We are a completely new product

Different Formula, new phenomenon, but will we have same old games? Let’s find out by sitting down for a chat with Lars Stegelmann, who is the Global Head of Commercial at FIA’s new Formula E racing category.

Mr. Stegelmann, Formula E sets new standards in advanced and sustainable drive technologies in motorsports. To what extent does the Formula E offer new approaches of marketing?

In this day and age it is very much about storytelling. This coupled with our approach – an R&D platform to offer innovation, sustainability and technology – means that we want to offer relevant topics not only for the B2B market, but also for the B2C market. We have, for example, the FanBoost, which integrates and engages the audience actively into the racing experience whilst bringing 21^st century technology and fan involvement. Another idea is a specialised 360-degree camera that we will install directly on the vehicles. This camera can then be controlled by any of our fans via our App on their iPhone or iPad – the users will have the option of selecting a driver and be part of the ride during his journey as a virtual passenger. The 360-degree camera means one can control the camera with the iPad itself – left, right, back and forth – so you can see even more of the track and the drivers themselves and get a fully live experience. The technology and infrastructure is already there, but we would like to bring more partners on board, especially from the connectivity field.

The 360-degree camera means that you can control the camera with the iPad itself – left, right, back and forth.

Formula 1 suffers from a looming loss of viewers and fans. Bernie Ecclestone said recently that young audiences are no longer attractive for Formula 1. Is it any different in Formula E? Do you try to tap such target groups by actively addressing the new series?

We do not compare ourselves with Formula 1. We are not a competitive product or a substitute – we are a completely new product that drives an entirely new approach. This is a global entertainment sport with an electric single-seater motorsport series at its core. We would also like to offer an R&D platform sustainability tools and develop future-oriented innovation, and to represent it altogether with our partners. That’s our vision. We have our own positioning that has nothing to do with the one of Formula 1. Of course, we are all fans of Formula 1 and find it amazing what it has achieved in motorsport overall, but the market is demanding something new way more than before, as it simply has become very fast paced and advancing daily. This is precisely where Formula E comes in.

The Formula E strives to be very trendy, with the hosting of the races in cities and on roads. Will you stay with this concept or will future events be on traditional tracks like Spa, Silverstone etc.?

With this USP – in urban areas, especially with dynamic cities or interesting places to race in around the world – we’ll be able to achieve awareness and can engage target groups that otherwise would not be reached. A race in the city is easily accessible for different groups of buyers, obviously. Not everyone can have three days of driving from and to a racetrack in the country, considering the travel costs, accommodation costs and so on. Those fans can only stay for one day and, in the end, they come away unhappy because they have not been able to experience the whole fluent show from start to finish. We have changed the format, it is all done in a one-day run from dawn to dusk – training begins in the morning, qualifying at noon and in the race comes in the afternoon. The access to the racetrack is partially free – you don’t even need a ticket. Thus, the family man with three children can turn up and buy his children a soft drink and some food whilst enjoying all that Formula E has to offer, and the children are happy because they had a great experience and a great day out.

Which target groups are you addressing this to? It is obviously not a traditional motorsport fan.

Sure, we have very different target groups. In principle, the platform is suitable for the B2B market and for the B2C market, but there is the so-called digital generation: we have already talked about the FanBoost, the 360-degree camera, about the app and so forth. For example, some of our operations rely heavily on Facebook and Twitter – we had 3 million video downloads on YouTube in the first race – what an incredible number for a new product! So a variety of target groups defined in various ranges of personalities is key: firstly, it’s the solid motorsport fans, then there are the fans who simply enjoy all kinds of sports, and recently we have stumbled upon a new target group that has developed over the last few decades – individuals who have a social and environmental responsibility. Modern parents want to introduce their children to environmental causes because they feel a moral responsibility and duty to educate them.

But purely electric drives are a novelty that various purists may find difficult to enjoy. How have you solved this image problem? How can Formula E contribute to global acceptance of these environmentally friendly technologies?

I think now that’s not how it used to be back when Birkenstock shoes were laughable. This generation doesn’t exist anymore – today it is “en vogue” to care about the environment. Many cities would like to host environmentally sound racing because it brings a positive reputation for the area for future visitors. This is also a big part of our legacy program. Therefore, we have, for example, developed a school series in which we distribute and share our own electric go-karts among ten schools, which then compete in a competition. And in that manner, we’re already passing the approach to the children. Maybe some of these children, once they turn 18, will buy an electric vehicle. This may be the first generation that will not even consider a petrol-driven vehicle as their car.

