repucom f1 report 2016

IN 2016F1

MAXIMISING THE OPPORTUNITY

OF THE SPORT’S GLOBAL

PLATFORM

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2Team-by-team in 2016

©2016 Repucom

MERCEDES AMG PETRONAS F1 TEAM

After a decade and a half spent as McLaren’s engine partner, a partnership which resulted in three drivers’ world titles and the 1998 constructors’ world championship, Mercedes-Benz elected to transition into full team ownership late in 2009. In acquiring Brawn GP, world champions in 2009 less than a year after Honda’s sudden withdrawal from Formula One had threatened the team’s entire existence, Mercedes took possession of a world-class facility in the UK town of Brackley. The team’s lineage can be traced all the way back to the Tyrrell team, with which Sir Jackie Stewart won three world titles in the late 1960s and early 1970s. Since 2010, its first year under the Mercedes name, the team’s title sponsor has been Petronas, with additional partnerships forged with the likes of Bose, Qualcomm, Blackberry and Hugo Boss. Major investment in the new engine-dominated rules packaged, introduced for 2014, has been at the core of the team’s domination of the last two seasons.

TEAM-BY-TEAMThe Formula One grid grows to 22 this year, with Haas F1 Team becoming the first new team to join the championship since 2010. The Americans join a group of four car manufacturers – Mercedes, Ferrari, Renault and power unit supplier Honda – in the sport, alongside two teams owned by an energy drinks firm and five other ‘independents’. Each one has its own commercial story to tell.

NIGEL GEACH’S VIEW

“They had a very good training ground when they were with a very successful engine supplier in McLaren – they cut their teeth before they decided to run a full-blown team, which is quite a sensible way of going into Formula One. Companies like Toyota did it the other way, investing a lot of money without being successful. That perhaps just un-derlines that Formula One is a very complicated business.

The ideal result for the team this year, after two sea-sons of domination, is to win the championship but for it to be a hard-fought battle. Formula One is cyclical – people tend to forget very quickly that Red Bull had the same dominance, as have McLaren, Benetton, Ferrari and Williams in the past.”

SCUDERIA FERRARI

Ferrari is the only team to have been on the grid since the first world cham-pionship Grand Prix season and its importance to Formula One can scarcely be underestimated. The team enjoys significant financial and political perks, unavailable to other teams and enshrined in its contract with Formula One’s commercial rights-holder which, like all teams, runs until 2020. The team has enjoyed longstanding support from Philip Morris, in various guises, and Shell, and boasts a stellar portfolio of partners including Santander, Hublot and Kaspersky Lab. In late 2014, longtime Ferrari president Luca di Montezemolo was replaced by Sergio Marchionne, the chairman and chief executive of Fiat-Chrysler. Marchionne has since orchestrated a Ferrari IPO.


“A strong Ferrari is a strong Formula One. It’s emotive. Ferrari really is Formula One. It has the history, as Mercedes do – and maybe Mercedes should play a little more on that history. But Ferrari is clearly an emotive brand; it’s got it all going for it. It has some fabulous road cars, which is important – McLaren are finding that with their road car now. There’s a huge affinity between Formula One and fast, expensive sports cars.

The IPO is a bold move. The world of finance is pretty unemotional and when you have outside investors or pensions investing like venture capitalists: they want a return on their money. It’s got to produce the turnover and the profit.”

58% of fans of the Mercedes AMG Petronas F1 Team say motorsport’s image is ‘dynamic’.

67% 67% of those who rank Ferrari as their favourite team use the internet to gather information about sport.


Insights by Repucom

The Repucom Expert

Nigel Geach is Repucom’s Senior Vice President, Motorsport, responsible for the marketing and sales side of Repucom’s global motorsport business. With more than a quarter of a century of experience of the sponsorship research business to his name, Geach joined Repucom as part of the acquisition of IFM Sports Marketing Surveys, where he was a Director from 1986.

RED BULL RACING

Red Bull acquired the Jaguar Formula One team from Ford at the end of 2004 (the team was created as Stewart Grand Prix in 1997, before Ford acquired the team at the end of 1999), but it took five years for the Milton Keynes-based squad to reach the top of the podium. The first victory in 2009 was the precur-sor to four years of domination, with four successive drivers’ and constructors’ championship doubles following. Funded largely by its parent company, Red Bull Racing has grown its partner portfolio over time, notably bringing aboard Renault-Nissan brand Infiniti as a title partner in 2013. That agreement ended prematurely at the end of 2015, as the team’s relationship with longstanding engine partner Renault broke down. Although the team will still have Renault power in 2016, the engines will be branded as Tag Heuers, part of an intriguing new badging by the Swiss watch manufacturer.


“Red Bull want to own a team or event. They were a hugely welcome addition to the F1 circus. They brought zest and a wackiness. Where it goes from here is the only concern. They’re very successful in their brand – they’re selling more cans of Red Bull than ever. They are still very clever in what they do – and I can’t see them not being in Formula One given it’s the pinnacle of motorsport. They like doing things differently, whether it’s jumping out of space-ships or flying contraptions off piers. It’s great having them in amongst a group of more conservative brands.

