Alex Meshkin

Two brands and two industries synonymous with NASCAR – Coors Light (Coors Brewing) and Texaco Havoline (Chevron) have in subsequent years cut ties with Chip Ganassi Racing and ultimately vacated NASCAR team sponsorship. The association and sponsorship of these two industries – Beer and Gasoline/Oil companies with NASCAR have by far the greatest value proposition; and yet they are leaving NASCAR? What is going on here? Even for someone like me who has been writing about the difficult NASCAR sponsorship market is surprised and concerned with Texaco pulling the plug on its storied NASCAR sponsorship program.

What is the root cause of these two prominent and long-term sponsors leaving NASCAR? The answer is simple: there are too many compelling alternatives which have a greater ROI and offer far less risk. Let’s be honest, primary sponsors are asked to commit up to $25 Million to purchase “so called advertising” without any meaningful guaranties of consumer advertising impressions. Sounds rather ominous, right?

Of course, sponsoring Dale Earnhardt Jr. and any of the other top performing drivers offers a unique value proposition: residue value through their brand loyal fans, merchandise and alike. But the vast majority of sponsors are receiving a diminishing ROI by virtue of the rising costs of NASCAR sponsorship and decreased television viewership and race attendance. Since 2004, the cost of becoming a primary sponsor of a top performing Sprint Cup team has soared by over 60% while television ratings have dropped by about 10%. The dichotomy of rising sponsorship costs and decreased television exposure is a disturbing trend which is primarily affecting the worst performing teams but could soon start to challenge the most elite NASCAR teams. The change in corporate sponsors’ attitudes towards NASCAR sponsorship shouldn’t surprise anyone.

However, NASCAR and its Teams have either refused or do not understand how to evolve in the digital age where advertisers can purchase measureable and interactive advertising with far less risk and much greater ROI. Unlike, most “traditional” businesses that reinvent themselves and innovate; NASCAR has failed to bring forth any meaningful innovations that can directly increase sponsors’ exposure and ROI.

Chip Ganassi Racing has had and continues to be one of the best performing open-wheel racing teams; and clearly delivers on and off the track performance for Target in the IndyCar Series. But unfortunately, Chip Ganassi’s foray into NASCAR has been a bitter disappointment. In 2006, Chip Ganassi secured Juan Pablo Montoya to pilot the #42 Texaco Dodge in the Sprint Cup series and hoped the media attention of the former IndyCar and Indy 500 Champion would ignite the performance and success of his NASCAR team. But excluding a few promising races (mostly on road courses) Montoya’s NASCAR career has underperformed. It appears Chip Ganassi Racing may be another victim of the sponsorship race; and soon join NASCAR’s elite defunct team list.

Over the past few years corporate marketing and advertising budgets have made a dramatic shift from Old Media towards New Media, which provides measurable customer acquisition with a recognizable ROI. Today, current NASCAR Sponsorship programs are structured much like Old Media, which fails to present corporate marketers with the value presented through “new media” channels. Now there are some who will say – sports marketing isn’t Old Media or New Media but Sports Media. While Sports Media does present a unique value proposition – at the end of the day, it does not provide corporate marketers a measurable customer acquisition medium -making it very similar to Old Media.
When specifically analyzing NASCAR as a marketing platform it’s undisputed that it provides unparallel consumer brand loyalty for sponsors; however “die-hard” fans, which are the most brand loyal – are unfortunately also a dying breed. As our country continues to face high inflation and a challenging economy for the middle-class, which is the loyal mainstay of the NASCAR demographic; it will become a less attractive marketing medium to corporate marketers.
Across the country, many businesses are attempting to adapt to this challenging economic market. Over the past number of months, the newspaper industry has announced wide scale layoffs as they attempt to transition their business to more online operations. The latest causality is The Atlanta Journal-Constitution that announced cuts to its work force by approximately 8 percent or 189 jobs. NASCAR is not alone; and needs to take heed and understand that it is no different than t the challenged models of the newspaper and Old Media industries – which also offer a branding and awareness platform with no real method to measure customer acquisition for its advertisers. Old Media is in a state of peril; and NASCAR and its teams must not make the fatal mistake of assuming they are immune to the fragile economy. Now is the time for them to reinvent themselves or they will face a similar dreadful business fate for their sponsorship prospects.
As a lifelong fan, former team owner and new media entrepreneur – I see numerous avenues to upgrade NASCAR from its current “1.0” platform to a “2.0” marketing approach; and leverage digital media technologies and social marketing techniques to provide unparallel fan interaction and advertiser ROI.
Back in 2003, in conjunction with the launch of my team Bang Racing with Toyota Motorsports, I developed a marketing platform and corresponding online venture to engage consumers and enable advertisers to target fans with online promotions and incentives. We successfully deployed a “points” based auction powered by eBay (a Bang Racing sponsor) and delivered unmatched ROI to our sponsors.
Today there exists technologies, which if employed could provide NASCAR and teams with a solution. Available web 2.0 architecture and social marketing techniques would enable NASCAR, teams and sponsors to leverage existing technology and increase their exposure, interaction and ultimately the sponsors’ ROI.
The most basic web 2.0 technologies, which have transformed online marketing, journalism and even politics, are “blogs”. They are free and easy to use but yet, not a single driver, team or even NASCAR has implemented one. This most basic concept is far beyond the understanding of most NASCAR insiders and demonstrates the antiquated approach to marketing.
NASCAR racing is entertainment and content; and while NASCAR Corporate controls the “content” at the racetrack; and teams are unable to successfully monetize their at-track presence – racing teams do have the ability to monetize their “content” away from the track – if they employ these new technologies. “RaceWorld”, which was a failed attempt by Michael Waltrip to engage fans in a physical structure, further demonstrates a lack of current business and technology savvy of NASCAR teams. Today, teams must embrace and engage fans through technology and the internet rather than expensive and traditional channels. A great case study is the success of online video – which is dominated by user-generated content – not by television networks or studios – this is the genius of the success of YouTube.
NASCAR teams, such as Hendrick Motorsports, Roush Fenway Racing and Joe Gibbs Racing could offset the devastating effects of projected manufacturer financial support losses and a difficult sponsorship market by simply distributing content through a variety of successful online businesses, which would increase advertisers’/sponsor’ impressions; while providing new revenue sources.
Through the use of live online streaming, micro-blogging, social networking and other web 2.0 concepts – NASCAR Corporate, racing teams and motorsports sponsors have the ability to receive an ROI capable of sustaining the growing costs of the sport. What are they waiting for – the race is on – and time is running out!