Caveat Emptor for the next promoter of the FIA World Rally Championships  !!
Lessons from Formula 1

Photo by Tim Barkey

I picked up the in flight BA Business Life magazine last week and there was a cracking article about Formula 1, its financials, stock market flotation and how Bernie has created an undeniably amazing brand with impressive future growth potential.
Credit where it is due, the article was entitled "I'm, Bernie, buy me" and was by Christian Sylt and Caroline Reid. Have a read because it is fascinating: http://www.babusinesslife.com/Tools/Features/Formula-One-the-big-sell-off.html

Photo by Tim Barkey

In essence World Rally Championships (WRC) has been in a pile of the proverbial from every perspective since North One Sport (NOS) had their contract rescinded by the FIA in January 2012; not that North One Sport made any money from being the promoter with a £2m reported loss in 2011, and not that NOS was the holy grail for WRC. The FIA have yet to announce a new promoter currently saying that an appointment will be made no later than September's World Motorsport Council Meeting. 


Many comments have been made, one most notably by Gerard Quinn (@WRCgerardquinn) of Ford WRC in Autosport magazine calling WRC, "a sinking ship", and that September is far too late to appoint a promoter. I agree totally. The sport has been knocked back by 2-5 years and it will take a significant change to re-establish itself. Gerard says "The WRC is a great sport but it needs to be run like a business." 




Now I know I am not exactly being fair by comparing F1 to WRC but the business model need not be dissimilar, nor the learnings, irregardless of the scale of each brand and the massive income from F1.

"According to F1 industry monitor Formula Money, the sport's Jersey-based holding company, Delta Topco, had a turnover of $1.6bn in 2010, with race hosting fees being the biggest single source of revenue at $567.5m. This was followed by $470m from the sale of television rights, $243m from trackside advertising, $153.5m from corporate hospitality, $90.5m from sponsorship and $62.5m from other sources"

Formula One generates around $500m a year in profits and is a truly global sport with South Korea joining in 2010, India in 2011 and in 2014 the first Russian race will take place. Next on the calendar will be South Africa and Mexico, with Argentina and Thailand. 


F1 has 20 races with a fee paid by the host of up to £30m per race. No need to do the maths but this sum alone would run WRC for several years! 




The WRC has 9 teams and 4 major manufacturers rallying in 13 races globally - Ford, Citroen, MINI and VW, with VW not running a full season with their ex Citroen driver Sebastien Ogier.


NOS as promoter received zero cash from each race on the calendar and actually used to pay each local promoter a fee to have their inventory on site!

In fact each of the 13 WRC events are run at the individual promoters risk, although they receive ticket sales from fans, charge the teams for their service park space etc. Hospitality was run by NOS but agreed with each event who also sold hospitality!!


The FIA recently sent a memo to the 13 WRC race organisers imposing a race fee of £100,000 to stage WRC in their respective countries, whereupon the race organisers told the FIA where to go.


The sport is in such disarray that each individual rally promoter charges the teams different fees for space at each rally. On top of this not every event has a service park or "hub" for fans to see the cars and drivers and soak up the rally atmosphere. It also doesn't help for monetising the brand that as a sport rallying is run in remote locations in forests and mountains. This makes the races hard to access, hard to create a brand and hard for new and exisiting fans to see.


Since Jean Todt wants to have longer, more extreme rallies for the future, this means even more "remote" service parks which will hinder brand development.


F1 on the other hand is track based in glamorous locations and has the superbly exclusive and glamorous Paddock Club with a 3 day ticket selling for about £4,844. The estimated revenue for Paddock Club alone for 2012 is £190m -  a sum that would keep WRC running for 20 years.


However what is stopping WRC from being more city-centre based, creating rally exhibitions, rally expos, and being closer to major cities?! Barcelona actually features in the season finale this year...hurrah!




WRC's issues are several:
The sport is disorganised and sponsors have now left the "sinking ship" - only Michelin and Edox remain. No sponsor will join with the sport in current disarray, and quite frankly even if a promoter joins in September you may as well write off 2013 and most of 2014.


TV broadcast needs to be in both terrestrial and pay per view - look at F1's success with Sky HD and the BBC. NOS was due to broadcast key stages of virtually all 2012 rallies live, and initially free, on the internet for the fans. This would have been incorporated into a new website with lots of new fan-centric information.


