With the announcement on Monday of a £6.4billion takeover from Liberty Media group, Formula 1 racing is now under new ownership. For 40 years the sport has been run by Bernie Ecclestone and CVC Capital Partners, but this week the F1 supremo was forced out. Ecclestone is responsible for managing Formula 1 as Chief Executive since 1978, growing it into the billion-pound industry we see today, but despite the growth over the last 40 years, there has also been a lot of criticism. Detractors have suggested that F1 has been run as a dictatorship and is not as popular as it should be for a sport with such global reach.
There has been an obvious lack of competition amongst constructers on the track in recent years and television viewing figures are dropping as a result. A sport that was once viewed as the pinnacle of motorsport has lost its sense of excitement. But this is not all down to the racing spectacle itself, some strange business decisions and a lack of effective marketing has also been detrimental. Liberty Media plan to revitalise the sport with new regulations that will level the playing field and lead to the design of better looking cars, but what is perhaps even more exciting are their ambitions to rejuvenate the sport through its marketing.
Bernie Ecclestone is regarded as somewhat of an analogue businessman in a digital age. Although he did initially invest in digital TV packages in the early 2000s, many of the problems in F1 stem from his reliance on broadcast media and an out of date marketing strategy, reluctant to engage with online platforms and attract a younger generation of fans. Liberty Media have promised to “take F1 into the digital age and elevate the sport to where it belongs on the global stage”. Under Liberty, marketing will play a crucial role, but what should we expect to see?
Liberty have stated that there are opportunities to expand the business “in all areas”, but the one with the most potential is through exploiting digital marketing channels. They are aiming to connect with a new fan base more accustomed to using digital and social media than it is consuming traditional media channels. The entire business model of F1 could change as a result, in the same way that streaming services have revolutionised the way consumers watch TV. F1 may be the first sport to go down this path by using live streaming on digital platforms for short-form content online.
CEO Chase Carey has said this week that the sport has unique global content and hasn’t done enough in the past to take advantage of it. By using online video platforms and social media, the experience can be enhanced dramatically, and new fans can be attracted to the sport. Monetising digital platforms is difficult, but it will help to support the mass audiences that sponsors want to tap into.
Chase Carey also plans to turn Grand Prix races into more compelling events, with a bigger appeal to advertisers and sponsors. Many argue that Ecclestone did not do enough to advertise races effectively in host cities or countries, and thus many races were not sold out. Liberty, who specialise in event marketing, have claimed that each race could be the size of the Super Bowl in the future by advertising Formula 1 more effectively for each individual race, and building it up during the week with promotional activities. According to Carey, sponsorships can also be brought to life with more effective experiential marketing. Sponsorship revenue is under pressure in F1, with teams’ sponsorship earnings dropping by $200m in 2017. It will be interesting to see how brands react, and which sponsors will be involved in the sport down the line if the demographics of the fan base change.
This week, Liberty have also suggested exploring new technology innovations to connect with global audiences in a more exciting way. As well as live streaming, one of their clear ambitions is to use virtual reality in the future to bring fans closer to the action. Sky Sports have recently signed a new deal with F1, and they too view VR as an important growth area.
This is an exciting time for racing fans, with the new ownership promising some profound changes in the sport. As marketers, it will be equally fascinating to see how the sport grows off the track.27.01.17 Archive