It’s an interesting move by Tag Heuer. You can see the synergy between Formula One and Tag Heuer, obviously – the personalities and the technical side, the precision engi-neering. To brand an engine is very bold and probably quite clever, because it’s different. If you’re not happy with your engine partner, then why not brand it. It’s happened before and we may see more of these licensing-type agreements in the future.”

WILLIAMS MARTINI RACING

Williams Grand Prix Engineering has been a Formula One regular since 1977, winning nine constructors’ world titles and seven drivers’ world championships along the way. Steered by Sir Frank Williams, the team has partnered with several engine manufacturers, including Ford, Honda, BMW, Toyota, Renault and now Mercedes, along the way. Since 2014, the team has been title-spon-sored by Martini, marking the drinks brand’s return to international motorsport. Between 2007 and 2011 AT&T were title partners, but from the mid-80s and throughout the 1990s Williams engaged in partnerships with tobacco brands, first Canon between 1985 and 1993, then Rothmans from 1994 to 1997 and finally Winfield in 1998 and 1999.


“It’s a classic case of two emotional brands – Williams and Martini – working together brilliantly. Martini, with their passion, name and heritage and the amazing colours, and Williams, looking to come back to the top: they’ve worked together to create an emotive brand in Williams Martini Racing. Martini wanted to get their brand to ap-peal to a type of audience – we all think of Formula One as an AB audience, but it actually stretches across the whole spectrum and includes a lot of people in the C and D socio-economic spectrum. And Martini have identified that, which is good.”

67% 34% of those who say Williams is their favourite team would choose a sponsor’s product rather than rival brands if the price and quality were the same.

47% Of those who call themselves Red Bull Racing fans, attend music concerts and festivals.


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HAAS F1 TEAM

The first start-up Formula One team since 2010, Haas F1 Team has been preparing for its 2016 debut since April 2014, when the project was launched. At its helm is Gene Haas, the founder and president of machine tool manufac-turer Haas Automation and a co-owner of the Stewart-Haas NASCAR Sprint Cup team. Haas views Formula One’s global appeal as a way of internationalis-ing the Haas Automation brand. The team will be based partly in North Carolina, where Haas’ NASCAR facility is based, and in the UK, and it has formed strong links with Ferrari, which will provide the team with engines, and chassis manu-facturer Dallara.


“Success in US motorsport means that it is an inde-pendent, commercial exercise. Haas Automation is treated like a main sponsor and therefore needs to make it work – they’re only going to put money in if it works.

Formula One has done a good job in America. This is a good opportunity, with probably the right man for the job – a hard, commercial man but one who loves his motorsport and has the passion. They can sell all the Haas Automa-tion machining products to all those who need precision engineering, across the industry, so I think it can only be good. It’ll be interesting to see who they can get as spon-sors; let’s hope there’s some American brands, although there are some good American brands already in Formula One – SAP, ExxonMobil.”

MANOR RACING

Initially known as Manor Motorsport, the team was one of three new en-trants to Formula One in 2010 at a time when it looked as though a budget cap might be introduced a regulation which would have lowered the financial barrier to entry. But the budget cap never materialised, leaving the team, renamed Virgin Racing for its debut season, struggling from the off. Investment by Rus-sian car manufacturer Marussia followed at the end of 2010, initially resulting in a title sponsorship deal for 2011 and then a full name change for the following season. At the end of the 2014 season, the team missed three races having fallen into administration only for the entry to be revived just weeks before the start of 2015 under the new ownership of Northern Ireland businessman Ste-phen Fitzpatrick, the founder of Ovo Energy. During 2015, new partnerships were struck with AirBnB, Flex Box and Shazam, while a long-term power unit agreement has been struck with Mercedes, starting in 2016.


“Manor are exciting – it would be great to have a chal-lenger team, to show Formula One doesn’t have to be this huge conglomerate and to dispel the myth that you can’t be competitive as an independent team. They are supported ably by Mercedes engines – it could be good.

They have signed an interesting partnership with Shaz-am: canny sponsors should look at teams like Manor be-cause I think they can give a platform. It’s an opportunity to play with the big boys, in the same paddock.”

Source: Repucom SportsDNA May 2015

30% of those who rate Haas F1 as their favourite team described motorsport as environmentally sustainable.

46% of those who say Manor is their favourite team are female.

While brands including Tag Heuer, Puma, Infiniti and Casio have switched teams for 2016, several other brands have elected to use Formula One’s global platform as a sponsorship vehicle for the first time. Wine brand Chandon and watch-maker Richard Mille have partnered with McLaren, while Renault’s return as a team owner has enticed clothing firm Jack & Jones and audio systems manufacturer Devialet to the sport. Sauber has secured four new ‘premium partners’ for the 2016 season: business channel CNBC, watch brand Edox, consumer brand Malbuner Power Slice and business software supplier IFS. Sahara Force India, meanwhile, has added the logos of Mexican bank Banamex to its crop of partners from the country. Indonesian oil firm Pertamina is a new partner of the Manor team.

