Bernie Ecclestone, the 84 year old supremo of F1’s commercial side has given an interview to Campaign magazine in Asia in which he has claimed that F1 doesn’t need to chase younger audiences as they don’t have any money to spend on products of F1 sponsors, like Rolex.
And in a similar vein he has again downplayed the value of social media as irrelevant to the F1 business, despite saying, “We should use social media to promote F1. I just don’t know how.”
On one level, it’s another interview that will dismay the F1 teams and many senior figures within F1’s principle shareholder CVC.
But before you reach for the Comment button at the foot of this post, let’s examine what he says and look a little into the background, which this site is well equipped to do.
Bernie on Social Media
“I’m not interested in tweeting, Facebook or whatever this nonsense is. I tried to find out but in any case I’m too old fashioned. I couldn’t see any value in it. And I don’t know what the so-called “young generation” of today really wants. What is it? You ask a 15 or 16 year old kid, “What do you want” and they don’t know. The challenge is getting the audience in the first place. I say to some people who start this nonsense about social media, look at what tobacco companies tried to do, get people smoking their brand early on because then people continue smoking their brand forever.
“If you have a brand that you want to put in front of a few hundred million people, I can do that easily for you on television.
“Now, you’re telling me I need to find a channel to get this 15-year-old to watch Formula 1 because somebody wants to put out a new brand in front of them? They are not going to be interested in the slightest bit.
“Young kids will see the Rolex brand, but are they going to go and buy one? They can’t afford it. Or our other sponsor, UBS — these kids don’t care about banking. They haven’t got enough money to put in the bloody banks anyway.
“That’s what I think. I don’t know why people want to get to the so-called ‘young generation’. Why do they want to do that? Is it to sell them something? Most of these kids haven’t got any money.
“I’d rather get to the 70-year-old guy who’s got plenty of cash. So, there’s no point trying to reach these kids because they won’t buy any of the products here and if marketers are aiming at this audience, then maybe they should advertise with Disney.
“We should use social media to promote F1. I just don’t know how. They say that kids are watching things on (tablets and mobiles) but it doesn’t mean that they are watching F1. And even if they are will they still be watching at 40? The world has changed so much in the last few years and I don’t that’s going to stop.
In fact Ecclestone has taken the time this year to investigate social media and to understand the threat it poses to his business model and to consider what opportunities it might offer, this site has direct experience of that.
He knows that he needs to embrace it, the problem is he’s nervous about letting the genie out of the bottle and losing control of the value in the TV rights that he has sold at a high price to broadcasters like SKY. To this point he’s been happy to let the broadcasters deal with online video clips and a limited amount of social media.
But as he says here he does recognised that F1 needs to use social media to promote the sport. He’s understood that people consume the sport in a far wider way then they used to with simple TV coverage. And this is an important story for him to start telling now, because in a period where TV viewership for F1 is declining (as it is for many sports and other TV products) he can tell the sponsors a story about the far wider reach the sport is attaining today via social media and online engagement. When the figures are all in, it’s likely that F1 will show a 10% drop in live TV audiences.
The Monaco Grand Prix this year is an example: it accounted for the biggest single decline in TV audience (8.3 million down on 2013 audience) However the market share remained largely unchanged (down just 4%), indicating that the broadcast presented a comparable draw for viewers; there were just fewer people watching TV at this time.
Nigel Geach, Senior VP of industry survey specialists Repucom makes this argument in a recent article in the Financial Times,
“Companies bought sponsorships 20 years ago as a media buy,” he says. “These are still big numbers, 1.6 billion cumulative audience, but it’s what they do with the numbers on the different platforms that counts today. It’s how they can use F1 that matters. Sponsors aren’t going to drop F1 due to falling TV numbers, as it’s still one of the few global sports events.”
That’s why F1 has now got a social media department at Ecclestone’s base in Princes Gate; it’s why they are investing in a new F1.com for 2015 and in the official F1 app, which has sold over 3 million editions. F1.com had 67 million unique users last season and that is set to rise this year. The new site is set to engage the younger audience, using all the social media tools Ecclestone refers to and will have a level of personalisation and fan engagement which is way beyond what is there today. They are very late to the party and it doesn’t help if the message from the CEO runs counter to the work actually going on behind the scenes! There is real value to be derived from this.
Talk to the business and commercial people in F1 teams and they think that F1’s annual commercial revenues of around $1.5 billion a year are well short of the potential, that it’s not being exploited to the maximum because Ecclestone is sticking to what he calls his “old fashioned ways”. They believe that there is at least another $500 million to be made quite easily, which when filtered down via the prize money formula, would mean another $27 million per team, enough to stave off the current ‘crisis’ of the smaller teams.
Bernie on Entertainment
There is another passage in the interview, which is genuinely hilarious; Ecclestone says:
“Entertainment is what people want to see. If you asked me to go tonight to the ballet..I would say it’s not for me. Maybe if I tried I’d love ballet. I just can’t understand why they have these girls dancing on their toes. Why don’t they get taller girls?”
This is a classic example of Ecclestone’s humour and an example of why one always has to be cautious about taking things he says at face value.
He goes on to say that there are many more forms of entertainment today than in the past before the internet and multi channel TV, when F1 tended to have a higher profile.
One other point of note: He dismisses the two teams which have recently gone into administration; Caterham and Marussia. “They’ve only got a name people would know because of the problem they are in. You need teams like Ferrari. If you go anywhere and say “Ferrari” people know what you are talking about. If you say ‘Marussia’ they won’t.”
Full article can be read here: Bernie Ecclestone/Campaign Asia interview
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