Red Bull’s $675 Million F-1 Spree Helps Top Ferrari

Bloomberg

Red Bull GmbH leads Formula One brands including Ferrari SpA in television exposure after spending more than $675 million in five years, research shows.

The energy drink maker, its logo emblazoned on four racing cars, got 4 hours, 27 minutes of TV airtime at the first 15 races this season compared with about 52 minutes for Ferrari, research by Guildford, England-based Margaux Matrix Ltd. found. Only series sponsor LG Electronics Inc., with almost 11 hours, had more coverage.

Red Bull spent an average $135 million a year on its main Milton Keynes, England-based team since 2005, according to company filings in the U.K. by Red Bull Technology Ltd., allowing it to rely less on sponsorship from other companies to cover costs, said Mick de Haas, a motor sports sponsorship consultant who has advised ING Groep NV.

“Red Bull is a brand that’s still emerging and it’s looking for as much publicity as possible,” De Haas said. “It’s all over the place.”

Fuschl am See, Austria-based Red Bull also runs a second team, Toro Rosso, and last year had a deal with Kimi Raikkonen under which the former champion drank from a branded Red Bull bottle when racing for Ferrari. Red Bull said in an e-mail it spends “30 to 40 percent” of company sales on marketing, including F-1 expenditure. It had net income of 123.1 million euros on sales of 1.85 billion euros last year, according to a filing with the Austrian company register.

Market Share

Closely held Red Bull was the 7th biggest maker of soft drinks last year, with 0.7 percent of the American market, according to industry journal Beverage Digest. While volume in the U.S. total soft drink industry declined 2.1 percent, Red Bull’s rose 1.2 percent. Red Bull sold about 4 billion cans of its energy drink last year, and plans to increase volume by more than 10 percent this year, Chief Executive Officer Dietrich Mateschitz told the Sonntag newspaper.

It purchased Ford Motor Co.’s unprofitable Jaguar Racing team in 2004 to enter Formula One. Its sports portfolio includes soccer’s New York Red Bulls, while it sponsors Olympic downhill champion skier Lindsey Vonn among other athletes.

In the racing series, Red Bull’s Mark Webber trails championship leader Fernando Alonso of Ferrari by 11 points ahead of the Nov. 7 Brazilian Grand Prix, the second-to-last race. McLaren’s Lewis Hamilton is 10 points further back, four ahead of another Red Bull driver, Sebastian Vettel.

Ferrari, in Formula One since 1950, doesn’t spend any additional money on marketing, team spokesman Luca Colajanni said by telephone. He declined to discuss team costs. The carmaker said in May it planned to maintain production at 6,000 road models this year.

Limited Market

“Ferrari’s audience is limited” to the high-end car market, De Haas said. It’s in Formula One to associate itself with elite technology, he added.

To be sure, Red Bull ceded space on its racing cars this year as part of “healthy seven-figure deals” with LG and FXDD Malta Ltd., said Zak Brown, chief executive of Just Marketing International, which brokered the deals.

It may come under pressure to sell the Toro Rosso team to reduce costs further, according to Mark Jenkins, a business strategy professor at the U.K.’s Cranfield University who has written about Formula One.

“They’re sinking a lot of money into Formula One,” Jenkins said. “It doesn’t make any sense with the current regulations for Red Bull to own two teams.”

Red Bull said it has no “concrete” plans to sell the squad, whose top-ranked driver Sebastien Buemi is 16th in the championship.

Human Billboards are Signs of the Times

Seattle Times

Imagine this help-wanted ad: "Employee needed to work outside. Smiling and waving required. Dancing encouraged. Bring your headset."

We've all seen one: a person dressed in a costume near a busy street, waving to drivers and usually holding a sign with a deal to a pizza place, hair salon or even a tax service. Many of us have probably never done much more than smile or wave back, which makes a person wonder, does this kind of advertising really work?

Dan Hendrickson of Minneapolis wondered that as he drove by the guy holding an "early bird special" sign outside Jiffy Lube on W. 7th Street in St. Paul.

"Companies seem to be pulling out all the stops to attract business," he said. He hasn't pulled in to Jiffy Lube — out of loyalty to his regular mechanic — but, Hendrickson said, "it makes me root for businesses that try it."

In tough economic times, small businesses try new ways to draw in customers. Many have gone to social networking on Facebook and Twitter and coupon sites such as Groupon, but old-fashioned methods are resurfacing.

