Indy trails in sponsor exposure race

[Jag_Warrior]

Discuss...


From the Indianapolis Business Journal:


Recently released data shows NASCAR’s Daytona 500 is still miles ahead of the Indianapolis 500 in terms of value the race delivers to sponsors. But, with the unification of the Indy Racing League and Champ Car, there is much optimism that the 2008 edition will be the most-watched Indianapolis 500 in more than a decade. The open-wheel crown jewel will have to really rev its marketing horsepower to close the gap.

A study compiled by Joyce Julius and Associates, an independent Ann Arbor, Mich.-based media research firm, concluded that Ryan Newman’s victory in this year’s Daytona 500 helped his sponsor, Alltel, receive in-broadcast exposure valued at $22.5 million, including promotional value for Alltel, Alltel Wireless and Alltel.com. Newman’s victory also earned Dodge and Dodge dealers almost $5 million and Mobil Oil about $3.8 million in exposure.

By comparison, the primary sponsor of Dario Franchitti’s winning entry at Indianapolis last year-Canadian Club-received in-broadcast exposure of $3.6 million. To be fair, the 2007 Indy 500 was rain shortened, but the gap between Indy and Daytona would not have been closed under the best weather conditions, sports marketers said. There were, however, bigger winners in sponsor exposure at Indianapolis last year, but all were well behind Alltel. Following are the top 10 at the 2007 Indy 500, according to Joyce Julius.

1. Motorola $8.1 million
2. NYSE Group $6.1 million
3. Target $5.8 million
4. 7-Eleven $5.7 million
5. Impact! $5.4 million
6. Vonage $5 million
7. Argent Mortgage $4.7 million
8. Canadian Club $3.6 million
9. Mobil 1 $2.9 million
10. Bryant Heating & Cooling $2.6 million



http://blog.ibj.com/thescore/?s=Joyce+Julius

[millencolin]

interesting article. For uni lately i've been doing a lot of work about sporting events and their marketing potential (in Australia that is), and the figures for the daytona 500 still amazes me. I guess that can be expected with the fact that the US population is massive compared to here but its still mind-boggeling. $$22.5million and her was only at the front at the very end! imagine if Newman was constantly up the front the figure would be huge.

[Mark in Oshawa]

People during the IRL/CCWS war couldn't seem to grasp the need for a merger. Right here in this thread you can see WHY. NASCAR is killing OW racing in North America for sponsorship value. If you take away the tradtionally high ratings for the Indy 500 ( the only OW race that draws anywhere CLOSE to NASCAR races) you get next to NO sponsor value. What was the value of the Medi-zone sponsorship on Graham Rahal or McDonalds on Bordais last year? What was the sponsor value to any of the sponsors on Franchitti's car if he never was up front in the 500 or if he ran just the other IRL events? EVERY NASCAR Sprint Cup broadcast draws better than every other OW race on TV by a 10 fold or better margin. Most out draw the Indy 500. Heck, the Nationwide series has the second highest racing ratings on TV in the US and it is NASCAR's "B" series. Sponsors are having a hard time going to THAT series and they will get network exposure THERE. I am actually shocked why anyone sponsors any OW racing cars at all. The business model of NASCAR has absolutely BURIED OW racing in the last decade and a half, and I cant blame all of that on Tony George.......

[Hoop-98]

JW where was cart/owcs 99-/07 since you are providing refs? How could a CCWS effort plan to respond going forward, was this the only, however faint hope, or did you invision a CCWS tract you could explain?


rh

[Jag_Warrior]

What was the value of the Medi-zone sponsorship on Graham Rahal or McDonalds on Bordais last year?

Right on the money, Mark. BTW, good to see you back. I thought maybe some goblin from American Axle had taken you hostage. :D

Medi-Zone, I'm not sure about them. I took a quick look around the CCWS website and found some Joyce Julius data from the 2006 season:

RuSPORT sponsor CDW earned the most exposure among the team sponsors with more than $5.7 million just for CDW, while team associate sponsors HP, Edge, Targus, Plantronics and Oracle earned a combined $7 million. Indeck was second among team primary sponsors as the Forsythe Championship Racing sponsor gained more than $4 million in exposure while Newman/Haas Racing sponsor McDonald's increased its exposure in 2006 to more than $3.6 million.

