New Delhi: With three weeks to go for the Indian Formula 1 Grand Prix, advertiser and spectator interest in the motor-racing event seem to have levelled off after the hyperbole associated with the inaugural event last year, partly because of the economic slowdown.
Barring title sponsor Bharti Airtel Ltd, most companies haven’t increased their marketing spending for the event, while local advertisers don’t see much of a rub-off benefit. As for ticket sales, 65% of the inventory has been sold as ticket prices have dropped by 40%.
“Last year there was huge curiosity, and the first F1 Grand Prix in our country was a great success. But this year, I am seeing lesser pre-event hype,” said Nandini Dias, chief operating officer at Lodestar Universal, a media-buying agency.
Bharti Airtel, the largest spender on Formula 1 in the country according to media buyer estimates, also expects interest to die down among those who aren’t motor-racing fans.
“The casual interest in the event will decline, but the genuine fan or the sport enthusiast is extremely excited about the race this year as well,” said Bharat Bambawale, global brand director at Bharti Airtel.
Formula 1’s managers have been taking the sport to emerging markets in Asia and elsewhere to tap into growing interest in these areas as its following wanes elsewhere. Still, global economic uncertainty in general and a slowing economy in India are also taking a toll on the kind of money companies are willing to spend on such event-related promotions.
The ticket-sale pattern this year is similar to what’s seen internationally, said Askari Zaidi, senior vice-president (corporate communications) at Jaypee Group, which organizes the event in the country.
“The sale of tickets is lesser than last year, but this is the global pattern. The first season of Formula 1 is a thumping success, and then the interest declines by 50%, though we are not expecting such a drop for India,” he said. Ticket sales revenue last year amounted to Rs.150 crore.
The price of a seat in the main grandstand, which accommodates 20,000 people, has dropped to Rs.21,000 from Rs.35,000.
“We have rationalized prices. In the case of the grandstand, we felt people may not be able to pay that much money,” Zaidi said.
In the cheaper “natural stand”, tickets for the three-day event start at Rs.2,000 compared with Rs.3,000 last year. “We expect the entire capacity to be sold even if it’s at a cheaper rate,” Zaidi said.
In addition to this, Jaypee Sports International Ltd has started the sale of tickets just for 28 October, the day of the race, to cater to those who don’t want to witness the qualifying rounds on the preceding two days.
Ticket sales started earlier this year—in April versus August in 2011. About 35% of the tickets were sold by August through BookmyShow.com, the official ticketing partner for the event. Sales picked up after that.
Mercedes-Benz India Pvt. Ltd is maintaining its advertising spending at Rs.8-10 crore, even though it has a substantial stake in the event. Apart from the official Mercedes team (full name: Mercedes AMG Petronas), some of the other Formula 1 cars have engines made by the car manufacturer. The company is seeking to recover the leading position it had in the luxury car segment in the country before being pushed down to number three by BMW India Pvt. Ltd and Audi India, ranked one and two, respectively.
“Our spend is more or less similar to last year,” said an official at Mercedes-Benz India, requesting anonymity. “This is because of the current market slowdown and also since it is the second edition of the Indian Grand Prix. So there may not be a lot of excitement around this time.”
While the spending level may not change, the event will mark another stage in its evolution for advertisers, said Aditya Hitkari, chief executive of Globosport Platinum Entertainment, an entertainment and sports solutions company.
“Since the spends are earmarked, they would be the same as last year,” he said. “The change is in the creatives, the deliverables from the brand’s side. We expect it to be a full house this time as well and the ante will go up next year, too.”
Media buyers say local advertisers are unlikely to benefit directly from such an event.
“The thing with F1 is, deals with respect to media rights and sponsorships happen at a global level and are tightly controlled. Only global sponsors like Vodafone, Red Bull, among others, can benefit through these,” said Hiren Pandit, managing partner (special projects) at GroupM. “There is not much for local advertisers. It is a very different model as compared to the Indian Premier League,” the lucrative Twenty20 franchise run by the Board of Control for Cricket in India.
“From a sports point of view, only the title sponsor can create recall value around the event. To generate return on investment on F1 is difficult as it’s an extremely expensive sport,” said Jai Lala, principal partner (exchange) at media buying agency Mindshare.
Lala also said local brands wouldn’t get much mileage from Formula 1. “Unlike cricket, F1 is here for three days and out. Brands cannot create too much buzz around it,” he said.
Bharti Airtel said it has increased its marketing effort.
“We have stepped it up a notch, but I can’t share more details,” said Bambawale.
The title sponsor has tied up with the Mercedes team for entitlements and partnerships in advertisements and promotions. The deal allows Bharti the right to develop co-branded merchandise, use the race partnership logo, offer mobile content and organize driver meet-and-greet sessions as part of promotions. The brand has also rolled out two television commercials with the drivers of the team—the legendary Michael Schumacher, who’s retiring at the end of this season, and Nico Rosberg.
“In today’s day and age, it is not enough for brands to expose or bombard their message to the target audiences. They need to find ways and means of engaging the multi-tasking audience,” said Sam Balsara, chairman and managing director of Madison World, the media-buying agency for Airtel. “Associating with new-age sports that catch the fancy of early adopters is certainly a good way” to do this.
Local advertisers are not staying away entirely. They have bought race telecast spots and are associated with promotional events such as after parties.
Official race broadcaster ESPN Star Sports said Formula 1’s audience is still rising. Last year, the event had an overall reach of 32.7 million compared with 25.5 million for the 2010 season. “The spurt primarily came from the introduction of the Indian Grand Prix,” said a spokesperson for the channel.
As for advertising inventory, ESPN Star Sports said, “We are already sold out for the entire season. Petronas, Samsung and Vodafone have come on board as sponsors on the live telecast. Another 14 advertisers, including MRF Tyres, Bharat Petroleum Corp. Ltd, Sony India, Sistema Shyam TeleServices Ltd, Bharti Cellular and India Tourism among others, have come on board as spot buyers.”
Amrit Jha contributed to this story.