WRC is not a global sport - of the 13 rallies 10 are in Europe, 2 in S.America, 1 in New Zealand/Australia. This limits the audience, fans and reach, more importantly the manufacturers to sell cars in new regions which in turns limits the WRC brand. The virtuous circle is not virtuous, but vicious...in some cases quite literally!


The FIA also has a lot of the rights tied up in an extensive contract that ultimately inhibits the sport for the promoter, the FIA themselves, and as a consequence the teams and the manufacturers. Given the FIA's loss of control over rights with F1 they are seemingly reluctant to hand over rights for WRC without lengthy legal contracts.


Fan insight - there is little understanding about who the fan is, what they love about the sport, and how this varies by region. No insight = no way to write a strategy. No strategy = no viable sport business.






WRC is an amazing sport with drivers pitting their wits and courage against the clock, the changing environments of snow, ice, gravel and tarmac and against each other. It is an epic motor sport adventure truly waiting to be unlocked.


However any sport that limits its commercial and brand exploitation with lengthy legal contracts, over-protectiveness of rights, under-utilisation of potential rights and lack of understanding of the end fan, will limit the growth of the sport for the short, medium and long term. Good luck to the next promoter of the FIA World Rally Championships, and very sincerely good luck to the teams and manufacturers - WRC is a superbly exciting sport.

Grumpy Guide to the XXXth Olympiad !

So I have just received a large parcel from the postie -  my Olympics tickets...hurrah!!! 

Well, all 2 of them for the hockey in the Riverbank arena in the Olympic Park that I received on the third purchase attempt. On the ticket it says that we are in the disabled area - I have no problem with that but it just seems a bit bizarre...probably due to the fact that the tickets were printed 6 months ago in Arkansas and then air freighted 4,500 miles to the UK; then a further £6 to send to me. Another multi million pound deal awarded to British companies by LOCOG.

Oh, and of course I can't take my 9 month old son to see the London Olympics because babies have to have their own ticket....not that it was hard enough getting 2 tickets!

Then I popped to the Official Olympic store in St.Pancras station and bought my "2 for £10" pin badges sourced from... China....bargain. I don't really think I will be buying much more Olympic merchandise, except maybe one of the limited edition (only 2,012) Team GB Olympic "reflection paperweights" for £70.

Of course I will go and see the free cycling in and around South London though, because, it's free...not that I can post any pictures to my social networking sites since LOCOG has ruled that the sights and sounds of the games cannot be uploaded to sites such as facebook, Twitter and YouTube. I am probably not even legally permitted to post this photo above!! 

A Locog spokeswoman has said: "Images, video and sound recordings of the Games taken by a ticket holder (or, the Advertiser understands, roadside viewers in non-ticketed areas) can only be used for private purposes."

"In addition a ticket holder may not license, broadcast or publish video and/or sound recordings, including on social networking websites and the internet more generally, and may not exploit images, video and/or sound recordings for commercial purposes under any circumstances, whether on the internet or otherwise, or make them available to third parties for commercial purposes."

I also can't wait for Danny Boyle's, £27m opening ceremony show, entitled "Isles of Wonder", as another golden opportunity to whinge along with animal rights campaigners!!

It will feature 100 farmyard animals set in a "green and pleasant land", with cricketers playing on a village green and ploughs tilling the fields in a three-hour show that will include: 12 horses, 3 cows, 2 goats, 10 chickens, 10 ducks, 9 geese, 70 sheep and 3 sheep dogs, a few cricketers and farmers.

Hey, at least I received 2 free travel cards to get to the Olympic Park! Roll on 27 July and the hockey and my Maccy D's and Coke.

SPORTS MARKETING IS PANTS !

Sorry I just couldn't resist this one especially as this happened at the Euros and England are still in with a shout!

Nicklas Bendtner has been given a slap on the wrist by the Danish FA and is potentially due another from UEFA for displaying his Paddy Power lucky pants as he celebrated his second goal against Portugal a few days ago. Unfortunately UEFA regulations ban any advertising on players' kits during the tournament, the Danish FA are sponsored by Ladbrokes and his pants were less lucky against Germany.


