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Martin Whitmarsh came as close to characterizing the future of Formula One as any other I’ve read. I offer a tip of the hat to the man who is refreshingly candid with his views and opinions on the sport. Whitmarsh said:

“We can’t think of bums on seats on the living room any more, because there are mobile phones, tablets, PCs, internet – plus storage for viewing later.

“We are only at the start of that process, and I think that Sky has got a lot of energy and creativity for the future.

“We were all very worried about it, but pay-per-view, with all its different outlets, it is much more complex than the traditional approach.”

Martin is right. He is correct when he says that the revenue streams for Formula One are becoming numerous. The system, as it stands, is clearly profitable but in the changing economies of the world, the sustainability model has prompted it to move house (from Europe) and seek emerging markets where investment dollars are used for global legitimacy and national pride. There’s nothing wrong with either of those notions but as we see with Greece and Spain, economies can falter and the desire for global legitimacy can wane when economies are struggling.

The average age of the world is 28 and by 2015 it will be 25. The generation we know as the Millennials (Generation Y) are 80 million strong in the United States alone. What Formula One fails to understand is the generational divide between their current program and the future. A connected generation that consumes media so radically different than their elders that the sport of Formula 1 is effectively becoming less accessible by the day.  Just like current work places, we are not a two generational system anymore…we are multi-generational in complexion. So too is F1’s demographic but tragically they seem to feel it’s it still the old pyramid structure of sorts.

You see, many Formula One fans may fit a demographic that speaks to an average age…let’s use America for example. The average age is 36.5 and that may be a strong demographic for Formula One. The average age of Europe is approximately 40 and it’s the only location that will actually increase over time instead of decrease in average age. Maybe F1 is right to leave Europe behind as the audience is waning and the method of consuming F1 in that continent is still rooted in the legacy model the series has employed for decades. I’m not convinced that is the right move but there is little question that China, Korea, India and Russia will pay more for a F1 race than, say, France, Spain, Germany or even Italy.

Bums in seats

Should F1 be concerned over “bums in seats”? With 600 million viewers of the sport per year, its evidently clear where the revenue comes from and that is not the race-day ticket sales…much to the promoter’s chagrin.  No, TV revenue is where F1 makes its hay. What Martin Whitmarsh is realizing is that this is but one of the revenue models embedded in the Millennial generation’s arsenal. With the advent of Bring-you-own-device (BYOD) strategies being employed in corporations across the globe the consumer model, desire and demand is re-shaping how the social consumer actually consumes. Formula One has missed this nuance for way too long.

Not shocking that 74% of marketing companies will tell you that they understand what their consumer wants. Sadly, only 34% of them have actually asked the consumer what they want. This isn’t a Formula One issue alone. Motorsport news and magazines are equally lacking the critical ability to engage in a new model of empathetic sales and the critical skill of listening. Offering an iPad app is not enough. Millennials are suffering from timeline fatigue and the curating process has begun in their social circles. Popular magazines and news outlets are attempting a noble effort to adapt new strategies. Some even think there is a emerging trend called “New Media”…there is no new media, it’s just media. Journalists have scorned bloggers and alternate social media outlets of F1 new/stories and I completely understand but the biggest pulpit they use to share their frustration is usually that of a blog or a Twitter account. Hardly a convincing argument to the fan but as someone in the full brunt of their anger, I understand as their livelihoods are being impacted and they’ve spent serious time becoming and honing their craft as a journalist. That frustration is not lost on me but it is lost on the connected consumer.

What F1 and journalists, news outlets and magazines may find is that their organizations were asleep at the wheel and who can blame them? Did anyone expect Facebook to gain 100 million users by 2008? How about 400 million users in 2010? No? Well what about 900 million in 2012? You see, the issue at hand is that the F1 machine and it’s secondary and tertiary industries didn’t align their strategies to the conditions of their competitive environment. It’s odd because F1 teams do this every year and they do it well…so well that the FIA has to constantly change the rules just to keep the competitive environment sane and understandable by fans. As for news and journalists? This is the sting in the declining nature of their craft and it would have been great if their employers had read the tea leaves a little closer back in 2005.