They're human billboards, said Glenn Karwoski, managing director at Martin Williams Advertising in Minneapolis. It's a variation on an old marketing strategy, the sandwich board. "But any way you look at it, it's inexpensive outdoor advertising," he said.

The past two years have been especially hard on businesses that sell luxury items such as jewelry, said Crystal Lundquist Mely, co-owner of Park Diamond in Maple Grove, Minn. To survive, she adapted. She moved to a smaller location and when city ordinances wouldn't allow a sign in the window, she took to the streets. Or at least her grandkids did, dressed as fairies in one outing, "Wizard of Oz" characters in another and most recently, a "bride" in a wedding gown wearing a diamond as big as a golf ball, waving to cars driving by on a busy street.

"It triples my traffic when I have my grandkids helping out," Lundquist Mely said.

Jennifer Max, the owner of a Great Clips franchise, said her business more than doubles when she has a pair of scissors near her salon — a 6-foot-tall pair of scissors worn by a woman who snips along busy Weaver Lake Road in Maple Grove. It also doesn't hurt that the scissors sister is holding a sign saying, "Haircuts $6.99."

If on-street marketing works so well, why aren't more businesses doing it? Like any pursuit, not everyone is good at it. The poor schmucks with hangdog faces staring at the pavement don't do much to attract customers. It's the ebullient characters who strut, smile and make us laugh who pull us in.

Briton Tomasko, 18, of Brooklyn Park, Minn., doesn't mind putting on a wedding dress and waving like a member of the royal family to potential Park Diamond customers as long as there are cars driving by. "It gets boring when there isn't anyone to wave to," she said.

The wavers have to be appropriate to the brand, Karwoski said. You probably won't see a person in a robin's-egg blue box dancing in front of the Galleria to coax big spenders into Tiffany's.

Generally, the concept works best for a spontaneous purchase, such as an oil change or a pizza, he said.

Little Caesars on S. Snelling Avenue in St. Paul tries to have a person holding a sign every weekday from 4 to 7 p.m., when people are heading home for supper.

"It's a great marketing tool, and it does work," manager John Ryan said.

What sounds like a great job for class clowns and "So You Think You Can Dance" wannabes isn't as easy as it looks. Turnover is high, according to most small-business owners. The pay is usually minimum-wage, and most wavers don't get commissions, despite the uptick in sales.

On the positive side, breaks are frequent and shifts rarely last more than four hours.

A big ham, Jenny Bagwell, 39, loves putting on the scissors costume for her Great Clips gig. But it was a rocky start.

"You're not seriously going to do this, are you, Mom?" her 20-year-old son asked. "You're going to be slushed," he said, referring to the fate of uncool students on the TV show "Glee."

Not to worry. Bagwell has been the recipient of people blowing kisses out the car window, found herself in the middle of admirers having their picture taken with her and has been invited to join a group of kids for trick-or-treating.

"It's the funnest thing I've ever done," she said.

MGM Studios, Icahn Agree on Bankruptcy Plan

The Wall Street Journal

Metro-Goldwyn-Mayer Inc. filed for bankruptcy-protection Wednesday, cementing a long fall for the iconic Hollywood studio with the roaring-lion logo.

MGM filed a "prepackaged" Chapter 11 bankruptcy in New York that has approval from nearly all its creditors. Creditors last week approved a plan to forgive more than $4 billion in debt for ownership stakes in the restructured studio and turn over management to Spyglass Entertainment co-founders Gary Barber and Roger Birnbaum.

MGM said it anticipates a bankruptcy judge approving its restructuring in about a month, paving the way for a quick trip through bankruptcy court. The studio plans to raise about $500 million upon exiting bankruptcy to fund new films and television shows along with other operations.

Stephen Cooper, a turnaround specialist and co-founder of Zolfo Cooper, will continue to lead MGM during its bankruptcy-court restructuring, the studio said.

MGM had hoped to seek bankruptcy-protection over the weekend but delayed its filing to negotiate with dissident creditor Carl Icahn. Mr. Icahn had offered to buy out other MGM creditors at a premium to upend the vote on the Spyglass restructuring plan but failed to get enough support to block the deal.

Mr. Icahn has been pushing MGM's creditors—led by J.P. Morgan Chase & Co. and hedge funds Anchorage Advisors and Highland Capital Management—to merge with Lions Gate Entertainment Corp., a rival studio that the activist investor has been trying to take over all year as its largest shareholder.