Team sponsors Mi-Jack, Aussie Vineyards and Gulfstream each received more than $1 million in exposure value for their partnerships with Champ Car race teams as did event sponsors Molson and Toyota as well as series partner Roshfrans. Team sponsors topping the $500,000 mark included Bell Micro, Sonny's Bar-B-Q, Tide, Wellbox and JLG.

What I often pointed out to some of the CCWS (management) fans on another board was the ratio or % ROI, not the fact that it might be "cheaper" to sponsor a Champ (or Indy) car:

Rank Sponsor Driver Total Exposure Value (millions)

1 » Budweiser Dale Jr. $183.10
2 » Lowe’s J. Johnson $143.60
3 » Cingular J. Burton $116.60
4 » Home Depot T. Stewart $98.60
5 » DuPont J. Gordon $88.90
6 » Miller Lite Kurt Busch $71.10
7 » NAPA Auto Parts M. Waltrip $68.60
8 » DLP T. Raines $67.60
9 » Subway G. Biffle $64.40
10 » DeWalt Tools M. Kenseth $63.30

(Also based on Joyce Julius data)

CCWS claimed to have a total sponsor value of just over $120.6 million for 2006. So Bud and Lowe's returned more than the entire Champ Car series and Cingular did about as well. Asking price for a primary in NASCAR Nextel was reportedly in the $15 mil range in '06. A CCWS car? $3-$4 million? So when people told (or tell) me that there's more "bang for the buck" in American open wheel, I only ask that they show me the smoking gun. I haven't seen it or heard it fire for many years. If you're a marketing VP, would you leave a series that provides a 640% gain for one that might return even money, if you're lucky? Me? Having a bunch of old dudes on the BoD try to chase me down and beat the fire out of me isn't anywhere near my idea of a good time.

And before any IRL fans get too happy... I'll put up the figures from Indy vs. Daytona when I run across them. :(

[garyshell]

What was the value of the Medi-zone sponsorship on Graham Rahal or McDonalds on Bordais last year?


Medi-Zone, I'm not sure about them. I took a quick look around the CCWS website and found some Joyce Julius data from the 2006 season:

Jag,

I don't think he was talking about the value to the sponsors. I think he was talking about the value to the teams, as in how much money did McDonalds pay to Newman Haas?

Gary

[Jag_Warrior]

JW where was cart/owcs 99-/07 since you are providing refs? How could a CCWS effort plan to respond going forward, was this the only, however faint hope, or did you invision a CCWS tract you could explain?


rh

The sponsors values for CART in '99? I would have to dig through a dormant h/d find those for '99. What I can recall from '99 is that CART was beginning to fall from favor with sponsors because of its lack of ROI vs. rising costs, lack of professionalism and tact. It was about that time that my former company withdrew support, after about a decade of strong support for CART (and Indy)... to the point of our Chairman trying to broker a deal between George, GM and CART. Losing the paying TV deal and getting a pay-for-play TV deal was harmful to the CART series, no doubt.

How could CART/CCWS have made it? Easy answer is $. To (re)build the series, someone was going to have to spend it. IMO, CCWS and its owners relied too heavily on cost reductions, yet they ignored the value of the product and the presentation. Part of the attraction to this type of racing for many people has been the "buzz" that it provided. I don't know how to quantify "buzz". But imagine if Cadillac, Porsche, etc. just tried to produce cars at the cheapest production cost possible and ignored the "buzz" that their brands represented. Cadillac tried that and failed. Now they've gone back in the other direction, and they're finding great success, especially with the revamped CTS. CCWS began to look cheap and began to act cheap.

Donald Trump "advertised" that he was a billionaire long before he actually attained that height. But he created and kept a definite "buzz" about himself. The arrogant pri... guy, actually turned himself into a successful brand. Maybe George can keep spending until he can convince more sponsors that he has a stable series and a buzz that is worth their $? CCWS clearly had lost the fire, so maybe he can pull it off? :confused:

I'll just keep munching on this popcorn, hoping I can last until 2AM when F1 practice from Malaysia comes on. Best case, I figure AOWR has a couple more years of "rich boy club racing" before it gets righted... or buried.

[Jag_Warrior]

Jag,

I don't think he was talking about the value to the sponsors. I think he was talking about the value to the teams, as in how much money did McDonalds pay to Newman Haas?

