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Sebastian Vettel of the Red Bull team is in the running for the F1 championship title.
Sebastian Vettel of the Red Bull team is in the running for the F1 championship title.

Red Bull's F1 campaign a masterpiece of marketing

Whether or not it is celebrating after today's F1 race, the energy drink has already won the brand sponsorship battle.

By 7 o'clock tonight one driver will be the 2010 King of Formula One. If it is Fernando Alonso, then it is a good day for both Abu Dhabi and Italy. Ferrari World could have no better launch. If it is Mark Webber or Sebastian Vettel, then Red Bull has done the double with both F1 2010 Constructors and Driver World Championships. If it is Lewis Hamilton and McLaren, then the other drivers will have had a bad day at the office.

For Ferrari, losing today would mean a disappointing season and cost millions of euros in bonuses and future sponsorship. It will have an impact on its brand gloss and corporate morale. Cars are its business, and F1 is the core of its marketing. For Red Bull, losing will be demoralising, but the partying around F1 will not stop and its main revenue streams are only rising. Red Bull may lose the battle but it is winning the war. Particularly the brand sponsorship war.

Look at it this way: Ferrari has more than 80 years of heritage as a company, while Red Bull has fewer than 25. Both understand passion and sponsorship better than their peers. Ferrari is the establishment in terms of an F1 brand and rights-holder. Red Bull is the young, upstart challenger breaking all the rules.

Red Bull is an incredible story. Its marketing and ingredient origins are a Thai energy drink called Krating Daeng. Dietrich Mateschitz, the Austrian entrepreneur behind Red Bull, developed the energy drink brand when, as the international marketing director for a toothpaste company, he visited Thailand in 1982 and discovered a cure for his jet lag.

Between 1984 and 1987, Mr Mateschitz worked on adapting the recipe, then invested US$500,000 (Dh1.8 million) in a joint venture with Chaleo Yoovidhya, his Thai business partner, and his son, Chalerm. The Red Bull product and brand was launched in 1987. Today it is one of the world's best-selling soft drinks. Forbes estimated in 2008 that both men are worth $4 billion.

Red Bull's journey in terms of sponsorship is equally remarkable. Mr Mateschitz and his team understood that to align yourself to fans, content and passion through sponsorship was key. If you launch a business with a brand today, follow this approach. Place your brand in the heart of the right sponsorship content, and if your business has the right core product and fundamentals, you can grow very quickly.

Perhaps the key to Red Bull's success is that it has done everything its own way. It sponsored individuals and events - particularly in extreme youth sports. If the right opportunities did not exist, then it invented them. Today when you look at Red Bull's website - a YouTube-style channel in its own right and no doubt a future media channel modelled on Virgin's brand diversification model - the most impressive part is that Red Bull owns most of what you watch.

In a rare interview with The Times of London in 2006, Mr Mateschitz commented on his 400m (Dh2 billion) marketing strategy of the time: "It's quite normal that you spend millions of dollars on marketing on TV, but here it's marketing investment in assets." Best of all, he owns the assets. From its impressive F1 team to its New York soccer franchise, from the Red Bull Air Race to Flugtage, Red Bull owns, markets and delivers its own content. It is also now generating major revenue streams from these assets, which considerably reduce its sponsorship outlay.

Ferrari does have one advantage in this regard. Red Bull is so good at what it does that other brands drown or fade in comparison. Destinations, alcoholic drinks, individuals and content can benefit from a Red Bull sponsorship asset association. But consumer brands will often have issues.

At present, Ferrari sponsorship gloss is far wider in terms of commercial impact. The Red Bull-du partnership announced last week has great potential because of the content that du will get. Expect downloads, ticket promotions, special access to drivers, F1 races and even Red Bull parties to come through your du subscriptions.

Two years before Red Bull's launch, a new airline called Emirates launched in Dubai. Initially a challenger brand, it has also used sponsorship as a core commercial tool to grow its business. Today Emirates Airline is the Gulf's largest sponsor. It is safe to say that it is the only one spending more than $100m on its global sponsorship programme annually.

Like Red Bull, Emirates looks to dominate most of its sponsorships. It also has an iconic slogan ("Fly Emirates") and sponsored assets including the Emirates Dubai Rugby Sevens, based at the "Sevens stadium", where the food and beverages are provided by an Emirates Group subsidiary. It is not beyond the realms of the possible that Emirates follows this model even further and buys into a sports franchise such as Red Bull in F1.

This trend of the "brand-cum-rights owner" will continue in boardrooms worldwide. This year Audi, probably the world's leading car brand outside of F1, took a 9 per cent stake in Bayern Munich in a deal worth 90m. Audi has been a partner of Bayern since 2002. The equity stake, while a good business proposition in its own right, allows Audi the potential to increase its commercial and community returns from the partnership by shaping the marketing strategy. The same is true for Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, with Ferrari, and Aabar with Mercedes.

Regardless of the result, there will be two other winners of the sponsorship race at Yas Marina Circuit. First, Abu Dhabi. The F1 Etihad Airways Abu Dhabi Grand Prix showcases Abu Dhabi as a leisure and business destination, while also creating strong commercial platforms for its major corporations: Aabar, Aldar, Etihad Airways, Mubadala and National Bank of Abu Dhabi.

Last year Etihad had more hits on its website on the Sunday of F1 than on any other day in its brief history. A recent survey by IFM sports marketing suggested that 94.4 million viewers watched the Abu Dhabi Grand Prix last year. This year it is likely to exceed 100 million viewers, given that the championship will be decided today.

The second winner is Red Bull. Sponsorship is multi-dimensional. If you place your sponsorship strategy at the heart of your business, you can shape a brand, win consumers, create a corporate culture, generate sales, motivate staff and much more.

It is part advertising, part PR, part sales tool, part brand gloss and very community based. Red Bull is perhaps the best modern example of why sponsorship works. The industry owes it a lot. It has shown how sponsorship can give you wings and make a product fly.

 

Jamie Cunningham is the founder of the Arabian Sponsorship Forum, which returns to Abu Dhabi on December 8 and 9 at Yas Hotel. For more information, log on to www.arabiansponsorship.com for more details.

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