To get its reorganization plan approved by a bankruptcy judge, MGM needed creditors holding roughly two-thirds of the studio's $4 billion debt load and more than half of individual debt holders to vote for the deal. In the end, Mr. Icahn remained among the only holdouts, the people said.

Mr. Icahn said today he would support MGM's restructuring plan after the studio altered certain parts of the deal.

Mr. Icahn will get a board seat once MGM exits bankruptcy. Messrs. Barber and Birnbaum will no longer be chairmen of MGM's new board at the holding company level. And older Spyglass films, including "Seabiscuit" and "The Sixth Sense," will no longer be merged with MGM's film library.

Spyglass, the small production company behind recent films such as the latest incarnation of "Star Trek" and "Get Him to the Greek," had planned to merge its older films for a little more than a 4% equity stake in the studio. But Mr. Icahn protested that the films were overvalued.

In addition, MGM's new shareholders will have the ability to call special meetings under certain circumstances.

Mr. Icahn said the changes enabled MGM to "avoid a potentially costly and disruptive bankruptcy process." MGM called the changes "immaterial" and said they would be filed with the bankruptcy court for approval.

As part of the restructuring plan, the Spyglass founders should still get a sliver of equity in the restructured studio in exchange for other assets. They also have a management-incentive plan that allows them to increase their ownership stakes should MGM's performance rebound.

MGM's largest creditors have agreed informally to continue discussing a possible merger with Lions Gate. But they stopped short of inserting language in the studio's restructuring plan that would require "good faith negotiations."

MGM struggled amid debt taken on in a 2005 leveraged buyout. The studio tried to sell itself in fall 2009 and the early parts of this year but failed to garner offers suitable to creditors. MGM then shifted to pursuing a standalone restructuring through a streamlined bankruptcy process.

MGM was advised by top law firm Skadden, Arps, Slate, Meagher & Flom and investment bank Moelis & Co. Investment bank Houlihan Lokey advised MGM's creditors.

Ailing Washington Times sold to Founder for $1

Associated Press

 

The Washington Times, one of many ailing newspapers, has been sold for a $1 to a group backed by its founder, Unification Church leader Rev. Sun Myung Moon.

The deal closed late Monday after months of wrangling, according to a story published Tuesday on newspaper's website. Sam Dealey, executive editor of The Washington Times, confirmed the sale with The Associated Press.

Preston Moon, the oldest son of Rev. Sun Myung Moon, had been running the newspaper since his father turned it over to him four years ago.

The elder Moon's group also will take on the newspaper's liabilities. The new ownership will bring back executives that had been ousted last year: former chairman Doug Joo and former publisher Thomas P. McDevitt.

Like many newspapers, The Washington Times has been hard hit by a downturn in advertising that has depleted its main source of income in recent years. The slump began as the Internet attracted more readers and marketers and became worse as the U.S. economy collapsed into a deep recession that lasted from December 2007 through June 2009.

To cope, The Washington Times has cut about 40 percent of its staff this year and eliminated its sport section.

A preliminary deal to sell the 28-year-old newspaper was announced in August, but delays in closing the deal raised fears that it might shut down instead.

The new ownership group appears confident that it can revive The Washington Times.

In Tuesday's story on the newspaper's website, Joo and McDevitt vowed to attract more subscribers while expanding The Washington Times' activity on the radio and Internet.

"We'll continue to keep the highest standard in journalistic excellence in this leading democratic country that upholds the values of freedom, faith, family and service," Joo said in The Washington Times' story.

Ford bets big in Digital Marketing Departure

Reuters

 

Forget the Super Bowl: Ford's marketing chief Jim Farley says he can get more for less on Facebook, Twitter and YouTube.

If Farley is right, millions of hits for Ford Motor Company on social media websites will dwarf the impact of ads broadcast during the National Football League's February championship game -- high-profile space selling for $3 million for 30 seconds.

"Customers are spending as much time with the mobile smart phone or online as they are watching TV now, so our advertising dollars have to flow to where the people are," Farley told Reuters in an interview.

Under Farley, 48, who joined Ford from Toyota Motor Co in 2007, the No. 2 U.S. automaker has bet bigger on the emerging category of digital advertising including websites and social media than any of its rivals.

Farley has taken the approach credited with the early success of the youth-oriented Scion brand he launched at Toyota and applied it to the makeover of an established auto brand.

He is betting Ford can use Facebook and Twitter to accelerate the word-of-mouth recommendations long familiar to the auto industry and help the blue-oval brand connect with younger and richer people.

