Monday, June 15, 2009

Remember that Algebra you took in High School and never though you would need again? JP discusses the competition conundrum.

There’s been a lot of conversation recently about competition and the inability of cars to race side by side. After seeing the racing in person at Indy and Milwaukee I had some suspicions, but after seeing Texas there was no doubt that there is a problem.

The shift to the 122 inch wheel base and removal of various specialized aerodynamic components for oval races may have made the budgets slightly more reasonable but unfortunately has had ill effects on the quality of the racing. While it remains early in the season, instead of making things more competitive, we may go through the oval season with only two teams in victory lane whereas last year we had three.

Many people have begun to weigh in on what’s needed. Perhaps the strangest example being Mario Andretti quoted as saying the series needed more Milka Dunnos. IE - Slower cars that serve as moving chicanes – or - Latino women wearing hip hugger pants. I’ll let you decipher his motives for yourselves. While Dixon benefitted from a slower Schekter at Milwaukee and Mario may have a taste in women that puzzles the rest of us, I am not sure a wider disparity in average speed is really what the series needs.

Dixon mentioned trimming out the cars though I am skeptical of suggestions coming from members of either of the top two teams. The last thing we need is the rich to get richer.

I will note – that I am not an expert in how the cars operate or could be changed to improve the racing. I will suggest what the ideal changes might result in to bring more drama to the on track racing competition. As to how to make that happen, I will leave that to someone really smart, like JR Hildebrand.

Remembering back to a lot of the racing I have seen over the years, I recall a lot more instances of Tortoise and Hare racing within fuel stints than we have seen this year. By Tortoise and Hare racing I am referring here to where some cars, the Hares, were fast early, and either used up tires or fuel quicker and drew back to the field to be caught by the Tortoises. The cars that were set up to run slower initially but preserved tires over a fuel stint.

What we have now is a series of exclusively Hares (or Tortoises, if you are Robin Miller). All cars are set up initially very similarly and the permanence of performance is not sensitive to the initial setup. The average speed of a car is generally X, with B being a multiplier based on the quality of the team or driver and diminishes by Y for each lap after 10 laps. Speed for a given lap (t) is roughly = Xt*B – Yt. The stuff before the minus sign is referred to as initial setup speed and the stuff after the minus sign is referred to as the decay rate. If the only thing in this equation that changes is the B, then the racing is going to be pretty poor because the decay rate of the equation, Y, is the same for everyone. The only thing that differs from competitor to competitor is B, and B is constant throughout the entire race.

What would be more ideal are a set of rules or changes in cars or tires where a wider variation in B is possible, but comes at a cost of C which is a new term in the decay rate of our speed equation. The speed equation now becomes Xt*B – Yt*C. Where if B increases by 1 then C > 1. SO you can buy yourself a little extra speed up front but you loose it quicker as the run goes on as the balance of the car changes with the burning of fuel or a more sensitive tire loses tread sooner.

Let’s say car P is set up with a low B and C, but car Q is set up with a higher B and C. If Car P starts a fuel stint in front of Q then Q, which is faster initially, catches up to and pressures P for the lead. If he succeeds by passing P then after a while of leading, the aggressive setup that allowed P to get the lead causes the car to go away faster than Q, who’s car is more consistent throughout the run. Q then begins to reel in P and has the potential to pass him back for the lead.

If technological freedom can create a situation where the average speed of cars is equal over the length of a fuel stretch, but the ways in which cars obtain that average can be quite different – then we are onto something. Such an arrangement creates situations where twice within a fuel stint a faster car is confronting a slower one.

The question becomes, if there really were tortoise and hare set ups, wouldn’t everyone migrate to one or other negating the competitive benefits?? That depends on the philosophy of the race team – Many or Few yellows anticipated??? If you expect many, then you go the hare setup, if you don’t expect many then you go the tortoise setup. If you are in the back of the field and need to move up in a hurry you might go with the hare setup hoping to gain spots and then block like Helio once the car goes away. If you are up front and have the benefit of clean air to run in you might go the tortoise route and have more speed deeper into the run.

