October 30, 2011 will be remembered as the day when India zoomed into the Formula One (F1) calendar. And why not? Prior to this, motor racing fans in India had to satisfy their hunger for action by sitting in front of the idiot box watching MotoGP and F1. As 12 teams including Ferrari, McLaren Mercedes, Renault and Sahara Force India vied for the Indian Grand Prix at Buddh International Circuit in Greater Noida in Uttar Pradesh, the event made a huge splash as it lured celebs, corporate honchos, motor racing fans and the uninitiated to the outskirts of the national capital to watch India’s first ever motor racing event.

Even before the V8 engines revved up, the Indian Grand Prix had created much buzz in the media to make it one of the most-awaited sporting spectacles in the Indian sports calendar. The world-class infrastructure, a racing track that got a thumbs up from F1 superstar Michael Schumacher himself, the arrival of the who’s who of India and the motorsports world all added to the excitement, and with the flawless grand finale, it heralded the arrival of one more premium sports property in India.

So what did the event have for the orgainsers? For that, first let us look at how Formula One works. The sport is controlled by Formula One Management (FOM), in which private equity firm CVC Partners holds 70% and financial services firm JP Morgan holds 20%. As per the current operating structure of F1, the circuits get only a global calling card. Each circuit pays FOM $35-45 million a year as licence fee. Revenues come from the sale of TV and internet rights, gaming rights, and event and track sponsorships. Jaypee Group, the infrastructure company behind Buddh International Circuit, has spent almost Rs 1800 crore on the project. Half of this has been paid as licence fee to FOM. Ticket sales revenue (the Buddh International Circuit had 1,25,000 seats) could be the only revenue stream for the company, at least in the first year.

Says Askari Zaidi, senior vice-president, corporate communications, Jaypee Sports International (JPSI), ?The successful completion of the Indian Grand Prix has put India and Jaypee Group on the global map. The race was attended by more than 1 lakh people and we hope to make close to R 85 crore from ticket sales.? According to him, the dividends have just started coming in. Impressed with the world class infrastructure at the circuit, corporates and film production houses have shown interest in using the facility for various purposes, he explains. In fact, JPSI has been in talks with MotoGP (a motorcycling championship) to bring the sport to India. The company is also open to hosting corporate launches, concerts and big ticket events such as Auto Expo which is usually held at Pragati Maidan in Delhi. ?We are open to exploring all these and other revenue streams to meet operating expenses and become profitable in the next few years,? he adds.

Jaypee’s agreement with the Uttar Pradesh government was to fill 35% of the 2,500-acre site with sports facilities including a 100,000-seat cricket stadium, a golf course and a shooting range. The company will profit from building and selling houses and commercial space on a large new development around the track, known as Jaypee Greens Sports City, which is expected to help it recover its investments.

A long-term view is the catchword here. Telecom service provider Bharti Airtel inked a deal worth approximately R 30 crore per year to come on board the international sporting event as the title sponsor, over a period of five years. ?Our association with Formula 1 in India is a strategic step towards strengthening our brand positioning and appeal to our target audience that is youthful, vibrant and enjoys the F1 adrenaline rush. While F1 today enjoys the cult following of a whopping 500 million-plus fans, Airtel has 200 million-plus customers,? says a spokesperson from Bharti Airtel, who did not want to be named. The telecom major organised a nationwide gaming contest, launched attractive offers for pre-paid customers and conducted the much hyped Grid Girls Contest.

The associate sponsors for the event such as UB Group, Vodafone Essar, Samsung India, Sony India and Perfetti Van Melle, had bought 90-300 seconds of airtime on ESPN which was broadcasting the event per day. According to sources, while ESPN sold 10-second ad spots for R4-4.5 lakh, associate sponsorships were sold for R2-2.5 crore.

Spots were also bought by Reliance Communications, Nokia, Shell, MRF, BPCL, Colgate Palmolive, among others. ?The entire ad inventory was sold out much in advance and we have seen a fair increase in spot rates as compared to previous years,? says a spokesperson from ESPN who did not want to be named.

Punitha Arumugam, group CEO of media buying agency Madison Media shares how there was not much ad inventory left to be sold in India. “Media buying for F1 happens well in advance across the regions. This is similar to buying slots in IPL where you buy inventory over a period of time. For obvious reasons a property like F1 is the right platform to target top of the pyramid TG,” she says.

Mobile service provider Vodafone had the title sponsorship of the Vodafone McLaren Mercedes (VMM) team. The company has been leveraging this association in India by bringing driver Lewis Hamilton each year to different parts of the country, especially the metros. This year, the company started two contests for consumer engagement: Vodafone Race to Fame – life in the fast lane which offered four winners (two consumers and two global enterprise customers) a chance to get up close and personal with the VMM team. The second initiative gave small and medium enterprises (SMEs) an opportunity to place their logos on the Vodafone McLaren Mercedes cars that raced at the motor racing event in India. Says Anuradha Aggarwal, vice-president, brand communi-cation and insights, Vodafone India, ?Though F1 in India is still at its nascent stage, it has gained momentum in the last couple of years with increasing eyeballs towards the sport. Indian Grand Prix is another step in building stickiness with the fan base.?