Gary


Well, paint me orange and drop me off on the wrong side of town. Yep, I see that now... my eyes are crossing (I would have done this silly s#!^ for CART in Australia, once upon a time, ya know?!). At what point might one die from lack of sleep? Anybody know?

Wild azz guess... $3 million+ from McD's? I'm not sure if I ever saw a reliable figure attached to their sponsorship.

Probably the most entertaining "debate" I had was at the "fantasy forum" with the team guy who insisted that sponsors needed to "understand the costs of sponsoring a Champ Car." I don't know but I bet that he was a Forsythe guy. What did Gerry want, $10 million for a one car primary... while Indeck was shown to have gotten about $4 million in TOTAL exposure value from its sponsorship of a two car team??? Wonder if that came with free KY Jelly? I respect Gerry for trying to save the series. But if the boys at Cerberus start asking $40K for Jeep Libertys and $80K for the new Challenger, I'd say they might want to pack it in too. Do you care what their health care costs are or how much grief they get from the UAW or what it costs to power a plant? Neither does any other potential customer.

[garyshell]

Wild azz guess... $3 million+ from McD's? I'm not sure if I ever saw a reliable figure attached to their sponsorship.

I have no idea what the amount was. I remember some speculation floated about that it was a B2B deal between "Newman's Own" and McDonald's and as I remember the speculation was that little or no money actually changed hands. Anyone else have a clearer recollection of what that discussion was?

Gary

[DBell]

Really interesting information Jag. To see the value for one Nascar Sponsor versus the whole value of CC is staggering. I'll be interested to see your IRL numbers. Probably a little better than CC, but still peanuts compared to Nascar. Do you have any F1 figures?

I think AOW waited 6 years to long to get back together. If a merger had happened within the first 5-6 years of the split, it may have been recoverable. It's hard to go out into the deep wilderness for a dozen years and then try to recapture what you had. Times change and more than a decade of losing fans while creating few new ones will be extremely hard to overcome. Young fans are looking at Nascar or drifting or something else. OW is not on their radar.

[Hoop-98]

I thik the peak days for CART were in the 250M range andin the 99 time frame IRL was about 188, by 2002 or so they swapped IIRC.

Joe's TV Coup soon killed off the CART side.

I can't see how the bailout will bring huge returns to the new Indy Car but maybe it will stop the decline, time will tell.

rh

[Lousada]

From the Sharp-Rahal civil action, it was said that Patron paid 5,2 million a year. I don't know how this relates to other teams, if this was above average or below, how much was for Sharp etc. But starting from this 5,2 number, 3 sponsors already turn a 'profit' from the Indy500 alone. A couple of others are already halfway there.
Another point is that these numbers are slightly twisted because Marlboro is not counted. I imagine they would easily make the top 5.
And my last point is that these are just numbers. They don't tell the underlying strategies the companies have. Again, Marlboro is a prime example, who according to this list have 0 return. Yet they see the value in sponsoring two topcars.

[Jag_Warrior]

Really interesting information Jag. To see the value for one Nascar Sponsor versus the whole value of CC is staggering. I'll be interested to see your IRL numbers. Probably a little better than CC, but still peanuts compared to Nascar. Do you have any F1 figures?

I think AOW waited 6 years to long to get back together. If a merger had happened within the first 5-6 years of the split, it may have been recoverable. It's hard to go out into the deep wilderness for a dozen years and then try to recapture what you had. Times change and more than a decade of losing fans while creating few new ones will be extremely hard to overcome. Young fans are looking at Nascar or drifting or something else. OW is not on their radar.

Joyce Julius:
Cumulative sponsorship value in 2005:
ChampCar: $98 million,
IRL: $340 million,
NASCAR: $5 billion

As far as Formula One, I'm sure that data is gathered, but I've never seen hard (reliable) numbers for F1 sponsor values or viewership. I say "reliable" because any number coming out of Bernie Ecclestone's mouth is about as reliable as those that come out of Donald Trump's mouth. :dozey:

[Hoop-98]

Unfortunately it's worse than it looks. JJ numbers are book rates times exposure minutes and to varying degrees (more CC but plenty IRL) the rate card numbers are skewed by the in kind (wheel goes round and round) advert.