The move was part of an orchestrated "ambush" marketing campaign, with Paddy Power issuing a statement congratulating the Arsenal forward, and who I am sure will pay the 100,000 Euro / £80,000 fine imposed on Bendtner by UEFA. (Expensive marketing?)




Personally I love ambush, or guerilla marketing, as I believe this can push the boundaries of traditional marketing. Having nearly been arrested while projecting a Cotes du Rhone wine image onto Big Ben, Marble Arch, and Nelson's Column in 1997 I can appreciate the inherent dangers but also the upsides. These sorts of stunts offer immediate exposure and PR at very low cost, a can get the vital "tipping point" for PR.

The fact that FHM magazine mildly outdid our campaign by projecting a naked Gail Porter image on to the Houses of Parliament added insult to injury!! FHM got coverage in The Sun, Mirror, Express, Star and Sport - as well as on The Big Breakfast and This Morning TV.

However the legal side of ambush marketing is now a lot more advanced and far reaching than in 1997!! 

Bavaria Brewery Holland was the first beer brand to catch some heat at the 2010 World Cup. At a match between The Netherlands and Denmark Bavaria unleashed a group of 36 women dressed in identical orange dresses in full view of the TV cameras. Claiming ambush marketing by Bavaria, FIFA ejected the ladies, took some of them to the police station and then set out to take legal action against the Dutch beer company.

Bavaria’s ranking leapt by 41 percent, according to Nielsen and the stunt even earned the firm a nomination at the Cannes Lions International Festival of Creativity. Look them up on You Tube too!!

In New Zealand RWC 2011 Samoan brothers Manu and Alesana Tuilagi were both given $10,000 fines for wearing the unapproved OPRO branded mouth guards during the tournament, breaching the event's legal terms of participation.

And watch out at the Olympics 2012 - the laws are tight and getting tighter! As consumers you can only pay by Visa, eat McDonald's, drink Coca Cola, drive a BMW and buy P&G products in the Olympic Park. http://www.london2012.com/documents/brand-guidelines/statutory-marketing-rights.pdf

Guerrilla marketing takes consumers by surprise, makes an indelible impression, and pops up when and where people least expect it. It often has a high ROI because is is based upon the execution of a good idea and can make a lasting impression without spending a lot of the marketing budget. 


However by being a little cleverer and as unpredictable, and by staying legal you can still challenge target consumers to engage with your brand in a creative way by creating stunts, more interactive marketing and experiential. Think QR codes, social media, pop up stores, flash mobs, apps, street art, sponsorship, etc. etc.


Check out what Sprite did in Brazil on the beach as shown on YouTube: 
http://www.youtube.com/watch?v=ocCYlqvJKC4


For more superb examples of guerrilla marketing have a look at Ryan Lum's Creative Guerrilla Marketing Blog: http://www.creativeguerrillamarketing.com/

I JUST DON'T SEE THE POINT !!


I am a big fan of tennis - playing, watching and talking about it. So for many years now I have watched the climax of the clay court season at Roland Garros before we switch to the fair lawns of England.


Lovely red clay, great Roland Garros branding and superb sponsors from the global arena that make the commercial wheels of the world of tennis go round. Six of the ten are French, naturally, two are European classics and two are American.

So who are the sponsors? Headline sponsor since 1973 and recently renewed until 2016 the great supporter  of French and global tennis, BNP Paribas; who this year are reaching out globally with a new English written tag line of "The Bank for a changing world" - La banque d'un monde qui change....how true a strapline! 

Powerhouse brands such as Adidas of Germany and Agassi-supported Longines of Switzerland complete the European roster at Roland Garros, while IBM and FedEx give the French Open their global content


The other five French brands associated with the French Open,  Peugeot, iconic tennis apparel brand Lacoste, mineral water Perrier and French television network OrangeSport, a specialist in soccer, tennis and cycling.
Powerhouse brands such as Adidas of Germany and Longines of Switzerland complete the European roster at Roland Garros, while IBM and FedEx give the French Open a totally global feel.




Then there is a "brand" I have seen for the last 4 years now and had no idea who they were. In all honesty I couldn't be bothered even to find out since they had made no effort to connect with me. 