Farley said he learned at Scion that the only way to push past consumer skepticism is "to break into their world."

"You have to shove your way in there. The way we do that is to break down myths. The great thing about Americans is they are always hungry for something new," he said.

Ford's U.S. sales are up almost 22 percent so far this year, twice the growth rate of the industry overall.

Farley's term at Ford has coincided with a sharp turnaround in its image. ALG, a firm that tracks consumer perceptions, said in a report issued on Monday that Ford cars and trucks lead all brands in gains in perceived quality since 2008.

FORD SEEKS FACEBOOK FRIENDS

Farley, who is seen as a potential successor to Ford Chief Executive Alan Mulally, called the Super Bowl, "a fantastic advertising opportunity" -- for unknown brands.

"If you are a company that wants to launch a new product that no one has ever seen before, it's a great venue."

Under Farley, Ford has spent 25 percent of its advertising budget on digital media in 2010, the same proportion as in 2009. That ratio is twice what J.D. Power and Associates says will be the average digital media spend in 2012.

Farley would not disclose the dollar amount of that spending.

One of the first experiments in Ford's new approach was its 2009 move to recruit Web-based "agents" who would help promote its launch of the Fiesta subcompact. In a follow-up, Ford used Facebook to reveal key aspects of the Explorer SUV rather than wait for an established auto show.

Now, Ford is seeking "bloggers, social media mavens and Facebook friends" to submit video applications to be one of 100 who will drive the 2012 Focus around southern France or Spain early next year, ahead of the car's launch.

The effort, called "Ford Focus Global Test Drive" seeks to create buzz ahead of the launch of a vehicle central to Mulally's vision for a streamlined product lineup.

Farley said that the Fiesta campaign had boosted consumer awareness of the Ford subcompact over direct competitors like the Honda Fit or the Toyota Yaris. At the same time, Ford only spent one tenth of what it would have through traditional media, including television, he said.

Farley's moves mark something of a contrast with the approach by cross-town rival General Motors Co.

Under its new marketing chief Joel Ewanick, GM is pushing back into advertising at the kinds of high-profile, high-cost events like the Super Bowl that it had abandoned in its slide toward bankruptcy.

In one example, last week GM rolled out a campaign for Chevrolet that plays to its base -- patriotic Americans with memories of the days when Chevy dominated.

By contrast, Ford is playing up the new elements in its product line-up, both new vehicles and new technology like the MyFord Touch system for navigation, entertainment and communications in campaigns that include videos for Google's YouTube.

Charlie Vogelheim, executive editor of Intellichoice, a consumer auto consultant, said Ford had pushed beyond its rivals in the way that it is building online buzz.

"Everyone is involved in digital marketing. The extent that Ford is doing it, wrapping it around events and utilizing the media with its launches, that is where Ford is taking leadership," he said.

How Fusty TBS Is Selling Conan O'Brien

Bloomberg / BusinessWeek

The cable network is courting a Web-savvy audience for its offbeat new headliner with a marketing quirk-fest

How do you reinvigorate a populist comedy uprising that's settled into a complacent lull? Try hiring a blimp, tricking it out with interactive Internet gadgets, and flying it across country. Or perhaps hire a man in a taco suit to dance in front of a live Web cam. Maybe even stuff a stunt car full of popcorn and fireworks and drive it off a cliff.

Conan O'Brien and his new bosses at the Atlanta-based cable network TBS have tried all those stunts—and more—in recent weeks as part of an all-out marketing push to reignite interest in O'Brien's imminent migration to one of the less-edgy networks on cable. The target of this marketing quirkfest is potential viewers, particularly those who frequent Twitter, Facebook, and YouTube.

Being the late-night headliner at TBS, the erstwhile "Superstation" that was long the purveyor of I Love Lucy reruns and the television home of the Atlanta Braves, is a bit of a comedown from O'Brien's former chair at NBC's (GE) The Tonight Show, the top comedic venue on broadcast TV. That perch brought household-name status to the likes of Steve Allen, Johnny Carson, and Jay Leno—and steady profits to the coffers of the Peacock Network for decades. But in today's fragmented media market, comedians such as Jon Stewart and Stephen Colbert, who appear on Viacom's (VIA.B) Comedy Central, have shown that the big broadcast networks no longer have a lock on late-night eyeballs.