IMO anyways

rh

[Jag_Warrior]

From the Sharp-Rahal civil action, it was said that Patron paid 5,2 million a year. I don't know how this relates to other teams, if this was above average or below, how much was for Sharp etc. But starting from this 5,2 number, 3 sponsors already turn a 'profit' from the Indy500 alone. A couple of others are already halfway there.

It hasn't been shown or suggested that there is no "profit" in sponsoring a car at Indy. Just the opposite is true. But again, the world of sponsorship does not revolve around Indy. Look at it this way. Using the numbers from 2006, I believe the cumulative sponsorship value of the entire IRL season (including Indy) was about $340 million. If I just include 20 full season/regular runners, I'd have a sponsorship cost of roughly $100 million (20 x $5 mil) for the full season... close enough for guberment work? I'll include the sponsorship value of Indy, but I won't include the costs of the one-offs that ran Indy. So $100 million gets you $340 million. Assuming that Bud and Lowe's had combined sponsorship team costs of $30 million ($15 mil per car) for the full season of NASCAR Nextel Cup, their full season return was roughly $327 million. I went to public school but I don't need an HP12C to figure out which deal I'd jump on there: $30 mil to get $327 mil or $100 mil to get $340 mil.


Another point is that these numbers are slightly twisted because Marlboro is not counted.

Why is Marlboro not counted? I think it is, or would be, except for... The Senna Foundation's Senna "S" buried inside the Williams cars' front wing supports probably wouldn't be counted either. Why? Because it usually cannot be seen on television. I don't even know if it's there this year.



I imagine they would easily make the top 5.

Joyce Julius conducts its data gathering based on "clear, in focus views". Marlboro isn't being discriminated against. If "Marlboro" cannot be seen clearly, it's not counted by JJ.



And my last point is that these are just numbers.

In my world, uttering those words during a meeting or teleconference would be the first step to "pursuing other opportunities effective immediately."

Any strategy that cannot be supported by data isn't much of a strategy. And if a strategy is really valuable to a business, why could it not be quantified?



They don't tell the underlying strategies the companies have. Again, Marlboro is a prime example, who according to this list have 0 return. Yet they see the value in sponsoring two topcars.

True, companies determine their strategies based on any number of factors. And you are correct that the numbers do not tell that tale... these measures are not in place to explain strategies. The measures simply give an "apples to apples" comparison of the financial success of one sponsorship program versus another. Also, I'm not aware that it says anywhere that Marlboro has a 0 return on investment. Where did you see that? Because of limitations on tobacco media advertising, I would say that Marlboro finds its value from at track ticket give aways and other such programs. I don't know. But in today's environment, what other options do they have??? Marlboro still spends a huge amount of money (estimates of roughly $100 million per year) in Formula One... even though its livery cannot be clearly displayed at most of the races that Ferrari takes part in. Go figure.

[Lousada]

It hasn't been shown or suggested that there is no "profit" in sponsoring a car at Indy. Just the opposite is true. But again, the world of sponsorship does not revolve around Indy. Look at it this way. Using the numbers from 2006, I believe the cumulative sponsorship value of the entire IRL season (including Indy) was about $340 million. If I just include 20 full season/regular runners, I'd have a sponsorship cost of roughly $100 million (20 x $5 mil) for the full season... close enough for guberment work? I'll include the sponsorship value of Indy, but I won't include the costs of the one-offs that ran Indy. So $100 million gets you $340 million. Assuming that Bud and Lowe's had combined sponsorship team costs of $30 million ($15 mil per car) for the full season of NASCAR Nextel Cup, their full season return was roughly $327 million. I went to public school but I don't need an HP12C to figure out which deal I'd jump on there: $30 mil to get $327 mil or $100 mil to get $340 mil.

Of course it's better to sponsor Junior than to sponsor any ICS team. It's probably better to sponsor junior than to sponsor any other American athlete. You don't even have to see this report to know that sponsoring a top NASCAR team is better than sponsoring an ICS team. Just comparing tv-ratings or attendance or paddocks or whatever should tell the difference.

But how is the relation from the bottom half of the NASCAR grid to the tophalf of the ICS? Or how does ICS relate to Nascar Busch? This is what I'd like to know (because I don't know)


Why is Marlboro not counted? I think it is, or would be, except for... The Senna Foundation's Senna "S" buried inside the Williams cars' front wing supports probably wouldn't be counted either. Why? Because it usually cannot be seen on television. I don't even know if it's there this year.

