The chequered flag had barely stopped waving at the end of this year's opening Grand Prix in Australia before the Formula One world once again began to wonder what it must do to bolster its appeal to advertisers.
The season got off to an inauspicious start, with Michael Schumacher and Ferrari cruising to a predictable victory. "If that race is an example of how F1 will perform this season, ITV and advertisers will be concerned," says Tim Brady, managing director at ZenithOptimedia's sponsorship division, Alliance.
Added to which, Bernie Ecclestone's Formula One Management (FOM) is again in the firing line, this time for overstating global viewing figures for each race to the tune of 130 million viewers.
Revenue adjustment
"It is positive that F1 management is becoming more accountable," says Ben Pincus, chief executive of sponsorship agency The Works London. "But the knock-on effect is that sponsors will look more aggressively at the price they pay. Revenues could fall by 50%."
FOM's new system put the average number of global viewers at 162 million a race in 2003. But Initiative Media's global media research arm, Futures, has come up with the vastly lower figure of 39 million viewers a race.
Jeremy Martin, statistics manager at F1, denies viewers are "missing".
He attributes the discrepancy to the more cautious approach taken by FOM's new system to calculating difficult-to-measure audiences, such as those watching races in countries with no formal TV measurement system.
Futures explains the variance between its and FOM's figures by saying it quotes the average global audience for each event, rather than the peak audience or cumulative figures, which tend to be greater.
On the face of it, F1 has reason for cautious optimism. Rule changes brought in last season, such as one-lap qualifying, seem to be making the sport more exciting; last season's title was decided in the final race, and there were twice as many winning drivers as there were in 2002; the final five races pulled in an additional eight million viewers a race year on year, and overall, viewing was up by one million viewers a race.
Yet the value of broadcast rights has taken a hit in the UK. Last month The Daily Telegraph secured sponsorship for ITV's F1 coverage for £4.5m after Toyota pulled out midway through a £25m four-year agreement.
Telegraph marketing director Mark Dixon defends the decision: "Thirty per cent of new readers come to the paper through the separate daily sports section, so raising our profile through sports sponsorships is key," he says. "Reports have questioned Formula One's global TV audiences; our one-year deal is with ITV and a UK audience, which we are confident it will deliver."
Recent team sponsorship figures from trade magazine Business F1 indicate there is renewed interest in backing the sport. Sponsorship, excluding the money put in by car manufacturers, rose by 8.8% on 2003 to £525m for 2004. But the teams need to work hard this year in the face of competition for marketing budgets from other big events - Euro 2004 and the Olympics.
With the spectre of the EU ban on tobacco ads looming in 2006, the pressure to bring in sponsors is increasing. Recent deals include the Williams team linking up with Anheuser-Busch, NiquitinCQ and Hamleys, while Renault has brought Telefonica on board.
But many argue that not enough is being done to broaden the sport's appeal to a wider audience. "There is no question that other than beer and tobacco, there isn't a lot of sponsor depth," says Jim Wright, head of marketing at Williams.
Marketing hitch
Pincus argues that to effectively expand the appeal of F1, an injection of marketing skill is needed. "The marketing directors of the racing teams have no formal marketing experience," he says.
He adds that F1 doesn't have a recognisable identity, which makes it difficult to market, and points the finger of blame at the FOM. "Other bodies, such as FIFA, UEFA and the IOC, have marketing departments of 30 to 40 people."
Changes to the schedule this year are expected to boost F1's appeal further.
Moving the final race to Brazil, traditionally one of the most popular races, will be welcomed by advertisers. And to reach new audiences, the competition is expanding to Bahrain and China.
But expansion could prove troublesome if it results in the dropping of too many races from Europe. Viewing is heavily affected by the time of day each race is shown and there is a need to make sure the changes don't lead to dedicated fans becoming alienated.
"The downside of the changes is that messing around with the sport for the benefit of TV and sponsors could see a lot of the heartland audience fall away," says Pincus. Despite the efforts it is making, the challenges facing F1 seem unlikely to disappear in a hurry.
TV RATINGS FOR AUSTRALIAN GRAND PRIX
Country 2004 2003 2004 (% of TV 2003 (% of TV
(mil) (mil) population) population)
UK 2.7 3.6 3.1 4.3
Italy 5.2 3.6 4.8 3.2
Spain 1.3 0.2 2.0 0.3
Germany 7.7 7.2 6.0 5.7
Source: Initiative Futures; Initiative local offices and partners
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