With these measures, the series should then be surely attractive for manufacturers. At the moment the teams still drive with a unit chassis but you want to attract the major manufacturers in the series. What’s the situation today?

Regulations will become available from the second season. We believe it will be under control going forward, but from September 2015 some manufacturers will also come on board so that some competition can take place in this field. Competition is great for business, everybody knows that.

Keyword ‘competition’: the recovery and long-term commitment of sponsors for almost all motorsport series nowadays is a major challenge. What strategies did you develop for long-term retention sponsors, in order to ensure sustainability?

I think it’s too early to ask this question. We will develop our product and the entertainment side of it all, and, after the first season, we’ll evaluate what things get particularly interesting, what areas need to improve, and which elements require to be replaced. And then, from season 2 and 3, we must ensure that, despite the involvement of manufacturers, a healthy competition remains. The first season is marked by a 100 percent competition because all vehicles are the same.

With manufacturers on board, however, there is also the need to control the budget, because that is a problem that you will encounter both in short and long periods of time, just like Formula 1…

That’s absolutely right. The solution is to develop an optimal set of rules. Now you’re talking to me and not to a technology expert, as I am purely responsible for marketing. Therefore, generally speaking, I see things just like you. This objection will eventually arise and we have to ask ourselves if it’s understandable for non-technical experts out there? Otherwise we lose the already outlined target groups.

One of the most important ingredients for an internationally recognised racing series is the television broadcasting. You have already secured contracts with several major broadcasters such as ITV, FOX and Canal +. How did the collaboration go so far and how will the television business for Formula E develop in the future?

You have to admit that the TV content influences you from the very beginning. So if we look at the TV Live Odds, then it seems pointless to draw any comparisons between Germany and Japan. The quota is far lower in Germany, and that is just natural. Just because of that we also had to start the Malaysian race two hours earlier due to heavy rain. It was already 7PM in Germany, and this was not an ideal transmission time. Nevertheless, we had great numbers that exceeded our expectations – 25 million TV viewers for the first race in Beijing, more than 250 million TV news viewers, and over 160 million social media activities. Altogether it was a buzz of one billion media encounters, and this is a number that is incredible for the first race of a newly established series.

And how big is the share of the funding, namely, how much of the television activities actually flow into the revenues?

That it almost impossible to predict after only several races. We all assume that the numbers will be just as good, perhaps even better, because we have improved successively by adding up the figures in the media sector.

Mr. Stegelmann, you have worked in football for many years (FIFA and UEFA). What can the motorsport industry learn from football in terms of marketing?

In the very end, it all comes to entertainment, both in football and motorsports…

Football continues to grow in popularity, and motorsports have rather the opposite development so far…

That’s right, I’m afraid. In comparison to many other sports, football’s rank has significantly increased, which has led the people that were not necessarily interested in football to become a little upset. However, ultimately, people are always interested in all top football events, which have now become actual events and not just a process of simply watching the actual game. I think there is something to learn from this – how to prepare your product in a way that it serves a wider audience than just simple entertainment. We should not limit ourselves to the positioning of motorsport, the highlights of the vehicle and its specifics, but we should try to make the transfer from the origin – what a vehicle is, of course – to what effect it may have in the daily handling of different people as I just now have enumerated. As I said before, the new generation is already here, and the exclusive enthusiasm to have a vehicle or to have the car as a status symbol has shrunk.

How does it look for the manufacturers?

Thankfully, manufacturers are no different, otherwise they would not be behind a mobility concept, as Mercedes does with Car2Go or BMW with Drive Now. They’re all here. Overall, a manufacturer of a product must always keep an eye on his main core, his DNA. That must be visible to the end user, but you have to get the communication to the different target groups fully focused to their dynamic. This is one of the biggest challenges and a truly great art.

Another major challenge is the future development with major partners, because there will be more demands, larger budgets and more power in development will be invested.

Well, we want to grow together with our partners. We don’t state to have it all nicely prepared, because Formula E offers a pretty basic platform. It’s a simple philosophy – an object with a vision that will prosper. And there are many companies that have taken the risk with us at an early stage, as we hadn’t shown any of the races yet. We have proved ourselves by our recent success, but we are still at the beginning of our development. So all the partners that had come on board certainly have an advantage over companies that are only about to join us.