After spending months wooing F1’s owner, Bernie Ecclestone, who has openly criticised Singapore’s red tape, the Government announced its triumphant bid to become a host city in 2008; the fourth city in Asia to do so. And as the third most-watched live sporting event in the world, after the Olympics and FIFA World Cup, it’s no wonder that advertisers are getting shifty.
Hosting the race will cost the Government US$100 million a year for a five-year contract, but with Ecclestone’s Formula One Management (FOM) owning commercial rights to every piece of F1 property, can Singapore benefit?
1 An estimated 20 to 30 per cent of each F1-related transaction, from a logo or even a picture of the cars, will go to FOM. The rest will go to Singapore GP, a private company owned by hotel tycoon Ong Beng Seng, who is managing the entire show.
2 The Government, in the form of the Singapore Tourism Board (STB), will foot 60 per cent of the bill. In a speech last week, Singapore’s Minister of Trade and Investment, S Iswaran, admitted that the cost of hosting the F1 “far exceeds the revenue a private race promoter can expect to get from ticket sales, merchandising and sponsorship”. Part of the costs will be defrayed by taxes and ticket sales, which have been the weakness of neighbouring circuits in Malaysia and Australia.
3 The event is expected to generate over US$100 million a year in incremental receipts, according to Iswaran, boost tourism and uplift the Singapore brand. But while the Government has publicly stated that it is prepared to sustain upfront losses, advertising will not come cheaply. “To get into F1, you have to sponsor a team. I don’t think most local companies can afford US$75 million,” says Anand Vathiyar, CEO of Up and Up Media and chairman of Motorsports Asia.
4 According to sources, SIA appears to be a shoe-in for the title sponsorship, worth between US$5 million to $10 million). However one source questioned the value of being a title sponsor. “You’d never say that you’re going to the Singapore Airlines Grand Prix would you? This isn’t like the Olympics, where brands are locked in every aspect. For example, Visa is pushing for the entire city of Beijing to only use Visa during the Games period, and it probably will happen.”
5 “Obviously, the happiest people are Y&R, because this is pretty much the Singapore Tourism Board’s event,” says Vathiyar, referring to STB’s agency of record. But apart from that, he says, a boost to the local advertising scene looks unlikely, given the high costs. Instead, Vathiyar thinks that PR and event companies will benefit the most: with the races comes a slew of glitzy parties for drivers and their sponsors.
6 For local advertisers who want to leverage F1 without paying the premium rates, Vathiyar says that outdoor is a safe bet. “It’s a street race after all,” he says. “Without paying F1 rates, your ads will get the exposure to crowds that are watching it.” Henry Goh, sales director of Clear Channel Singapore, is understandably excited: “The race track is smack right in the heart of the city, winding through several landmark sites where Clear Channel has a strong presence,” he says.
7 As for broadcasters, F1 boasts an audience of 300 million for each race, with 75 per cent of the races taking place during prime time hours in Asia, and 64 per cent of the race’s home viewers in Asia. “Hosting an F1 race in Singapore will further broaden the appeal of the sport to Asian audiences,” says Manu Sawhney, EVP of programming and marketing, ESPN Star Sports, the official broadcaster of F1. Support programming also offers opportunities for brand placement.
8 FOM usually doesn’t allow companies to sponsor just one telecast: “They’d have to sponsor long-term, or perhaps a one-off at a huge premium,” notes Vathiyar. The event may be too expensive for local broadcasters such as MediaCorp, which would have to become trade partners. “Taking on F1 is like dating a supermodel,” says Viyathar, “You have to give them whatever they want.”
What it means for...
CLIENTS
Unless you’re prepared to fork out US$75 million to sponsor an entire team, be prepared to stay on the sidelines. Companies who have expressed interest are major global brands with an historic association with F1, such as Johnnie Walker and Tag Heuer. Meanwhile, Singapore Airlines has been touted as the frontrunner for the title sponsorship.
Book outdoor media as a way to leverage tourists coming in for the races. After all, it’s a street race and the F1 period would be an optimal time to push outdoor work.
According to Anand Vathiyar, CEO of Up and Up Media and chairman of Motorsports Asia, it’s probably too early to plan. The race schedule only comes out at the end of June, so until the dates are locked in, there’s no point in planning, he says.
AGENCIES
PR and event companies are likely to receive the greatest boost to their industry. With F1 comes an onslaught of glitzy VIP parties, for drivers and their sponsors.
The Singapore Tourism Board’s agency of record, Y&R Singapore, should also receive additional work by default, given that STB is footing 60 per cent of the cost to bring in the race.