Joyce Julius conducts its data gathering based on "clear, in focus views". Marlboro isn't being discriminated against. If "Marlboro" cannot be seen clearly, it's not counted by JJ..

Except everyone knows Penske is sponsored by Marlboro. This is something this report does not take into account. Mobil1 is a secondary sponsor of Penske and they are on for 2,9 million so Marlboro is at least the same. It's just a minor observation I thought was worth mentioning.


In my world, uttering those words during a meeting or teleconference would be the first step to "pursuing other opportunities effective immediately."

Any strategy that cannot be supported by data isn't much of a strategy. And if a strategy is really valuable to a business, why could it not be quantified?

True, companies determine their strategies based on any number of factors. And you are correct that the numbers do not tell that tale... these measures are not in place to explain strategies. The measures simply give an "apples to apples" comparison of the financial success of one sponsorship program versus another.

Which is what I'm getting at.
I'm not dismissing anything from this report. What I was getting at is that comparing these numbers it looks very dramatic for the ICS. But it's a matter of perspective, which I was trying to point out.
I'm sorry to say but when I first read your firstpost I thought it was a little dig at ICS. You know like Indycool used to post suggestive articles with no comment? ;) But reading your replies I see this was not your meaning at all and that you know what you are talking about. I don't think we are disagreeing here on anything. If I could explain it properly you probably agree that we are on the same level ;)
Hope I didn't offend you just there? :o ;)


Also, I'm not aware that it says anywhere that Marlboro has a 0 return on investment. Where did you see that? Because of limitations on tobacco media advertising, I would say that Marlboro finds its value from at track ticket give aways and other such programs. I don't know. But in today's environment, what other options do they have??? Marlboro still spends a huge amount of money (estimates of roughly $100 million per year) in Formula One... even though its livery cannot be clearly displayed at most of the races that Ferrari takes part in. Go figure.

This is what I was trying to say. According to this report the financial succes of their sponsorship is 0. But of course this is not true. Marlboro, like every other company, can't throw away money just for the fun of it. I am sure they precisely calculated that sponsoring Penske gives a positive return.
This is what I was trying to get across in my first post. That sponsors in Indycar might have different strategies than clean tv/media exposure value.

[Jag_Warrior]

But how is the relation from the bottom half of the NASCAR grid to the tophalf of the ICS? Or how does ICS relate to Nascar Busch? This is what I'd like to know (because I don't know)

By the Joyce Julius yardstick, it would all come down to the frequency and length of the "in focus views" on TV. I'm not a JJ subscriber (roughly $4K/year), so I can't answer your question. In the summaries I'm able to find, they tend not to go past the top 10, once the cumulative series figures are offered.

But I think in one of Waldo's posts, he suggested a correlation between the IRL and Nationwide/Busch and/or Craftsman Trucks.



Except everyone knows Penske is sponsored by Marlboro. This is something this report does not take into account. Mobil1 is a secondary sponsor of Penske and they are on for 2,9 million so Marlboro is at least the same. It's just a minor observation I thought was worth mentioning.

Actually "everyone" doesn't know that. I didn't actually know until I double checked the Penske Racing website. The "Marlboro" wording has even been removed from the cars and the Penske Racing site. Philip Morris USA is listed only on the sponsor page, and there is no Marlboro logo there either. Whereas the Ferrari F1 team is still called "Scuderia Ferrari Marlboro". I guessed that Marlboro was still involved with Penske, only because I've followed racing for a long time and the livery is so familiar to me. Anyone new to the sport, or the casual viewer, would have no way of knowing this. That's why Joyce Julius doesn't count them: there is nothing to count on TV. But as you said, Marlboro obviously finds value in other ways, just not on TV.



Which is what I'm getting at. I'm not dismissing anything from this report. What I was getting at is that comparing these numbers it looks very dramatic for the ICS. But it's a matter of perspective, which I was trying to point out.

I would say that it is rather dramatic. The return ratios for each sponsor dollar spent (overall and at the top of each series) provides a hint as to why sponsors have made the choices that they have (whether looking at IRL, CCWS or whatever). Years ago, the series vs. series ratios were not nearly as divergent as they are now.

