Formula 1 has spent the past few years in existential self-examination. Should its primary goal be entertaining its fans or showcasing the technology of its competitors? What does it stand for in a world slowly turning away from the internal combustion engine?
And – with stakeholders still adjusting to the more liberal style of new owners Liberty Media after years of Bernie Ecclestone’s iron grip – how should it do business?
Entering F1 at this critical juncture – and facing the impact of Covid-19 to boot – is Ben Pincus, formerly sponsorship director at Heineken.
Pincus takes over the director of sponsorship and commercial partnerships from Murray Barnett, who brought a flexibility in terms of rights package creation to the role in his three years but could not meet the sales expectations of the owners.
Just one Global Partner – Saudi Aramco, the world’s biggest oil company – has signed up under Liberty’s tenure so far and that, SportBusiness understands, was the result of F1’s sales agency CAA Sports.
Switching from a brand that has worked with F1 since 2016, Pincus has a brand-side take on the organisation’s strength and weaknesses. Perhaps as importantly, he believes in the sport absolutely, seeing the move as a “logical transition” and a “huge opportunity”.
“I’ve spent the last 20-odd years in world of the sports marketing, largely on the agency side and more recently on the client side,” Pincus says. “I’ve been involved in Formula 1 at various different stages, with various different brands. I have a huge belief in Formula 1 as a commercial platform for brands and the opportunity to be a part of delivering and developing that was, frankly, too good to turn down.”
At Heineken, Pincus saw first-hand how Liberty opened up the sport and enabled the brand to activate in ways they were not able to do in the past.
“The way Bernie ran the business was relatively easy to manage because it was quite controlled: what you were able to do was limited, but you did it very well. Conversely, working with Liberty presented a whole set of opportunities but also different challenges.“
Change of agenda
Pincus takes over with some areas of the business on the right track, particularly digital content and social media. “In terms of digital rights, this is something that’s opened up massively,” he says. “I was talking to Frank Arthofer [F1’s global head, digital media and licensing] a couple of days ago and reminding him that he’s achieved in three years what most rights-holders have managed to achieve in 10. If you look at F1’s digital offering today versus our competitive set, I think we’ve achieved a huge amount and are on a par, if not better, in most areas than our competitors.”
In other areas he brings an agenda of change. His priorities are to develop the sport’s sustainability credentials and build out its fan data sets.
On the latter point, he says the sport only holds information on a relatively small percentage of fans versus the overall universe.
“One of my priorities with the digital team is to start to build those data relationships from one of a basic understanding and contextualisation to be able to offer brands a better understanding of our fanbase, right the way through to the ability to transact.
“We are doing some work at the moment around what the commercial requirements of brands are likely to be in the next three years, five years and 10 years from a sponsor perspective, from a licensing perspective and from a broadcast perspective, and my anticipation is that proximity to one-click purchase is going to become incredibly important.”
If that indicates that F1 will focus on improving as a proposition for B2C brands, Pincus says he does not expect that group to become more important than the series’ B2B core. The tension between entertainment and technology will remain evenly balanced.
“I don’t think you can just be a pure entertainment proposition; you have to have very solid foundations and you have to have an authenticity, a purpose for your existence. I don’t think it’s one or the other, I think ultimately one feeds the other.
“For me, Formula 1 represents five values. It’s worldly, aspirational and premium, and it’s about innovation and performance. It’s easy to move towards performance and innovation because it’s natural territory in a conversation. It’s a bit harder to explain the worldliness story, the aspirational story, the premium, but these are also key to its value proposition.”
New business
In practice, Pincus aims to build a systematic approach to generating new sponsorship business. While the sales team gets a fair amount of inbound sales interest – he says the sport receives one or two enquiries a week – outbound connections are key.
“We are looking at what categories we can genuinely build a robust business case against. Then, we’re going into those categories and looking at brands that fit our values – having identified primary values, which brands within those categories can we genuinely do something for? – then looking at what set of rights we can offer against that robust business case.
“It is quite a process, to be honest, and frankly I’ve applied my own experience of being on the receiving end of it [at Heineken] to know the difference between a good inbound conversation versus a clunky, waste-of-time conversation. “
Barnett took a bespoke approach to generating new business, often with regionally- packaged rights. The global partner tier, which comprises deals with Heineken, Rolex, DHL, Pirelli, Emirates and now Aramco, was augmented by secondary global or regional deals, including ones with Amazon Web Services, Petronas, Liqui Moly and Mercedes AMG.
The AWS deal, over four-and-a-half years from mid-2018 to 2022, carries the ‘Official Cloud and Machine Learning Provider’ designation, leaving room to potentially bring other tech companies in at global partner level.
Under Barnett’s watch, F1 also struck the sport’s first global data and betting sponsorship rights partnership with Interregional Sports Group, which intends to sell on the sponsorship rights to up to seven different regional betting sponsors. Thus far, 188Bet’s deal for the Asia region is the only such deal confirmed.
In comparison, Pincus envisages a portfolio based more strongly on global assets. He wants to add two more global partners – he is targeting brands in the IT services and consumer electronics sectors – and bring in a third new brand at a lesser inventory level, most likely a payment services or credit card provider.
“We currently have six global partners. We believe we need eight, maximum nine. We believe IT services and consumer electronics are two gaping holes, and I’d like to end up with eight global brands which get our ‘Knightsbridge real estate’, if you want to frame it like that. We envisage a second tier of seven brands with visibility assets but not necessarily on our Knightsbridge real estate level, and then a supplier tier of about five brands.”
Pincus also wants to change the value proposition around these deals, explaining that what F1 can offer sponsors is not just brand visibility assets like on-course signage, but the image and attributes of F1 and the ability for sponsors to engage with the series to generate content.
The Aramco deal fits this brief. “They ultimately want to develop an efficient and clean fuel for the combustion engine. Formula 1 has spent the last 70 years innovating in automotive and beyond, whether it has been seatbelts, monocoques, hybrid technology through to telemetry that manage utilities in hospitals. We sit in a world of innovation and you couldn’t pick a better partnership.”
Future-gazing
Despite the impact of Covid-19, F1 will introduce new financial regulation for next year. The budget cap of $175m (€160.5m) – which covers expenditure that relates to car performance – will come into force as planned. Teams will in theory be required to develop their 2022 cars – under the new regulations – within the budget cap framework.
Pincus believes that the regulation changes will be a milestone moment and help transform the sport from a competitive point of view and enhance its position as a marketing platform.
Covid-19 is a major obstacle but one that can bring inspiring innovative solutions in the sport, Pincus concludes: “It’s amazing in the Covid-19 challenge that we were all facing, from a human being perspective as well as business perspective, how it’s forcing us to think differently.”