Sponsor focus

BRAND NEW SEASON

5Williams Advanced Engineering

Insights by Repucom

CASE STUDY

WILLIAMS ADVANCED ENGINEERING

Modern-day Formula One teams, especially those without the direct support of a car manufacturer or energy drinks company, tend to be fund-ed by a mixture of income generated through sponsorship and the annual slice of the sport’s centralised revenues paid out by the commercial rights holder. For the past few years, Williams Grand Prix Engineering has added a third revenue stream, its Williams Advanced Engineering division. It is a prime example of how Formula One teams can successfully diversify.

“Williams has been involved over the years in a number of bespoke projects on an ad hoc basis, many of which were linked with manufacturers or engine suppliers at the time to the Formula One business: there was a BTCC touring car programme with Renault, the Le Mans pro-gramme with BMW that preceded our Formula One involvement, etc.,” says Craig Wilson, Manag-ing Director of Williams Advanced Engineering, explaining the ra-tionale behind its formation. A lot of those projects were about uti-lising the engineering capability that the group has, which is one of the things that underpins Wil-liams as opposed to some of the other Formula One businesses.

“Before in 2008 F1 became a hybrid racing series for the first time and Williams developed its Kinetic Energy Recovery Systems (KERS) entirely in house, develop-ing both a battery and flywheel equivalent. Recognising the fly-wheel’s commercial potential, we created a business called Williams Hybrid Power to develop new systems for public transport and motorsport. This technology was used in Le Mans winning racing cars and London buses to name a few, and when it was ready for scaling up to full production we sold the business to GKN in 2014. This was our first foray into creating a new business division to commercialise F1 technology.

“In 2010 Williams was approached by Jaguar Land Rover to help devel-op the C-X75 hybrid supercar. We made 5 prototypes and whilst the C-X75 was stopped as a programme for commercial reasons, on the back of this programme and our flywheel work the group recognised - and also with the changing landscape of Formula One sponsorship - that it had the engineer-ing capability and know-how to attract further revenue streams to the group by establishing a dedicated business. The concept was born of creating an engineering business that wasn’t just project-by-project but aimed at com-mercialising F1 technology and know-how, and continuing to develop other technologies as well. The company has made a large investment in assets, people and facilities, and it saw an opportunity to create a revenue stream to help the balance of the overall company.”

Since then projects have ranged from adding expertise to other motor-sport, to work in the wider automotive sector and across a variety of different industries. “We have some projects that have nothing to do with Formula One but we still have a business here that is very agile and has a can-do attitude, and that comes from the DNA of the group,” says Wilson. “It’s supported by a

brand that has a lot of credibility and one that people do like to be associated with, which is a tremendous asset.”

Williams Advanced Engineering has, for instance, overseen the development of the batteries which power the FIA Formula E Championship, the electric car series now in its second season. “We effectively provide the powertrain, the battery being the most important part – if we had produced a battery that had caused prob-lems, we could have killed the formula. But it was the opposite: we only had one car stop on track in the en-

tirety of last season due to a bat-tery issue and it was a loose con-nector, so that’s definitely been a success story and underpinned the whole business actually.”

Williams Advanced Engineer-ing’s Formula E activity will in-crease this year when it runs a team on behalf of Jaguar, under-pinning a wider relationship with the car manufacturer that also saw it produce the cars featured in the most recent Bond film, Spectre.

As an example of its work out-side motorsport, Williams Ad-vanced Engineering has recently produced an aerofoil which is now being trialled in supermarket fridge freezers. “In some ways it’s quite a simple device that bor-

rows F1 aerodynamic principles,” Wilson says, “but it’s had a very big impact in terms of energy consumption and improvements in climatic conditions in aisles.”

There is a continual monitoring of technology de-veloped for Formula One and how that might be ap-plied elsewhere. “There’s a continuing drive in Formula One to improve the energy efficiency of the vehicles as well as increasing the performance,” Wilson points out, “so I think there’ll continue to be areas where we can take advantage – either directly or indirectly.”

“We’ve gone through quite a large growth over the last 12 months so I think the priority is to execute,” Wilson concludes, adding that he now oversees a team of over 200 people – roughly double that of the same point last year.

“A couple of years ago the priority was to build brand awareness, to build a customer base, to build a contract pipeline. We’ve done a lot of good work in those areas and as a result the business is growing from a personnel perspective, so our focus this year is delivery. For every one of our customers, their project is the most important and that’s whether it’s worth £10 million or £50,000.”

“ The company saw an opportunity to create a revenue stream to help the balance of the overall company.”

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Photography:Front- and Back-Cover: Stocksy/MEM Studion; Page 4: AFP PHOTO/Jose Jordan; Page 5: Supplied by Williams Advanced Engineering

repucom f1 report 2016

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