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Steve Potter: People in Japan don't go to the Home Depot

 

CART Manufacturer's Forum - Cleveland - Marketing Managers

Participants:

Sam Scott, Ford Racing Marketing Manager
Steve Potter, Supervisor, Sports Marketing Mercedes-Benz
Les Unger, National Motorsports Manager, Toyota
Robert Clarke, General Manager, Honda Performance


 

Question: When we had this first forum in Homestead earlier this year a big topic of discussion was television ratings. My questions is how do you measure the success and value of your involvement in cart and have you seen an improvement since the beginning of the year in terms of marketing value?

    Potter (Mercedes): "One of the main issues in sports marketing in general is measuring the results of your involvement. Corporations are, out of necessity, focused on if you spend a dollar do you get back a $1.75 or do you get back $.85? Every kind of sports marketing faces that challenge. All of us in the CART community are aware that there are challenges that we face for a number of reasons, some are internally some externally. All of us have close conversations with CART and we are certainly, from our perspective at Mercedes-Benz, CART has clearly gotten a different awareness of what the problem is over the last 24 months. Things don't change overnight, CART is taking the right steps and the organization is taking the right steps and moving in the right direction so it can turn into something that we all want it to become so that everyone's investments are being better rewarded."

    Unger (Toyota): "I think Steve speaks to a point that all of the major sponsors, whether they are in the form of engine manufacturers or team sponsors, whether they are involved in car racing or other types of sports and so forth. I don't think anybody is happy with the current state of television viewership including CART. It's a big problem. Declining television viewership is a problem that not only affects auto racing but sports in general. Depending on the poles you look at and the surveys that are taken, even the NFL and the National Hockey League are suffering in terms of ratings. I think the key is can we all agree and come together and come up with some sort of concrete plan to improve those ratings and the exposure. The easiest thing to measure in regards to television is how many people are watching the show. Obviously another yardstick is the number of spectators at the events and the benefit you may get sponsoring the brand awareness and so forth . Television is very important, there's no questions about that."

    Clarke (Honda): "Basically I want to echo Steve and Les's comments. But beyond that it is very difficult to measure the value of exposure. It is even compounded by the quality of the coverage, not just that it is watched but that people actually getting anything out of the broadcast? I would say that Honda uses its internal resources to gauge the value or the quality of the broadcast, not just inside corporate Honda but inside the dealerships too. We host groups of dealers at basically every event which gives us an opportunity to interface with them, to hear, ask them what they are getting out of it, what they see the value of CART racing as it gives us feedback from a captive audience."

    Scott (Ford): "Television is obviously important but we are also looking at some other things that are important as far as media is concerned. There are over a hundred racing programs on TV every single week apart from the actual race broadcast when the cars are on the track. When you look at the coverage that we get from those programs, the internet, magazines, the papers etc., I think you will find that it is about equal to every other racing series there. I my opinion it is about equal in coverage to NASCAR from that perspective. I would say that, yes, the TV rating is less than what we want it to be but I think that's something that everybody is suffering from. Especially because we air the races on the weekends it interferes with people lifestyles. One other thing, along the same line as Robert's philosophy, we try to judge, aside from all of the technological advantages that the series offers, our dealers response and how they can effectively use the program and cascade it down to the showroom. That's where we make our sale. Over the past few years we have been benchmarking a lot of the consumer companies that are coming into racing. Most of you know that prior to 1990 most of the manufacturers in racing were primarily auto related companies. Since then there has been a tremendous influx of consumer related companies and these companies view racing a lot differently than we do and they are a lot more focused on how they use the program and go to market. So, we are trying to take advantage of some of the things that they are doing and it is clearly reaching and going out and touching the consumer at the point of sale."

Question: Les, a questions to you. In Long Beach Toyota stepped with an interesting strategy during the race, can you briefly touch on that?

    Unger (Toyota): "Sure. One of the things that is of concern to us at Toyota in terms of the brand and image is whether or not people feel good about the types of sporting events that Toyota gets involved with. One thing that we hear back from our advertising agency and the mail and phone calls we get is, and this doesn't just focus on CART but automobile racing in general, is that you have a race going on and there is no time out. You have all of these commercials that go on throughout the race and a lot of times you miss action during the commercial brakes and one of the things we decided to do again this year, we started doing it in 1998 during the Toyota Grand Prix broadcast, we basically got with the network indicating to them that we would convert a couple of the spots that we purchased to air during the broadcast to what they call commercial free minutes. We wanted to do something to pay off the fans who were watching the race and make sure that the last five or ten minutes of the race would run commercial free and we got some very good feedback from that. We are all looking for things that can be done to make the sport more viewer friendly and perhaps that's on of them. Again, that is a tough call to make because as a sponsor you are paying x number of dollars to run the spot and you are still paying that money but you are basically not getting your quote unquote message across. So we have worked with ABC a little bit, we have put some crawlers at the bottom of the screen and have the announcers mention the race is being brought to you commercial free by Toyota. But, it is a tough one to sell to upper management."

Question: There has been a lot of talk regarding the reconciliation between CART and the IRL. From a marketing standpoint how important is that something happen?

    Unger (Toyota): "I don't think you are going to find anyone involved in this sport or racing for that matter who doesn't think that it is something that in an ideal world needs to happen. I think that if you read the newspapers and watch television it is not just the people in open wheel racing that feel that it is a necessary thing to happen. But sometimes what you may think makes sense logically is very difficult to pass because of the emotions and feelings that are involved. Basically we have two sanctioning bodies, from what we hear, that have been having a lot of discussions and we as manufacturers and sponsors are trying to be as supportive as we can and we will do whatever we can to move everything along. It is definitely a thing that will make the sport better."