This bizarre sounding name of "Afflelou". French patisserie? French Chateau? 

 No. Apparently, they make eyewear.

So where is the great sponsorship activation? Advertising? Supporting website? Social media campaign? Quite frankly let's be honest is there any supporting spend behind this brand apart from some court side branding?

According to the Afflelou website here is why they have a passion for tennis and Roland Garros:

"Between ALAIN AFFLELOU and Tennis, a real story was born. After the sponsoring of Amélie Mauresmo and of The Roland Garros tournament, it is now to the Davis Cup French Team to be supported by Alain Afflelou. Beyond his sponsoring, it is for our brand name an incredible opportunity to get associated with a sport practiced by more than 4 million French people among which 1 100 000 people are members of The French Tennis Federation"

Oh dear!
A few suggestions Alain:

1. Get someone to write your website in grammatical English -  and tell us about the story of Tennis and Afflelou...if there is one.
2. Activation - buying sponsorship rights is only the beginning of the partnership. Rights are not just about "badging" or even tickets to the event. Think about how activating the sponsorship rights will help you achieve your brand, marketing and  business objectives. 
3. Integration - your advertising, website, your social media campaign; and make them multi-lingual to aid your brand's global expansion.
4. Relevance - sponsor a player who wears glasses - Janko Tipsaravic for instance who has had a fantastic year, wears very distinctive (Oakley) glasses, or semi-finalist Yaroslava Shvedova (Oakley).
5. Make a campaign fun....what would Djokovic look like with glasses on? Genuine engagement with current customers and new potential ones.
6. Make it educational with on event activation - eye tests at the Championship
7. Hey, why not create an app, everyone else is?!
8. Are your objectives SMART? I know this is sales terminology but it definitely applies to marketing too.

Sponsorship is there to heighten brand awareness, provide positive publicity, create new connections, convey the brand personality, differentiate the brand, and communicate it's relevance to a target audience with a perfect match with a sport.

So, Mr.Afflelou, I am sorry but you get "nul points"

THE BLUE CLAY OF MADRID MAKES PLAYERS SEE RED

With Roland Garros having just started a reflection on the blue clay of the Masters 1000 event the Mutua Madrid Open.
The views of the clay inn the words of the experts - the players:
Novak Djokovic: "To me that's not tennis. Either I come out with football shoes or I invite Chuck Norris to advise me how to play on this court," said the Serb.

Victoria Azarenka “the bounce is different, the movement is different … it’s just 100 per cent different.”

Sergiy Stakhovsky tweeted “I can say with full responsibility on my shoulders that it is the worst court of @ATPWorldTour"

Before the tournament Caroline Wozniacki said: "Blue is my favourite colour, this makes things a bit different." However after falling and hurting her ankle during her three set win over Ksenia Pervak, after the match, she said that she had found the surface “slippery”.

Nadal: "They are claiming that the court is exactly the same as red clay, which is not true because there is a big difference," the defending champion said. "You are tripping, slipping all the time, sliding. The winner will be the one who doesn't get hurt by the end of the week."

To be fair Nadal has never been a huge fan of the Madrid tournament since it moved schedule in 2009 switching from hard courts to clay, and from October to May when Hamburg lost its status. He is also unhappy that the high altitude in Madrid at 650m nullifies the strengths of his game and helps his rivals, helping players with a bigger serve due to the fast court. However Rafa did blow a 5-2 lead in the third set in losing 6-3, 3-6, 7-5, his first defeat to Verdasco in 14 matches - so was that blue clay or just loss of focus?
(Note this was only the 9th time in 224 clay courts matches since 2005 that Rafa has lost !)

Copyright Mike Hewitt/Getty Images      



The Director of the Mutua Madrid Open and the Chief Advisor to the tournament, Ion Tiriac, once Ilie Nastase's doubles partner, now billionaire, described the blue clay as Madrid's "trademark" ....well at least for 2012! His desired intention for the Mutua Madrid Open was to provide a contrast between the yellow ball and the blue surface to make the tennis easier to follow on television.

Tiriac had even commissioned a company called the Technological Institute of Optic Colour and Professional Image (AIDO) to study the contrast issue, and the agency determined that spectators court side as well as watching on LCD and LED television screens had a "higher" and "more favourable" contrast with blue clay.

