Tobacco loses out to F1 brand

The Formula One tobacco débâcle has implications, not only for the Government but for marketing, as the event itself acquires brand power. Tobacco companies may seem to have won the day, but because they now have nowhere else to go, F1 has bee

If it’s possible, let’s set aside for a minute all the emotions surrounding the Formula One /tobacco débâcle – the accusations of betrayal, corruption, abuse of power and so on – to ask what these extraordinary events signify for marketers.

A decade ago it would have been unthinkable that a few measly sponsorship deals could stall a Government with the biggest parliamentary majority ever, still propelled by the momentum of its electoral triumph, and in pursuit of one of its most cherished crusades. Yet this is what has happened and it tells us a lot about how the marketing environment is changing.

One thing it rams home is how, in a world dominated by global media, “sovereign” national governments’ ability to be their own masters is waning. It was the suggestion that banning sponsorship of the sport would merely drive it to less regulated areas of the world, resulting in even more tobacco images flooding onto our TV screens, that supposedly convinced Tony Blair he wasn’t selling out.

A second ingredient is the way that sponsorship has embedded itself into our sporting and artistic infrastructure, becoming an integral part of the nation’s cultural funding. For many commentators the fact that the withdrawal of tobacco’s 100m input into motor racing would jeopardise its future proves that big business is using sponsorship money to dominate such events.

They may be right, but what they miss is its incredibly powerful win-win logic. Sponsors win because of all the name awareness and the imagery and associations they generate. The media wins because it helps generate audiences. The sport wins because it needs the money to survive. And fans win because the sport is healthier, available more cheaply and on TV.

This is a far cry from sponsorship as a branch of charitable giving – the “chairman’s wife” syndrome. It marks the emergence of an integrated marketing system as potentially powerful as the advertising system which has driven mass marketing for decades. This, too, is a win-win-win-win system which has proved impregnable to all who would like to dismantle it. Media owners win because their operations are heavily subsidised; retailers win because advertising attracts customers to their stores; producers win because it drives volume and reduces risk, enabling them to invest in new product development and reach manufacturing economies of scale; and consumers benefit because these economies of scale deliver them “new! improved!” products at lower prices.

The only difference is that the advertising system is beginning to fray at the edges (for reasons such as media inflation and fragmentation with which we are all familiar), while sponsorship goes from strength to strength.

And for good reason. In many ways sponsorship of a sport like F1 has even more potential than advertising. Unlike media advertising, which is by definition two-dimensional, sporting and artistic events are full-blooded, all-round experiences which people “live” for. Their subject matter instantly connects with, and arouses, the interest and the emotions of their audiences. They don’t have to agonise about achieving “cut through” because what they have instead is audience “search out”.

There’s more. Good events like F1 and the Olympics generate global audiences which deliver global economies of scale for marketing investment. In addition, sponsors have access to all manner of knock-on opportunities such as linked promotional campaigns (“win a ticket to …”), corporate hospitality (often critical for business-to-business marketers), an opportunity to showcase your expertise (for example IBM at the Olympics), and so on.

But there is another side to this coin. As the F1 row highlights, it is F1 that provides “the name” and tobacco companies that are providing the money. So which is the “real” brand here, F1 or Marlboro?

When sponsorship was in its infancy, it was possible to see it in terms of big brands supporting needy events. Events came to big brands, cap in hand, saying “please, sir, will you sponsor me?”. Minor ones still do. But today, the big events are becoming brands in their own right, and their brand managers are beginning to realise they offer consumers the rational and emotional benefits they really want to buy. By comparison, associated brands are just hangers-on.

That’s important, because within any win-win system there is always a battle for the biggest share of the spoils and in this particular battle power is shifting rapidly to the holders of intellectual property rights themselves – to the sporting and artistic brands with real pulling power.

Thus, recently, BBC chairman Sir Christopher Bland complained that while the BBC licence fee was hardly tracking inflation, the price of buying broadcasting rights has mushroomed 800 per cent over the past decade. Last week, the Premier League signed an overseas broadcast rights deal for 100m, over ten times the value of the previous one. And while 628 corporate sponsors stumped up $7m (4.2m) for the Montreal Olympics, just ten handed over $300m (181m) for the chance to link themselves to the Atlanta games.

Indeed, instead of seeing sponsorship as another form of advertising – for example a way for big brands to buy exposure – it might be better to see it as the means by which emerging entertainment superbrands are leveraging their brand strength to maximise cashflows.

All of which makes the F1 furore even more astonishing. Sure, on the one hand the tobacco companies have done it again, riding roughshod over objections of all the campaigners. But to achieve what? The bizarre thing about Labour’s proposal for an exemption is that it effectively legislates F1 into a monopoly, as tobacco’s only public communications vehicle.

On the one hand, this means that without special provisions, the sport will become even more dependent on tobacco. On the other hand, by “banning” competition from all other events and all other communications channels, it is giving F1 players the power to dictate terms: the tobacco brands have nowhere else to go. Which makes one wonder. Have the tobacco marketers really taken the sport hostage? Or is it the other way round?

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