TBS, which according to The Daily Beast is paying O'Brien $10 million to $15 million annually, is betting it can get similar results from the red-headed comic's 11 p.m. nightly show, Conan, which makes its debut on Nov. 8. "Conan is arguably the biggest broadcast celebrity to come to cable," says Steve Koonin, president of Time Warner's (TWC) Turner Entertainment Networks, which include TNT and TBS. "You look at a lot of networks—they have good shows, but they don't mean something. I'm not talking ratings; I'm talking identity. By aligning with Conan, it gives us an identity that instantly equals comedy, which is what we're trying to be. We think Conan is one of the best brand enhancers in all of television."

O'Brien and longtime sidekick Andy Richter have been on TV hiatus since January when, amid lackluster ratings, NBC executives cut short O'Brien's brief tenure as The Tonight Show's host. The nasty public parting, which cost NBC an exit package estimated to be worth roughly $45 million, touched off a frenzied public backlash. Along the way, O'Brien emerged as a folk hero for the social media set. Google's (GOOG) YouTube exploded with clips of fellow comedians supporting O'Brien and mocking his predecessor-turned-successor and sometimes nemesis, Jay Leno. Fans marched in protest outside of NBC. They uploaded triumphant photos from their Conan love-ins on Tumblr. They pledged allegiance to "Team Coco" on Facebook. O'Brien grew a beard and kept in touch with the faithful on Twitter.

Now, some nine months later, TBS is attempting to revive the Team Coco fervor. Over the summer, TBS kicked things off with a series of 30-second TV spots featuring the chorus from the John Waite song Missing You and images of lovelorn fans coping with their bereavement in unusual ways—such as a despondent fellow spelling out "Conan" with the letters in his bowl of alphabet soup.

In late September, TBS unleashed the full campaign. During TBS's annual coverage of the Major League Baseball playoffs, the network provided aerial views of the games, courtesy of a big, orange Conan-TBS-branded blimp. Online, fans could follow the blimp's movements, look at constantly updated photos, and interact with fellow O'Brien fans by "checking into"

the blimp on location-based social network Foursquare. There was even a 24-hour Coco Cam on the Web streaming live video of Conan and his crew making odd preparations for the new show.

The rollout was designed to maximize Conan's visibility on the Web. So ads featuring the blimp—like the print ads in Vanity Fair, the photo shoot of O'Brien posing with a European barn owl, and the music video of O'Brien soaping up his desk in slow motion—were cross-posted on a handful of Conan-centric websites, including teamcoco.com, a Facebook page, and a YouTube channel. One reason for the Web focus: O'Brien's popularity with younger viewers. "Here's a guy, Conan, who is in his 40s who attracts audiences in their 20s and 30s, competing against guys in their 60s who attract audiences that are virtually the same age," says Koonin. "The audience should be the youngest in late night. That's what advertisers crave."

Since introducing its "Very Funny" tag line in 2004, TBS has grown into one of the top-rated channels on cable, thanks in large part to the network's acquisition and repackaging of proven comedy series, such as Seinfeld, Everybody Loves Raymond, The Office, and Family Guy. Despite the network's success, TBS is still largely perceived as an accidental destination—a place people stumble on while channel surfing, not a go-to place for original programming, says Robert Thompson, the director of the Bleier Center for Television and Popular Culture at Syracuse University.

Turner executives hope Conan's arrival could change that. "There may be some college students who will discover what number TBS is on their cable dial for the first time because they want to watch Conan," says Thompson. "Comedy Central has demonstrated that late night is no longer just the purview of the broadcast networks," he adds. "Late night is potentially a cash cow."

A recent study by Advertising Age estimated that in 2009, CBS's (CBS) The Late Show with David Letterman earned $271 million in ad revenue; NBC's The Tonight Show brought in $175.9 million; and ABC's (DIS) Jimmy Kimmel Live! earned $138.1 million. Time Warner Chairman Jeffrey Bewkes in August boasted that TBS was already getting ad rates for Conan on par with its late-night competitors.

O'Brien's move to cable sets up a potential showdown against Comedy Central's The Daily Show with Jon Stewart followed by The Colbert Report. So far this television season, according to Nielsen research, The Daily Show has averaged 1,948,000 total viewers. During the final, frenzied week of O'Brien's NBC run, The Tonight Show averaged 5.3 million viewers. So do TBS execs think O'Brien is going to trounce Stewart? "Conan is top of the class," says Koonin diplomatically. "We think his ratings will be extremely competitive with late night both on broadcast and cable." No potshots from the blimp just yet.