After all there is a very good reason why the Australian and US Opens both have blue courts - visibility for the revenue-generating broadcast, for excellent standout for sponsors and the fans who pay to watch live tennis in massive stadiums. Can you imagine being at the US Open and sat at the very top of the Arthur Ashe Stadium ?!

You have to admire Tiriac for pushing the boundaries and trying new event and brand marketing. Although some of the players were annoyed, the tournament has received fabulous publicity and column inches in all the press, websites, and blogs - just google "blue clay of Madrid" and you get 1.5m hits,  with a lot of photos of sponsors logos - If I was the Head of Marketing & PR I would be chuffed especially as the players are blaming the ATP and not Madrid!


The positives:
Tiriac has always had a talent for PR and marketing. Who can forget that he invented the idea, also at Madrid, of using fashion models as ball girls? He has challenged the status quo on several occasions, asking why there are only 4 Major Slams, why does clay court tennis have to be played on the red of Europe and the green Har-Tru of the USA.

It looked distinctive on live TV -  it was different - it was "innovation", "new product development", he tried something new in a world of tennis where just maybe there is a reluctance for change and innovation.

You could see the ball better.

The courts received extensive PR both pre-event, during and after - albeit not all positive but we all know the saying.

The negatives:

The players, especially the top ones Nole and Rafa did not like it, with Rafa saying if they kept the surface then he would not be playing Madrid in 2013.

Lack of consultation with the players - If they had been consulted about the reasons why - broadcast & sponsorship revenues, ball visibility and sports marketing - then they might have been slightly more understanding especially as the ATP is there to serve the players!

The learning's:

Stick to your guns - try new things.

Involve stakeholders (here the top players) - take them on the journey and get their public support and buy in.

Sound out the marketplace / consumers/fans

Innovate and create new experiences.

Understand and focus on the revenue streams - fans, broadcasters, sponsors

Always try and attract new fans whilst satisfying the current loyals.

Challenge the status quo

In conclusion, regarding the blue courts the ATP said in their press statement: "The ATP granted this permission for one year with the understanding that it will be reviewed following the event, of course taking into account feedback from players," "We believe it is a good thing that our tournaments are trying to be innovative."

I agree - the crucial point here is that innovation pushes the boundaries and enforces change internally within organisations and externally with fans and consumers. Sometimes organisations resist innovation or getbusiness paralsis and most new products (70%-90%) fail on launch. A vast majority never get to launch due to over researching, internal politics and predominantly fear! At least Ion Tiriac as the Tournament Director had to courage and foresight to create change & try something new. Tiriac is a realist, and a visonary and every good business needs experts - something that he can profess having being a businessman for decades and as an ex-player he knows both sides of the game.

Plus Berdych as a runner up and and ultimately Federer the champion managed to cope!

Footnote for chemists and tennis aficionados....

Why blue clay?
The blue clay courts are built from crushed brick, just like the orange ones, except that the material has been stripped of its iron oxide, (the chemical that provides the colour), and then treated with dye. It was inevitable that the process would change the way they behave especially as the organisers admitted that the courts were compressed too much and the top dressing too loose thereby making the surface slippery!

As a postscript to this article the Madrid assistant tournament director Carlos Moya and former French Open champion declared that the main problem with the "slippery" courts was the ill-advised addition of salt to clay, which created a kind of super-hard shell on the individual granules. Moya insisted that those who had played on the courts before they were treated with salt (a common practice to control the effects of humidity) all judged the court to be fine.

Cardiff City - A Bluebird turns into a Dragon, and back again
a tale of commercial vs marketing


So, a glorious instance of how not to re-brand anything....but an interesting case study in forging into  new sports markets & sport marketing / rights opportunities.

I am sure you know the background but the Malaysian owners of Cardiff City FC wanted to re-brand the club's look and feel...and no ordinary re-launch either especially with a £100m "investment" attached.

