AKRON (March 31, 2008) — The motorsports arena often serves as a playground for automotive parts and tire manufacturers—a place for them to show off their newest “toys.”
When these toys work well, they can help build a company's image and increase the likelihood of positive publicity. After all, there's a reason the names of suppliers are plastered all over race cars.
But if the products don't perform the way they're supposed to, recrimination could follow like a yellow caution flag.
For any manufacturer, the decision to supply its product for competition comes down to weighing the benefits against the possible downsides.
Participating in motorsports offers suppliers a variety of opportunities for brand exposure.
“It's the only endemic place to actually prove your product,” said Travis Roffler, director of marketing for Continental Tire North America Inc., which just recently launched its own motorsports program. “It's the only place where our product is used and can be the real difference between winning and losing.”
Supplying products for use in motorsports has a lot in common with advertising, according to Al Speyer, executive director, Bridgestone/Firestone (BFS) motorsports.
“We know over and over again the companies that do the most advertising have the most success in the marketplace,” he said. “It's very difficult to pick one element out of everything a company might be doing specifically.”
Though it's difficult to measure how much of an effect supplying parts for competition has on product sales, Mr. Speyer said BFS can trace a direct link to increased sales in the mid-1990s when the Nashville, Tenn.-based tire maker began to get back into motorsports competitions.
“Between '92 and '99 we were seeing 20-percent increases year over year with the Firestone brand,” Mr. Speyer said, noting the Firestone brand's business doubled in the U.S. in that time period. “Something like that was really unheard of in the tire industry…. Restructuring took place at the time, too, but the motorsports program and (our) return to Indy was the catalyst.”
Outside of the obvious marketing advantages, supplying to motorsports also comes with other benefits.
Mr. Roffler said a company can benefit from direct advertising as well as residual effects, from tractor trailers driving down the road with a firm's logo on the side or exposure in advertising by its partners.
For other companies, participation in motorsports serves as a learning experience.
“The biggest direct benefit is that we are constantly learning, pushing and challenging ourselves to improve in every element of performance,” a Michelin North America Inc. spokeswoman said.
Many technologies used in racing tires also can trickle down into the consumer market, she said.
“We're involved in endurance racing so we learn a lot from the tires,” the spokeswoman said. “Tire wear and performance in different conditions are critical learning that can be applied to street tires for drivers everywhere.”
Mr. Speyer added that participation also helps to create brand loyalty among company employees.
“Motorsports also offers a great way to build our teammates' morale, giving them the opportunity to follow and root for our brands,” he said.
Following NASCAR's Kobalt Tools 500 Sprint Cup Series race March 9 in Atlanta, Goodyear faced negative media attention generated by NASCAR driver complaints about the performance of the company's tires on the track that day.
Other suppliers have had similar experiences over the years—which is indicative of the fact that sometimes things simply don't go as planned.
“There's always risk,” Mr. Speyer said. “You try to manage the risk and control it, but whether it's motorsports or some other venture, there's always risk.”
Don Burgoon, president of brake manufacturer Performance Friction Corp., said problems occur at every track, ranging from minor mechanical issues to more serious failures.
“Everything that can go wrong will go wrong in motorsports,” he said. “It just happens at a much faster pace than normal driving.”
Mr. Burgoon said the purpose behind a company's advertising involvement in motorsports is to build its image of having high-tech product lines. If the products don't perform, it can backfire on the company and “affects people's opinion of the brand.”
Motorsports involvement can be a risky, expensive and time-consuming venture for manufacturers.
“Thank God most of the failures in motorsports aren't huge,” Mr. Burgoon said, “but I think it really has to do with the people involved in the R&D (research and development) of motorsports.”
He said Performance Friction spends about $4 million to $5 million each year on research and development of its products. The firm supplies brakes and brake-related components to various motorsports venues including Champ Car, NASCAR, Formula 1 and IndyCar racing.
The Clover, S.C.-based company also has developed technical partnerships with a number of driving schools, including Bob Bondurant School of High Performance Driving; Dale Jarrett Racing Adventure; Finish Line Racing School; PANOZ Racing School; Stock Car Experience; and the Mid-Ohio School.
“The R&D is very expensive when you're done,” Mr. Burgoon said, “and it has to be done right because you can't afford any catastrophic failures on a race track.”
Off the track, a manufacturer may have to protect the firm from itself.
“You have to be careful with a multiple-brand company such as (BFS) to separate the brands,” Mr. Speyer said. “The last thing you want to do is create confusion or competition among your company's own brands.”
Conti, though a newcomer to motorsports competition, has taken this into consideration as well, focusing its General brand towards light truck competitions while looking at street-tire timed events for the Conti brand.
“You have to work hard to differentiate those brands because you don't want to gray those lines with the consumer,” Mr. Roffler said.
Weighing the benefits
For manufacturers, investing in motorsports is much like investing in the stock market, Mr. Roffler said.
“The best analogy is for me to say I'm your stock broker and I say there's a 5-percent chance a year from now you'll have nothing, but there's another 95-percent chance I'll put more money in your pocket,” he said.
Mr. Speyer agreed, noting that companies with well-organized motorsports programs that consistently research and test their products face very little risk in their involvement.
“In the end, it's really very simple,” he said. “If the company is participating in a simple activity, motorsports or some other campaign, they've weighed those benefits with whatever risks there are. Participation is the one obvious end result of a company saying, 'We accept the risks.'”
As for Goodyear, the company is confident that recent media attention following the Atlanta NAS¬CAR race will not hurt consumers' opinions of the brand.
“We feel good about our brand, our momentum and our credibility as a company...,” a Goodyear spokesman said. “We also believe that our long relationship with NASCAR and several generations of drivers will not be impacted in the minds of consumers simply because of the reaction to one race.”