Of course I can’t imagine creating this scenario is easy to engineer. It probably means giving back the wheelbase and various aero options while at the same time asking your tire sponsor to make a tire with a little less permanence. You risk in some teams just running faster overall and a team or driver complaining about tires going away too soon. Perhaps someone at the league competition office needs to give JR a call…

Tuesday, June 9, 2009

Who are these People? JP organizes an Indy 500 office pool.

A few weeks ago I e-mailed Keith who seems to be in the middle of all office pools at my employer and suggested that we organize an Indy 500 pool. The main office is in Stamford Ct, so I had to convince Keith that this 500 thing was a big deal and worthy of his effort. After a couple e-mails, one announcing the pool, and a second to clarify some basic facts about the 500 (like Jeff Gordon wasn’t involved) we got a group of participants pony-ing up the $5 entry fee. Names were drawn and other than Todd who proclaimed “I got the hot chick in the commercials during my hockey games” everyone asked a question that could be boiled down to “Who is this guy?”.

This is one of the current challenges the IRL has. Name recognition of it’s participants. Once you get past Danica, Helio and the lingering recognition of the Andretti name we have a series of anonymous heroes and participants. Needless to say this is one of the reasons that the series has trouble attracting sponsors. But the funny thing here is that our drivers are not bland or uninteresting. I took some time to tell the pool entrants about their driver and as I did it became clear that the background story for many of our drivers appealed and resonated with people who an hour earlier has never heard of their pick.

The IRL does what it can to get drivers out in front of people. I would be surprised if other series make ALL of its drivers available for autograph sessions on race weekends. On air appearances for various drivers on local radio and television are frequent and productive.

A big partner the IRL potentially has here is Versus. To introduce the IRL to its audience, Versus created a series of “flying IndyCar” crash spots that were all over it’s network and purchased time to put them on some others. This was followed by the “Danica Strapped to a rocket ship” interview-mercial. This is now followed by another interview-mercial featuring Scott Dixon. The plan here is sound, introduce the series to the audience, associate it with its biggest star and then start identifying some of the other key figures in the series.

Some suggestions I would have for the Versus spots going forward…
First, the interviews in these spots are about the racing. I think the topic of these needs to change a bit. There is a well known book about building consumer brands titled “Lovemarks”. The basic principle is that people associate with brands and become advocates for those brands because there is an emotional attachment to the brand in question. This needs to be the strategy that Versus and the IRL begin to take with marketing their stars, and that begins by telling the stories of these drivers. The Versus spots need to feature the featured driver talking about their hopes and dreams with their careers. Hopes and dreams appeal to the casual, transient fan at a much more emotional level than does how intense the racing is, which is really fodder for the already converted.

Second, dig deeper into the driver pool to find the best most compelling stories. Graham or Marco talking about following in their father’s footsteps. Sarah talking about balancing her career as an owner and driver. TK Talking about the race he hasn’t won. Paul Tracy “The Wrestler” (as dubbed by Townsend Bell) talking about finding that one last shining moment to end a career. Tell Will Power’s story the week before one of his cameo appearances this season. The more the merrier. If people know the background story for a driver, they will begin to care about the driver and they will follow the driver through the races.

Third, don’t stop with the IRL level drivers. Dig into the Lights series as well. There is a great crop of future stars driving in that series today. Additional recognition will help them associate with the sponsors that can carry them into a ride in the big cars. Again the stories here are key – who wouldn’t love to hear JR Hildebrand’s story? Having gone to school at a premier engineering school myself (Carnegie-Mellon), his deferment from MIT has me on the verge of a man crush.

Fourth, plan to layer and target these spot placements strategically. The spots featuring the most well known personalities should go into the paid slots on other networks. The Versus hockey fan knows who Danica is by now, The spots on Versus itself should now start digging deeper into the driver ranks. But not during the race broadcasts themselves, your broadcasts are wonderful and often serve that purpose already. During the race broadcasts is where the spots featuring the Lights drivers should run, introducing the IRL series fan to the next generation of drivers.