I used to get a kick out of tracking Nielsen ratings and year over year growth or declines. Let's call 2008 a baseline, with respect to sponsor exposure values, and see where it goes from here. Even though the IRL is substantially behind NASCAR now, can the IRL grow fast enough to close the gap? The original article mentioned this as well.



I'm sorry to say but when I first read your firstpost I thought it was a little dig at ICS. You know like Indycool used to post suggestive articles with no comment? ;)

I'm curious as to how this business model is going to move forward... or if it's going to move forward. Other than increased subsidies, I haven't seen or heard of any plans which would address sponsor or viewership concerns - unless one would argue that the former CCWS teams will bring in sponsors and viewers? ;)

And Indycool? Personally, I've always gotten along with Indycool. When he posted articles on CART or CCWS, it was usually something valid (and yeah, seldom was it anything positive ;) ). If there was information available to counter the article, then I did that. If not, then I didn't. But whatever his agenda may have been, I felt that he always provided a good debate.



I don't think we are disagreeing here on anything. If I could explain it properly you probably agree that we are on the same level
Hope I didn't offend you just there? ;)

I've read your posts many times over the years. I'd say that we are on the same page more often than not. But don't worry about offending me. If no one else will do it, I'll disagree with myself in order to have a debate. :D


This is what I was trying to say. According to this report the financial succes of their sponsorship is 0. But of course this is not true. Marlboro, like every other company, can't throw away money just for the fun of it. I am sure they precisely calculated that sponsoring Penske gives a positive return.
This is what I was trying to get across in my first post. That sponsors in Indycar might have different strategies than clean tv/media exposure value.

By using the term "financial success", I worded that poorly. The Joyce Julius report is one (important) measure of financial success, but it's not the only one. Years ago, I got to sit in a conference that included some guys from Lowe's when they first signed on with Hendrick and Jimmie Johnson. Listening to them was quite an education for me. Even though my own company had been involved in various forms of racing sponsorship for years, part of that was because our Chairman and CEO was a racing nut. These Lowe's guys were racing fans, but they were going racing (mainly) because of what they saw in hard data reports on ROI (Joyce Julius), Nielsen ratings and other reports, which showed that NASCAR fans were some of the most brand loyal sports fans there were.

Marlboro is a special case. Even liquor, male enhancement and porn companies can advertise on cars, if they so choose. Anything is possible. But I wouldn't want to make a sponsor presentation which showed that I was behind on the metrics most important to the average sponsor.

Again, I think 2008 makes a good baseline to begin looking at how (or if) AOWR will begin making a dent in NASCAR's lead in the eyes of sponsors.

[Lousada]

By the Joyce Julius yardstick, it would all come down to the frequency and length of the "in focus views" on TV. I'm not a JJ subscriber (roughly $4K/year), so I can't answer your question. In the summaries I'm able to find, they tend not to go past the top 10, once the cumulative series figures are offered.

But I think in one of Waldo's posts, he suggested a correlation between the IRL and Nationwide/Busch and/or Craftsman Trucks.

I don't know if you ever saw this site. It's made by a fan so it's not as 'scientific' and precise as JJ but it's pretty interesting nonetheless:
http://www.cawsnjaws.com/
It gives a rough estimate on how much airtime each driver gets. For example at Bristol only 18 out of 43 drivers got focussed on.


I used to get a kick out of tracking Nielsen ratings and year over year growth or declines. Let's call 2008 a baseline, with respect to sponsor exposure values, and see where it goes from here. Even though the IRL is substantially behind NASCAR now, can the IRL grow fast enough to close the gap? The original article mentioned this as well.

I for one will get a little kick out of those ratings this year ;) So far, all Nascar races have improved ratings. I wonder what the impact on the ICS ratings will be.


I'm curious as to how this business model is going to move forward... or if it's going to move forward. Other than increased subsidies, I haven't seen or heard of any plans which would address sponsor or viewership concerns - unless one would argue that the former CCWS teams will bring in sponsors and viewers? ;)

Yeah, they certainly haven't been very open so far. I'm guessing it's because of this last minute blendification that eats all the time. I hope that when everything is settled we'll see where this is going. Hopefully we'll discover their new direction come Indy or else per 2009. There are no more excuses now.