Connections

In the future, Gen Y will have less “connections” and the connections they do keep will be more relevant and contextual to their particular needs. Formula One doesn’t stand a chance of surviving the curating process if they do not add relevancy to the timeline. The owners, CVC Capital Partners, are surely interested in their investment and perhaps they will, some day, realize the loss of revenue over the past three years alone would have made a serious impact on the long-term debt structure they posses in the acquisition of the series. There is is an age-old notion that business is motivated more by loss aversion than it is in revenue gain and that’s really a human nature if you consider it in context. Is there any surprise then that F1 is so reticent in moving toward a digital, connected world where content is accessible and at the head of the wave of mobility? That seems risky but risks can and should be taken. What may be more critical is that this seems like a loss of your content copyright and the flood of pirating as well as sharing and that is loss aversion.

The old marketing strategy of gaining interest and leading this interest to intent doesn’t work. Connected consumers have more resources and vet their decision in trusted circles and insight from trusted sources. They form opinion based on the collective aggregation of their trusted circle which remains salient to their opinion process which forms a basis by which to measure their opinion before proclaiming it (or in the context of consumer speak, buy it). In the end, F1 will have to re-fashion their whole approach to marketing. One can simply look at America’s NASCAR, Indycar and ALMS for an example of what can happen as the demographic changes with the advent of technology that has allowed them to change more rapidly than ever before. NASCAR and other major sports in America have resorted to T-shirt cannons, drink koozies, cheap swag and patronizing merchandise. No one wants their schlockmeister efforts, they want relevancy, access, insight and meaningful experiences. F1, perhaps chief among all, is woefully bereft of this concept.

What the heck do they want?

Over 80% of consumers want deals and relevancy from their brand engagement. If a Gen Y “likes” your Facebook page, that’s great but what do they get in return? Sure, a “like” is social currency but it is fleeting. Can it really be as simple as listening?  Possibly.

I’ve advocated that F1 needs to understand that fans want three things from their brand engagement: Exclusive content, deals or promotions and rewards programs. What F1 seems to think their fans want in their brand engagement is: aid for viewing outlets, series news and possibly some customer service or programs to allow customers to attend or consume their series with an “official” endorsement sticker. Fans are left wanting.

Ultimately Martin Whitmarsh speaks of the waning importance of race attendance and more to the myriad outlets that F1 could be facing in the future. Creativity for the future? You’re already at least 3 years behind, Martin. They are just now starting to consider a segment they may recognize as the connected consumer. The problem with this notion is that this isn’t a segment unto its own these days…this IS the consumer base as a whole. Hopefully Formula One will understand that listening (this doesn’t mean another fan survey…look what that got us?  DRS) and engaging in meaningful strategies that are aligned with the conditions of their competitive environment are critical for survival in the future. Gen X rode the wave of our fathers before us as we grew to love the sport in a sort of borrowed fan-ism but Gen Y isn’t that pliable, they are more elusive than that and more connected (some say distracted) and thus, need more from the brands they choose to engage.

 

 

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An F1 fan since 1972, NC has spent over 25 years in the technology industry focusing on technology integration, AV systems integration, digital media strategies, technology planning, consulting, speaking, presenting, sales, content strategy, marketing and brand building.

  • Jack Flash (Aust)

    Sterling editorial NC.
    I have recognized some traditional F1 journalists, like Joe Saward for example, have written rather terse web-blog pieces about the dumbing down and regurgitative blah being thrown around the web nowadays. Some of this derisive critique is warranted, but a lot more is their want to keep a traditional mortgage on the F1 news & editorial markets. It is ironic as you’ve said, that such derision is handed out via the very web media forum that is the vehicle of their new-age competitors.
    To be fair, their is a lot of shite F1 web content. Baseless half baked

    • Joe has been relatively vocal about it and it’s a fair cop. He’s a long-time F1 journo and I can understand his point. There are a few sites that are simply aggregating news and that can be frustrating for a guy like Joe. I don’t know him, haven’t had the honor, but I would imagine his concerns are all relatively well-founded and based upon what he has seen in his own industry.

      For our part, we’ve never claimed to be a “news” site. WE are a journal of F1 opinion and that, to us, is what a blog is all about. We’ve always tried to be a fan’s voice and not a news aggregation site. Sure, news is what drives our content but we’re always very determined to link sources and give all credit to the fine men and women in the industry.

