-owned entry in seven Winston Cup events last season. The car was meant to be a training ground for Kevin Harvick, a promising and colorful talent who was to drive a full Busch schedule last season in preparation for his first full Winston Cup season with AOL this year. But, after Dale Earnhardt was killed at Daytona, Childress Racing turned to Harvick to replace Earnhardt in Winston Cup.
That left AOL with Green, who had won the Busch series championship in 2000 but lacked Harvick's flair. After watching Green handle the car for two races last year, AOL committed to him as Harvick's replacement.
"We were looking forward to a relationship with [Harvick]," Lynn said. "But Childress had to deal with a tragedy and make some moves as a result of it. We wanted to be a good partner. Richard says this kid Green is good and we have confidence in his judgment."
AOL also has confidence in its marketing strategy, thanks in large part to what it saw during its time on the circuit last year, when it hit the NASCAR scene with a 40-by-60-foot "mobile marketing unit" equipped with 42 computers on which fans could sample AOL.
To drive consumers to the truck, AOL followed the route of most NASCAR sponsors, parking Green in front of it for autograph sessions each week.
"That's the thing that's so unique about NASCAR that makes it work ," Lynn said. "Can you imagine doing that with the NBA or NFL? You couldn't do it."
AOL is banking on turning that loyalty and connection into new subscribers who gravitate to AOL because it brings them closer not only to NASCAR, but to other NASCAR fans.
On his first trip to a race last year, Lynn was struck by the miniature city that sprung up around the track. His mind began to percolate with possibilities. Lynn envisions NASCAR fans chatting between races, making travel plans and buying merchandise, all through AOL.
"Community is what AOL is built on," Lynn said. "It's one of our key differentiators: the community angle, with the message boards and chats and how people interact. And that's what NASCAR brings. NASCAR fans are a community."