The plan was to change the brand colours, brand logo, brand identity of a bluebird, and seemingly throwing away the heritage. The proposals included:

• The team would play in new red shirts, black shorts and red socks, with a blue kit for away games.
• The team name would remain 'Cardiff City Football Club', but the Bluebirds badge would be replaced with a dragon emblem

The reasons given for the change were that Vincent Tan and his fellow Malaysian investors believed the new colours would 'represent the fusion of the two cultures of Wales and Malaysia', and that new supporters, sponsorship and sales opportunities would come from Malaysia as a result of the changes.

A tad naive perhaps?!

The fans have been vitriolic in response, taking to facebook, twitter, online forums and youtube, all of which is understandable from a fan perspective and a marketing one too.

Delve into the story however and you discover that "the brand" Cardiff City FC has outstanding debts of around £30m, which would be paid off by the investment, as well as Vincent Tan currently funding the club to the tune of around £1m a month - an input that has already totalled close to £40m.
Both amounts would have been wiped out by the proposals with the club’s backers willing to turn their debt into shares instead.

So where was the "fan insight"? Probably a classic case of "boardroom research" from the owner/MD who has anticipated what the Malaysian fans would like - red shirt and a classic dragon! A wonderful example of a robust research sample size of one - "I like the idea, therefore I am doing it!" Trust me I have seen these a couple of times in my career, sometimes right, but more often not.

I am also not quite sure what a fusion of Asian and Welsh looks like but this obviously wasn't the way to do it. The quick and dirty rules of re-branding need to be:

 - Get buy in early on in the process -  seek to engage with fans & stakeholders
 - Alienate your core fans at your peril - especially with the passion of football
 - Don't go for wholesale change immediately....if you do go for a dramatic re-brand consider doing it gradually as you will lose all your fans and current revenue sources.
 - Highlight the brand qualities - 100 years heritage being one of them!
 - Get the insight and translate that into the brand essence.

Would Cardiff FC get more fans in Malaysia? Actually, maybe. If they did get more fans, merchandise revenue, sponsorship, TV broadcast would the change be worth it?
Naturally there needs to be balance between brand and commercial, but could the changes translate into a better brand?

After all although the Welsh Dragon is a mythological creature it is also a powerful symbol of a proud Welsh nation linking past, present and future. It features on the national flag Y Ddraig Goch and dates from around 829 AD. So perfect branding for Welsh football team! Albeit Wrexham got there first with red and dragons.
In Malaysia the dragon also symbolises power and divinity, and as red is the national colour of Malaysia, they see it as a lucky colour and believe the change would give them more chance of a foothold in Far East markets.

You can see why the leap of faith was made!

In an open letter to fans the Chairman Dato' Chan Tien Ghee apologised for any offence that was inadvertently caused and to emphasise the plans were in the best interests of the club. He also highlighted that Cardiff City FC is in a poor financial  position:
“It is clear to all concerned that the club simply cannot continue to function and exist in its current state, effectively losing large amounts of money each month, while acquiring more and more debt. We have continued along this path until the end of the current season, but the club inevitably now faces bold and real world decisions should we want to see the club survive."

Owner Vincent Tan and Chairman Dato' Chan Tien Ghee

My solution would be a compromise between commercial needs and income and marketing/brand integrity: Transition the brand from blue to red shirts keeping the bluebird logo. Alternatively make the away shirt red and sell that in Malaysia. Introduce a dragon that befits the Welsh and Malaysians. Then maybe change the logo. However all backed up by research and a collaborative, involving process to avoid embarrassing leaks.

As in the world of brand marketing, in fast moving consumer goods (FMCG), service brands, anywhere, the "classic" steps for sports marketing should ideally be the same:

Conduct a brand audit - facebook, twitter, website, blogs, forums - what are the fans saying about your brand? What state is the brand in? Profitable? Cash strapped? (Cardiff City FC has 39k likes on fb, depending on which page you look at! and 18k & fans on twitter)
Set a budget - how much do you want to spend on research & ultimately a re-brand if you need to?
Seek insight - desk research, field research, find out what the key stakeholders are expecting from any re-launch.
Share the journey internally & externally; that classic phrase of "no-one likes surprises" seems to have been overlooked by the Malaysians in this case


Given the swift turnaround by the Malaysians, and no comments such as "well our quantitative and qualitative consumer and fan research said", it would appear that Cardiff City FC will, for the time being, still be known as the bluebirds, but will the investment remain?