Whilst Formula 1 sits firmly at the top of the motorsport family tree, the brand new FIA Formula E series has been gaining traction with international audiences. The London ePrix, taking place over Saturday 27th and Sunday 28th June marked the end of the inaugural Formula E season and a suitable juncture to re-evaluate the series. James Parrish from Rush Sport & Entertainment gives us his take on the evolution of this electrifying sport.
Sustainability is a buzzword for this brand new series, but rather than discuss environmental sustainability, this article will look at Formula E’s sustainability as a sport, and as a business. If the question 18 months ago was, is Formula E going to get off the ground? Today the question is, how viable is this series long-term and how will it build?
Before the series launched, skepticism was rife – even yours truly didn’t expect much. But at the end of Series 1, and having worked in the Series for a year, I have a different viewpoint. The common comparison early on was with A1GP, a series that was never really able to grab consumer’s attention and build a stable enough business model to survive. Amongst a more neutral audience of general public or casual motorsport fan, Formula E did a particularly good job in publicizing itself and its different proposition. Despite the cars being heavy and quiet, Formula E was able to successfully steer conversation towards innovation, sustainability, and all-day live city-centre entertainment. I dare say that Formula 1 could learn a thing or two from the PR job that Formula E did in those 3-4 months before the series launched!
Formula E’s first task was to secure a raft of reputable teams and manufacturers to participate. Automotive manufacturers have been trying to introduce electric vehicles to market with varying degrees of support and success over a number of years.
Whilst we don’t expect Formula E to take viewers away from Formula 1, from a commercial perspective it may take some revenue away from the sport.
The series’ core proposition to provide a competitive R&D platform to develop electric vehicle technology and promote widespread consumer adoption of electric vehicles, resonates well with manufacturers and teams. Mahindra, Audi’s Abt outfit and Venturi signed up from the start, quickly followed by Renault acquiring a significant stake in the eDams team, and BMW coming on board as the Official Vehicle Partner, supplying its i8 and i3 models to be used as the safety and course cars for the series.
Global manufacturers including Chevrolet, Volvo, and Honda have also discussed entry into the series. Although these discussions were exploratory, with no new manufacturers expected until at least Series 3, Citroen and their DS brand announced a partnership with Virgin Racing over the London ePrix. The French brand has been testing a Formula E car at their test facility near Versailles ahead of the second season, which starts in October.
Whilst as a visual spectacle Formula E lacks in some areas, the first season’s racing has provided viewers with close wheel-to-wheel action. Aided by the closed formula, the series has featured some great entertainment – Races 10 and 11 of the season in London showcased some of the best racing I’ve seen in years! Slipstreaming is much more effective in Formula E than in Formula 1, meaning that attacks and overtakes are happening up and down the field. These are made better by some great on-board camera angles, low down on the nose of the car that enhances the perception of speed. The parity in design has also created a sense of unpredictability, with seven different winners in the opening nine races.
SMG Insights, the sports insights and research division of YouGov, provide Formula E’s audience figures and demographics. In its opening season Formula E attracted 188 million viewers, which should be seen as a success, making it one of the highest viewed global motorsport categories within its first year.
To achieve this Formula E secured a strong portfolio of broadcast partners for a brand new series. Fox Sports, ITV, Sky Deutschland, Canal+ and TV Asahi all signed up at the start of the season, and many more domestic broadcasters were added throughout the year.
If the question 18 months ago was “is Formula E going to get off the ground?” Today the question is “how viable is this series long-term?”
The series’ financial sustainability was boosted in March by the announcement that John Malone’s Liberty Global and Discovery Communications groups were becoming the largest combined shareholder in the series.
After stalled talks with F1 majority owner, CVC Capital, Malone’s plans for Formula E are yet to be announced in detail, but will include management support, help with broadcasting procedures and systems, and the development of media content – some of which was being filmed in London. Interestingly, unlike Discovery’s recent acquisition of Olympic Games broadcast rights, the investment in Formula E is to be seen as a strategic investment in a sport they believe has growth potential. For Formula E the investment secures the mid-term viability of the series and will help fund its growth.
Another financial boost for the series was an early agreement with the promoters of the China ePrix. After a pre-event Gala Dinner held in the Forbidden City and an exciting race that showcased the 2008 Olympic venues, including the Birds Nest, the China ePrix promoters were obviously very happy; signing a 10-year agreement to host the race, as well as an agreement to host a race in Hong Kong – due to be held in Series 3.
Formula E has actually proved very attractive for host cities; the temporary street circuits around iconic tourist attractions provide a great way to showcase the city as a travel destination, and to promote cleaner energy usage and reduced pollution.