    Scott (Ford): "There is no question, we have stated many times that we want to make this thing happen. From a manufacturers' perspective, all of us involved in the sponsors council support this and want to do everything we can to make this happen. It has to happen because this is one of the best racing series in the world and NASCAR and Formula One are at Indianapolis now so without question we all need to be there."

    Clarke (Honda): "I think the only thing that I have to add is that their series would benefit from joining operations and I think that is key that both sides recognize that they have weaknesses than can benefit from working together."

    Potter (Mercedes): "It was clear in 1996 that there wouldn't be a reconciliation unless both sides critical issues were addressed. The other side of that is that both sides have to want a reconciliation and will probably have to make some sacrifices and give up some things of significant value for this thing to work. Discussions are taking place and if there is to be a reconciliation it probably wouldn't happen as quickly as everyone may want. At the end of the day there is not much point of coming back together if the series is not going to work. And there are fairly dispert but sincerely held opinions about these things and there is going to be a lot of work to make this happen. But, the original question as I recall it, and I think I speak for all of us, to have one series and be able to compete at premier open wheel racing in the United States is definitely a plus. There isn't one of us that wouldn't like to see that happen. But it has to work for everyone. It's got to work for CART and it has got to work for the Indianapolis Motor Speedway or it is not going to happen."

Question: This question is primarily to sam as an American manufacturer. There has been a lot of talk over the last couple of years about tv ratings and then there was this split. Am I missing something here? The tv ratings were not great before CART split with the IRL. It seems like people often talk about the good old days when cart had good tv ratings. Can any of you cite what the cause of the problem is because it seems like we ought to have something to blame for it?

    Scott (Ford): "I think you are right, Steve, to a certain extent. The Indy 500 carried the IRL and CART when we raced there. But, first of all they weren't on the same TV package as we are now. In our opinion CART has the best television package going, it is a far superior TV package than NASCAR has when you consider that every race is on ABC or ESPN and none of the secondary cable networks. We are disappointed that with the growth of the sport the numbers should be bigger but you are right, if you look back you will see that they are on the same plane as they were before the split but we expect them to be better."

Question: Kind of on that note, are you saying that when you have meetings with others at Ford they don't say to you that, well Chevy is not in the series and can't we kick their butt at each race and we see the ratings , is there any pressure to not be as involved in the series? I mean people within Ford who may ask if this is really a sound decision?

    Scott (Ford): "If you take a look at the casual racing enthusiast, the Ford and Chevy rivalry is the biggest rivalry in the country. Maybe even bigger than the Michigan/Ohio State rivalry. But in this series it's a bit different because it is more high tech, more sophisticated and attracts a little different audience. From our perspective we are very proud to be competing against what we consider to be the best engine manufacturers in the world."

Question: But you sell vehicles. Don't you have people in these meetings that ask if we are selling enough cars through our involvement in the CART series?

    Scott (Ford): "You could probably say that we could be doing a little better. But, because it's not a Ford car out there so to speak it is a little more fragmented but now that we own Cosworth we have a lot of marketing opportunities with new products and I think that is going to broaden our horizons a bit. I mentioned earlier about working with our dealers. We just got our dealer group in Chicago which consists of ninety some dealers in metro Chicago to be the official vehicle of the new Chicago Motor Speedway. And they favored that over the new track in Joliet, Ill., just because of the opportunities that this track is going to afford them with this particular series. That's an area of the country that typically hasn't been that involved in racing but were excited about that opportunity. I guess to answer your question when we can cascade a program down to the dealers, get them involved and get them to spend their money to support something then we are very pleased. For the most part dealers are like any other retailer. They are going to spend their money if it going to help them sell product. They are not doing it for exposure. They think the exposure part should come from us."

    Mike Zizzo (CART): "Steve, to follow up regarding CART. Since 1996 we have restructured our organization to address those concerns. We have a vice president of television and a full marketing staff as well."

    Potter (Mercedes): "If I can add something to that, television is certainly important but sometimes it seems that the illusion is all it is is a TV show. Sam eluded to the fact, and I think this is critical, that there are ways that all of us leverage our involvement here. It's a simple mathematical fact that every time that one more channel is added to the average American household that the average rating for a TV show is going to go down . We are all going to live with decreasing overall television ratings. But we are also going to live with much ramped up interaction with the internet. Marketers are looking more and more at dealing with individuals more than a group. Television is a mass medium, but, if you are selling a high tech consumer durable, the trend is talking to individual consumers and television is a pretty poor way of doing that. So, television is something that we are all concerned about, we all want more ratings rather than less, but when we look out at the long term, television becomes less and less salient. It will never be unimportant, but the other channels that we speak to and interact with customers will become more important. Television is becoming less of a determining issue."

    Unger (Toyota): "If I can just add something. I think when you look at perhaps Toyota's involvement in motorsport, and perhaps the same for Ford, Honda and Mercedes, it is a form of advertising. You can advertise in television, billboards and newspapers and/or if you want to enhance your brand image are there other ways to do that. One of the ways you do that is going out in front of the public. In some ways it does a better job of representing your company to that audience than perhaps an ad. You turn things on and turn things off, glance over things but when you are out there competing real time in front of spectators and in front of a TV audience, there is an awareness there and an enhancement there in terms of the brand. You bring that brand down to a certain geographic area, to a certain group of dealers, through other sponsors through a business to business relationship it allows you to focus on certain segments of the public geographically and demographically. Television is important but it is not the singular focus of marketing as it was ten years ago or twenty years ago."



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