Formula One’s global research director has revealed that just 14% of its viewers are under 25 despite the auto racing series launching a number of costly initiatives aimed at boosting its appeal to a younger audience.
The initiatives include revving up F1’s presence on social media, streaming its races online, starting an Esports series and launching its first-ever marketing campaign which featured the faces of fans being blasted with wind and water.
The driving force behind them was the $4.6 billion takeover of F1 in 2017 by investment firm Liberty Media which is listed on the Nasdaq with the ticker FWONK. Having public stockholders increases the pressure on companies to grow their revenues and an easy solution for F1 appears to be increasing its appeal to a youth audience. The auto racing series has historically struggled to attract younger fans and after two years of Liberty being in the driving seat it still does.
In a wide-ranging Q&A on discussion website Reddit, F1’s global research director Matt Roberts said “the average age of a global F1 viewer is 40. 14% are under 25, 30% are 25-34, 20% are 35-44, 20% are 45-54 and 17% are over 55. The average age is higher in more established markets like the UK, Italy and Germany whilst it is youngest in newer F1 markets like USA and China.”
Roberts was hired by Liberty in June 2017 and has a ten-year career in sports research which began in 2008 when he joined broadcaster Eurosport as head of research. His comments were made late last month in an ‘Ask Me Anything’ (AMA) slot where users post questions to a featured guest in a live, interactive online interview. Roberts was replying from a verified F1 account and took full advantage of the opportunity.
His responses covered everything from television contracts to merchandise plans and F1’s discussions about new races (including “a few in North Europe”). Fans weren’t just taken aback by the breadth of the discussion but also the candour of Roberts’ replies which stand in stark contrast to the jargon and marketing speak heard in many interviews with F1’s management.
“It’s refreshing how honest and straightforward you are in this AMA,” said one fan. “Yeah same here. I’m astounded,” added another. His comments weren’t uniformly positive and also cast a spotlight on areas where F1 has been stuck in the slow lane. Even this feedback was revelatory.
One example is F1’s new marketing campaign which launched with great fanfare at the start of last season. At its heart was a 60-second film which jumps between race footage and clips of six fans being subjected to intense weather conditions.
The campaign introduced the slogan ‘Engineered insanity’ and was the brainchild of F1’s marketing department which is led by Ellie Norman. She was hired by Liberty in 2017 and doesn’t come from an F1 background. Instead she was formerly head of advertising and sponsorship at British broadcaster Virgin Media and before that spent seven years in marketing and communications roles at Honda.
In an interview with Reuters in March last year Norman said that the aim was to develop the campaign through the season to make it more real-time and reactive. “One example would be that in-between every race there is a new edit, a 30 second piece of film that is created that starts to take the key moments from the race before and plays that back almost as a snapshot. It’s literally to keep people engaged with Formula One.”
In another interview the following month Norman added that the campaign had got off to a flying start. When asked what type of content gets the most engagement from F1 fans she responded that “some standout pieces are always the team radio best bits edit after the race, the Engineered Insanity marketing campaign, and the race wrap up in 60 seconds.” Since then, little has been heard about the impact of the campaign. Until now.
Roberts revealed that the response to the campaign “was actually positive and above the industry norm (source: Ipsos). The one problem was that not many people saw the ad which we need to improve next year. The reality is that outside of avid fans, not many casual or non F1 fans saw the ad.”
Despite having a premise which should appeal to kids the campaign still hasn’t fuelled the under-25 segment to more than 15% of F1’s total audience. In contrast, Roberts said that “Esports have been great for us so far. 80% of the audience is under 35 years old but is amazing when you compare this to ageing TV audiences.”
His description reflects the one used by F1’s former chief executive Bernie Ecclestone who Liberty replaced in 2017 with 21st Century Fox vice chairman Chase Carey. Instead of trying to appeal to a youth audience, Ecclestone made F1’s older fans a selling point to sponsors and its sponsorship revenue accelerated.
“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,” said Ecclestone in a 2014 interview. “I’d rather get to the 70-year-old guy who’s got plenty of cash.” It paid off.
Over the decade to the end of 2016 F1’s sponsorship revenue rose 49.7% to $262 million. It made the greatest gain in 2013 when Rolex and Emirates joined and boosted F1’s sponsorship tally by $53.4 million. The two brands actually paid even more than that.
This author has unique insight into F1’s sponsorship values through leading a team which has been analysing the deals for more than 15 years. Fees for every F1 sponsorship deal since 2005 have been derived from hundreds of interviews cross-referenced with thousands of company filings. Values are based on size, location and number of logos as well as benefits other than branding and performance at the time the deal was signed.
The results have been compiled in the first ever searchable archive of F1 sponsorship values which covers more than 5,000 deals since 2005. The data can be searched by sponsor, team, sector, deal value or country of origin and the results are shown on custom-generated charts.
They show that when they joined in 2013 Rolex paid an estimated $40 million whilst $25 million came from Emirates which more than compensated for the loss of several minor deals and the F1 calendar having one less race than the previous year. Liberty’s new deals haven’t been as turbocharged as this despite promising rapid growth.