The Series 1 calendar featured 10 cities in 9 countries, and whilst the race host fees don’t compare with Formula 1 for the time being, Formula E are happy with the interest the series is seeing. Mid-way through the season, it was reported that 180 cities had approached Formula E with interest in hosting an ePrix. The competition to host a race will help drive the fees up, with some cities already offering substantial fees for the right to host a race.
But while conversations progress, agreements are in place to take Formula E to more cities in Series 2, and in a more condensed time period – something I think is required, as the series did lose some of its momentum between races this year. The additional cities for Series 2 will be Paris, for a race near the Eiffel Tower, and Mexico City. Hong Kong is then set to host a round in Series 3, with Monaco back on (as it alternates with the Historic Grand Prix) and a raft of conversations ongoing in Canada, Switzerland, Belgium and Brazil.
It is the Tier 1 city locations that are one of the main draws for sponsors. Formula E started the season by securing the type of brands you’d expect to partner with a new motorsport series; brands like DHL, Michelin, and BMW – more technical partners or suppliers than sponsors. Although technical partners or suppliers to Formula E, these brands aren’t just supplying products or a service, many of these brands have committed a good amount of cash to align with the series.
Whilst many in Formula 1 have largely ignored Formula E and say they don’t see it as a threat, it’s interesting to note that Formula E has secured marketing dollars that Formula 1 teams have courted for years. Over the past 9 months, more mainstream brands like Visa have entered as series and team sponsors. Earlier this year Rush Sport & Entertainment worked with Intercontinental Hotels Group and Avis Budget Group to develop Formula E sponsorships, with both brands announcing long-term agreements part-way through the first series. When you consider the main constituent parts of the Formula E sponsorship proposition you can understand why there’s interest from global Fortune 500 and FSTE 100 brands.
Aligning your brand with Formula E means aligning with a fan-centric sport that has sustainability, innovation and entertainment at its heart. There are no adverse publicity issues with partnering with Formula E.
The entertainment value is attracting a big enough audience to be interesting, which is further enhanced by the race locations – major city-centre events grab the attention of those living and working in the city, providing a much greater potential audience for sponsors to engage.
The success of Formula E’s push into digital marketing can be summed up in one stat – 1 billion social media impressions for the Beijing ePrix.
Formula E has also been able to look at digital marketing from a fresh perspective. It benefits from being born in the digital era – where it hasn’t been held back by the inertia of legacy/current media deals, conservatism, or by stakeholders or rights holders that don’t fully grasp the concept. Formula E sessions are available to watch live or delayed via the Official Formula E App. Fans can also watch delayed full race and highlights coverage via YouTube, who are a content partner of the series. Add to this Formula E’s relative openness and feasibility for teams and sponsors to create and publish media content, such as live broadcasts on Periscope, and you have a sport that truly offers brands freedom in the area of digital marketing and content creation.
Much was also said 12 months ago about the FanBoost concept. Some ridiculed it, some said it was gimmicky, and some said it would be too hard to set up, but fans and sponsors have seen benefit. FanBoost has given brands a tool to help empower the fan, and build a stronger emotional connection with groups of fans that follow their team or driver.
The success of Formula E’s push into digital marketing can be summed up in one stat – 1 billion social media impressions for the Beijing ePrix. Compare this to 8.6 billion for the entire 2014 Formula 1 season.
Many rights holders have struggled to monetise social media, and in cases have tied up sponsors hands, frustrating them. Formula E’s approach to date has been refreshing; giving the teams and sponsors the freedom and opportunity to develop content, focusing on building and promoting the sport. This approach will be attractive for many brands that aim to target Millennials and a younger generation, that are becoming harder to reach and harder to build brand loyalty amongst.
Just one year into Formula E, the series has built a strong early following. The sports key stakeholders have spent time laying out the building blocks. With the security that additional investment provides, and strong end to season, it’s now time to play with these blocks and grow the sport.
It’s interesting to note that whilst at the beginning of the season, Formula E was compared to A1GP, now it’s widely compared to Formula 1 – and that was before Richard Branson’s headline grabbing quip about Formula E overtaking Formula 1’s viewership in 5 years!
Formula E doesn’t position itself as a direct competitor to Formula 1, and I don’t believe they are mutually exclusive. Formula E won’t take viewers away from Formula 1. As Formula E draws in a new wider audience to motorsport it may even do the opposite. But it is sponsorship revenue where Formula E has the potential to hit Formula 1 teams hardest. Formula E has already attracted sponsorship dollars that might previously have gone to Formula 1 Teams, and I only expect this to continue.
Formula 1 teams should be mindful not to address this threat by trying to compete on price. The price of Formula 1 sponsorship has been driven down by inter-team competition for dollars that does nothing for the value of Formula 1. To then compete with Formula E, would further hinder efforts to develop and grow new revenue.