Finally Seek out alternative media to place these spots or ads. Generally these placements are lower cost than broadcast television, but when well placed can be as powerful. Obviously the internet is a place to start but how about in the preview reel of a summer blockbuster in a market that will be hosting a race in the next month? How about telling Ryan Hunter Rea’s story behind the Times Square billboard on the tv screens that are in all the NYC cabs these days? Lord knows I am tired of the Smith and Wollenski ads…

The IRL now has a broadcast sponsor who cares about the series which is a far cry from where things were a year ago. With a little thought towards the richness of the participant pool this partnership can be a big tool to help build a driver lineup whose name recognition runs deep.

Thursday, June 4, 2009

nascar and the Ratings Myth...

Invariably when callers to sports talk radio shows talk about the IRL gaining momentum, the next phrase out of their mouth winds up being “maybe we can catch back up to nascar”. This is a funny statement, because on one had it seems very improbable that will happen anytime soon, but on the other it may be more realistic than we might otherwise suspect.

There are three main ways we can measure the IRL relative to nascar. The first is tv viewership, the second is event spectators and the third are sponsor dollars. Generally, the first two lead to the third and the third makes things like more cars on the track, more races and better pay for drivers all possible.

Right now, nascar has the IRL covered on overall viewership, or TV ratings. IRL ratings over the past 15 years have dropped tremendously, but that trend is not unique. That has been the story for most sports. We are an NFL country and that has remained bullet proof. The only sport to gain over the last 15 years? Nascar – Which is why it became the advertisers darling over the past 10 years.

Recently however, those ratings have flattened out and have started to decline. Dig a little deeper and you start seeing some cracks and flaws that make nascar seem downright vulnerable.

Ratings points correspond to the percentage of households with a TV that viewed a broadcast at any moment in time. But it is important to note, that not all broadcasts scoring the same 5.0 rating are identical, particularly in the eyes of sponsors. That is because some shows skew differently than others. When people watch tv, the audience is not a random sample of the overall audience. Ie if the US population splits 50/50 male/female, there’s no guarantee that the audience of a particular broadcast splits 50/50. Typically ratings for sports skew to having more males and soap operas skew to having more females for example.

Ratings can skew across other dimensions as well, age, education and most importantly income. I am reminded of a WKRP in Cincinatti episode where DJ DR Johnny Fever is reviewing the most recent book of Arbitron ratings for the local radio market and screams exuberantly “Look what I am doing with 12 to 18 year old males!!!” getting funny stares from the other characters in scenes and laughs from the studio audience.

For tv ratings, income in particular is a key measure for advertisers because people with higher income typically spend more money and thus are more sought out to advertise to. Broadcasts that skew to higher income groups are gold relative to those that skew to a lower income bracket because the spend potential of the audience is larger.

Perhaps the most extreme sports example here is comparing golf to professional wrestling. Wrestling gets a larger ratings share than does golf. But when it comes to advertising dollars, the story is reversed, by a landslide, in the other direction. Why? Golf skews to an audience with a much higher average income than does wrestling. This translates into the golf audience having a much larger spend potential than does the wrestling audience.

With this lesson learned, lets return to racing. As big as nascar’s rating is, a good chunk is worthless to advertisers. Not to sound elitist here, but simply stating a fact. Many of nascar’s hardcore viewers are lower income males that live in rural areas. These viewers don’t have much money and they have even fewer places to spend it. Compounding the issue for nascar recently is that as ratings have started to drop, the lost viewers are not from the bottom end of the income spectrum, but rather from demographics more desirable to advertisers and sponsors.

That’s not to say that all nascar viewers are poor, across the south nascar viewership across all income brackets is strong. Just not so much in other parts of the country.

The ratings for the IRL are still small and at this point it is not clear how they are going to skew in the long term, but one thing is clear. If the IRL can position their sport and their broadcasts to appeal to a relatively higher income group, half the battle is won. By doing that, even a lower overall TV rating can obtain a relatively larger spend potential from its audience, potentially closing the gap in sponsorship spend with nascar. Making the $7m to sponsor a car in the IRL a much more effective marketing spend than $22m in nascar.

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