      F1 is a multi-platform business model and it struggles under the weight of its constituents. That’s normal in that model but journalists are having to find new outlets and new mediums and as ironic as it sounds, its the same medium that they are frustrated with for damaging their livelihood. I’ve always been sensitive to that and understand Joe’s frustration (a little, having not spoken with him I can’t fully understand his position). I’ve seen some heavy-handed comments out there from some journalists about blogs that I think do a great job and that’s unfortunate.

      • Rapierman

        Unfortunately, like everything else in the world, among all the great blogs (such as yours), there are those that are nothing more then pathetic stream of consciousness incomprehensible rants. In the concept of “freedom of speech” and/or “freedom of the press”, we can’t prevent these other miscreants from “venting their spleens”, as it were. We really have no choice but to wade through the vitriol to find the tiny gold nuggets, and the perception is that the “group” is only as good as the weakest member. These are the obstacles that must be overcome.

        Admittedly, being from an in-between generation (born in 1962), I was slow to latch onto Facebook and Twitter, and I wholeheartedly embraced high-technology. I was seeing downsides that were greater than upside. It was only when I saw that the next generation was requiring these things that I signed up for it. My biggest concerns were privacy and how easily criminals can target these things. I see now that you can protect yourself and they will help you do that, so I’m more relaxed about it.

        My big fear in the future is that the next generation will demand instantaneous “living vicariously through others” experiences. That means chips imbedded in the brain to be able to access the experiences and feelings of others, including Formula 1 drivers. From that point, I fear that the Human Race will begin a descent into extinction, because that is losing a piece of one’s soul. I hope that’s not what’s going to happen, but that’s what I fear.

        • There are a lot of F1 blogs out there with people doing nice work. Equally there are a lot of journalists with blogs who do a great job of it too. We wish them all the best but as you segment the F1 fans, some like certain styles over others just as they like certain journalists over others. I tend to like Nigel Roebuck a lot, for example. There are a lot of people who do not like out vibe or approach to F1 opinion and news and that’s okay, there is enough to go around.

  • Fred

    How many of those 600 million viewers are real racing fans? If not many then they will eventually, probably sooner than later, will stop watching. Mean while many of us racing fans would love to go the races but can’t really afford to. Sad to be middle class.

    • On one hand you could argue that if TV is the real, main revenue stream, then why are tickets so expensive? That is most likely due to the actual promoters of the race trying to make a reasonable profit on the race or in some cases, trying to at least break even. If the sanctioning fee is $25M per year, promoters have to make a lot to cover costs. That is why track economics are so important and circuits that only host F1 and maybe a smal series or two don’t have a sustainable model to keep the circuit alive unless the race is subsidized by the government etc.

      • What I find worse isn’t the ticket prices, it is the price gouging by the local community. In our enthusiasm, my wife and I bought tickets to the race in Austin. Unfortunately, the cost of getting there, housing ourselves (at horrific prices) and feeding ourselves has made it clear that we will need to sell our tickets. This upsets me greatly — for many reasons. Four hundred dollars for three days in semi-premium seats doesn’t seem that rediculous to me. It’s the $4000.00 for a two bedroom rental for four days that is criminal beyond comprehension.

        Furthermore, I am vehemently not interested in TV beyond F1. I cannot stand that I must pay for a cable TV connection, just so that I can watch TV for the 20-odd weekends a year. As a former Internet professional, I cannot understand why F1 is not available as a pay-per-view stream. Charge a boatload for it, Bernie, I’d still buy it.

        How can something as high-tech as F1 be so bloody low-tech when it comes to accessibility? It really boggles the mind. I keep wondering if it is going to take the death of Bernie for this to change. That is not sarcasm, but truly what I believe.

        • This speaks squarely to what F1 is missing. And you’d pay more for F1 if you didn’t have to buy cable package for crap you don’t watch. :) great point mate.

  • Rapierman

    In a sense, what you’re seeing is a “future shock”, when the pace of time and progress comes in so fast and so furious that the human race in general can’t handle it psychologically, and this generational “disconnect” is one of the symptims. (See also Orson Wells documentary.)