In an interview on CNBC’s Squawk Box way back in January 2017 Carey was asked about his forecasts for F1’s key revenue streams. In response he said “Probably the one to grow the fastest is sponsorships. Realistically today we have a one-man sponsorship operation. There are many categories we are not selling into. We have signage at tracks we’re not selling. Putting an organisation in place that enables us to execute on that probably is the most immediate impact.” It was not to be.
In Liberty’s first year at the wheel, F1’s sponsorship haul only increased by $11 million which was less than the growth in any other year over the past decade. In November 2018 Carey finally admitted it hadn’t gone as he expected when he told the Financial Times that “the perception was just there are sponsors waiting…They were lined up out there and as soon as we had somebody to go call on them, they were just going to sign up. The world’s not that simple.”
According to Roberts, it has got to the point where sponsors now need to be encouraged back to the sport. “We hope with all the investment and the change in management, this will help encourage advertisers back to the sport,” he said. It remains to be seen whether Liberty can pull it off but it has raised the stakes by investing so much in a bid to boost the number of younger viewers.
One of its biggest single investments has been in streaming races online. As we have reported, it isn’t just a gamble because of the cost but because it puts F1 squarely in competition with broadcasters whose fees are its second-biggest revenue stream. It looks even more risky in light of Roberts’ admission about the tiny percentage of F1’s viewers who are under the age of 25.
As one media executive told us in an article for motoring magazine Autoweek, “Formula One’s audience is older, it’s wealthier and it is very sophisticated. But while they love technology in Formula One, they don’t want to watch it on their phones, or their iPads or their computers. They want to watch it on a big screen.”
However, instead of putting the brakes on further initiatives which appeal to a younger audience Roberts revealed that F1 is considering releasing a line of toys which could launch as soon as this year. He was asked “can you release toys [merchandise]? Like die cast, [radio controlled] car, figurine, track, of F1 team/car? Or you can’t do that because its team exclusive right?” In response Roberts said “funny you should say this. This is being looked at for 2019.” All teams have the right to produce toys of their cars, and they all do it, so it remains to be seen whether this would be a hurdle for F1’s plans.
The biggest obstacle to attracting a younger audience could be much more fundamental – cost. This can be clearly seen in the results of another report compiled by this author’s team.
Every year since 2006 we have been collecting data about the highest and lowest ticket prices at every Grand Prix along with the attendance from Friday to Sunday. It is a gold mine of information and is available to the public in a report. For full disclosure it needs to be stressed that this author was involved with compiling the report and with the data acquisition process though the information comes directly from the race organizers which are all independent sources.
The report is the only study of its kind and covers 573 days at 191 races. It shows that in the two years to 2017 alone the average price of a three-day ticket to a Grand Prix rose by a staggering 8.9% from $438 to $477.
There is also the matter of exposure. As we reported, in November Carey revealed that “television viewing on race day year-on-year is down 5%, however that is largely due to our move from free to Pay TV in Italy.”
Over the past decade, the total number of F1’s viewers has crashed by 41.3% to 352.3 million as the series has signed more Pay TV contracts. A new one begins this year when live broadcasting of F1 will be almost non-existent on free-to-air TV in Britain for the first time since the mid-1970s.
It is an incredibly significant market as F1’s headquarters is in Britain, seven of the ten teams are based there and the first-ever F1 race took place there in 1950. That race, the British Grand Prix, will be the only one available live and free-to-air on Britain’s Channel 4 this year. Its Pay TV rival Sky Sports will show all of the other races exclusively and Channel 4 will broadcast delayed highlights of them.
As we have reported, estimates suggest that the British TV audience could crash by as many as five million viewers in 2019 as a result of the new contract but not according to Roberts. “Channel 4 will have the highlights next year and we have worked with them to ensure they show the races in a favourable prime time slot. We estimate that we will actually have more viewers next year in the UK (thanks to this prime time slot) than we had this year. We do appreciate that many of these viewers will be watching only highlights though.”
It could depend on the quality of the product itself which Roberts admits isn’t firing on all cylinders. He said research has shown that, regardless of whether F1 is on Pay TV or free-to-air, the majority of viewers have turned off by the time the trophies are awarded. “The problem with podium interviews are that 70% of viewers have switched over by then,” he said.
Roberts added that winter testing, which begins next month, will be streamed online and not shown on TV. “Broadcasters have not expressed interest in showing it as many feel they can get bigger audiences in the slot with other content…Sky used to show it but hardly anyone watched it so they stopped broadcasting it.”
Liberty is still considering how to rev up the product and Roberts said “we need to improve to highlight more of the speed and sound. This has come up in multiple pieces of research.”
He added that “it is important that we don’t alienate our older viewers in pursuit of these younger fans as they will have been fans for many years and are more likely to sit through the 2 hours race.”
It is a reminder that if F1 focused purely on improving the product rather than trying to make it more trendy that could actually prove be the winning formula.