Tadato Kimura, general manager, marketing, Sony India says, ” F1 is an absolutely thrilling sport and has a burgeoning fan base comprising the youth and the affluent, which is a key target segment for Sony as well and hence, the association with F1 was obvious. Being the first ever F1 Indian Grand Prix, there was tremendous excitement for the game and therefore our strategic investments were towards television advertisement. Also, since the event happened around the festive season, for which we have huge budgets, we were able to loosen our purse strings to invest in F1.”

Ravikant Sabnavis, vice president – marketing, Kingfisher Airlines which owns India’s only FI team, Sahara Force India, along with the Sahara Group, explains how the team conducted a research to understand the F1 audience in India. Based on the findings, the target group for the sport is divided into four categories: purists, outer ring followers, tertiary audiences and non-followers. Purists are those who understand the game inside out and speak the technical language of engines, aero-dynamics, etc. Outer ring followers can be defined as people who understand the sport with-out being an F1 fanatic. While tertiary audiences include those who may have little interest in the sport and do not want to lose out to a friend over a conversation on the topic, non-followers are people who have no interest in the sport. ?Our marketing initiatives are targeted mainly at the last two sets of tertiary and non-followers. We have lined up a series of consumer activations between November and March with a focus on social media. Our merchandise offtake was good as well at the Indian Grand Prix,? he adds.

To get the much needed support for the team, Sahara Force India launched a mall activation titled ?Raise the flag? across eight cities. Flagged off in various locations by politicians and cricketers, the activity allowed people to go to the pit stops. The team also conducts a hunt for India?s next F1 driver.

Reebok has been the official apparel, accessories and footwear merchandising partner for the team since 2009. For the Indian Grand Prix, the company launched the Reebok Force India footwear in the team colours. Apart from this, special edition apparel with slogans such as ?live to race? and ?force of a billion hearts? was also launched. Says Sajid Shamim, brand director, Reebok India, ?F1 has always been a niche sport in India but it is fast catching up among the youth and with the growing number of fans. We are very hopeful to see a growth in our sales. In fact, this collection is already one of our best sellers on our online store.?

The winning team of the Indian Grand Prix, Red Bull Racing, started a slew of marketing activities in August itself. Nightclubs were targeted by Red Bull Night Race where participants got a taste of how quickly tyres need to be changed in pit stops. Then, the brand brought Formula 1 to the streets of Delhi with Red Bull Speed Street at Janpath where Daniel Ricciardo sped down in an F1 car. Red Bull Racing Cans excited students and won the team some fans through a competition where they were asked to design bodies for remote controlled cars using Red Bull Cans. Red Bull Racing was also the first on the Buddh International Circuit, when Red Bull Junior Driver Neel Jani officially drove the first Formula 1 car on the track.

Brand strategy specialist Harish Bijoor considers F1 as a sport of rich Westerners. According to him, its a great networking location. ?You can play cricket and follow the sport but the same cannot happen with F1. This makes F1 a very viewership-driven sport. We may not understand the sport in its totality but there’s a desire of being able to talk about it. In terms of advertising, F1 will surely bring a caste system in India as part of which only the brahmins (premium brands) will be allowed to come and be associated with it,? he says. Bijoor also sees a lot of sense in Airtel?s association with the sport as the telecom operator has now entered overseas markets and F1 offers a sizeable viewership across the world.

Ninad Shah, head ? strategy, sponsorship and IPs, Percept Sports and Entertainment, explains how F1 is not just about sport but something that has moved into a lifestyle space globally. ?While the following in India is not as big as it is in other countries, Indian Grand Prix was a good start. Unfortunately, the right marketing was missing this time. Strategic brand associations are crucial to the sports commercial success in the country. Also, like the Indian Premier League (IPL), F1 should also look at multiple locations for better return on investment,? he says.

Media planners are unanimous about the futility of comparing F1’s ratings with cricket. While F1 has garnered average viewership of 1 or 2 TVR (television viewership ratings), the same for a cricket match can be 5 TVR or more. The fourth edition of IPL commanded TV ad spot rates that ranged up to R15 lakh per 10 seconds, and made R1,000 crore approximately in broadcasting revenues.

But comparisons are bound to happen, especially with Indian Premier League (IPL). Auctions in the past have shown how there?s no limit to what the team owners can spend to get the right players. The first season of IPL saw the Indian government earning tax revenue of R91 crore. It was immensely successful, but the franchisees had spent huge money during the auctions and development of their respective teams. Franchisees were not expected to reach breakeven point, but a few have earned profit, while some faced a negligible loss. IPL team Kolkata Knight Riders made the highest profit in the first season, in spite of its dismal performance. Another team that made a profit in IPL season 1 was Rajasthan Royals. The fourth edition of IPL included 10 franchisees and according to industry watchers, most of the teams made a neat profit.

While the pickings may be meagre for Jaypee Group as of now, the Grand Prix event has certainly propelled the company into the big league. The F1 hoopla usually sees top global brands sponsoring teams and thousands of affluent tourists descend on the circuits. India’s maiden foray into the world of F1 has given the Jaypee Group abundant exposure in the global media and made it a globally recognised brand. That?s just the first success story for the Indian Grand Prix.

Inputs from Twishy Shahi