Source: Formula Fuel – Paddock Magazine
In amongst new driver announcements, car launch dates, eRacing, and calender shuffling, the eagle eyed motorsport fan may have noticed a small but significant change in the name above the door of the current Formula One Constructors Champions over the Christmas period.
Since January 1st 2017, the Mercedes AMG Petronas F1 Team has been re-branded Mercedes AMG Petronas Motorsport. In contacting the team the rationale for the change was explained as a move to harmonise the team with the overall strategic direction of the business. The team went on to explain the change does not necessarily indicate plans for the Brackley based team to expand into other categories, but that the team would not rule out this happening at some point in the future.
With a notice of intent offered to Formula E having been made by the Mercedes Grand Prix in 2016, in effect granting them first refusal on the final team slot in the championship, the harmonisation of Mercedes Motorsport branding could signal team preparations to enter the championship. Another factor to consider could be the rumoured budget cap set to be implemented across Formula One. Mercedes Grand Prix employ over 1200 staff, the salary bill alone could exceed the budget for running a team in future. Diversification of the team into other racing categories would serve to increase Mercedes brand awareness and maintain it’s commitment to the motorsport industry in the UK.
Mercedes’ positions in DTM & GT racing, logically, could also be housed under a single Motorsport entity, possibly located in the UK.
See below to follow developments at Mercedes AMG Petronas Motorsport live:
Over the past week various news outlets have reported BP are set to enter Formula One with a $30 Million sponsorship deal heading the way of either Renault or Mclaren. Whilst there is no formal comment from any party to confirm or deny the story, a little bit of a sanity check might be helpful.
The optimisation of current the iteration of Formula One power unit technology is more dependant on fuel and lubricant specificities now more than any time in the history of the sport. Power units and their respective fuel and lubricants are developed in conjunction with each other. Whilst the fuel used in Formula One is made up of 99% the same compounds you would expect to see in the forecourt, the remaining 1% has a huge impact on vehicle performance and is unique to each and every supplier.
At this time there are 4 power unit manufacturers and 4 fuel and lubricant suppliers in Formula One. These are:
Shell with Ferrari
ExxonMobil (Mobil 1 / Esso) with Honda
Petronas with Mercedes
Total with Renault.
All teams using customer power units will use the fuel and lubricant supply defined as above. Any additional fuel and lubricant sponsorship with customer teams are sponsorship partners only. They do not supply the team.
Unlike agreements such as that with BR Petrobras and Williams, given the comparable size and market share BP have to Petronas, Shell, & ExxonMobil it is highly unlikely either party would be prepared to have a customer team run with BP branding and a competitor’s fuel and lubricant supply.
The development of fuel and lubricant solutions is a continual process, at any given time Shell, for example, could have up to 65 compounds in development. Fuel and lubricant partnership is integral to a team. In 2015 Scuderia Ferrari attributed 25% of their performance gains through the season to Shell. Fuel and lubricant suppliers bring trackside laboratories to every F1 race. They analyse the performance of their product after every session. Relationships are so well developed that a fuel and lubricant supplier can and do advise a race team on how to approach race strategy.
Fuel and lubricant suppliers do not enter Formula One for simple brand exposure. They use the sport as a platform to innovate. Innovation reaching the circuit can take as long as five years to hit the forecourt. Formula One engagement is not a short term quick win project.
In short, if BP were to be entering Formula One the undertaking and commitment would require a significant change in business strategy. It would be much more complex than writing a cheque for $30 Million. If a new partnership is not already known it would not be realistic to expect anything for at least 2 years. With all this in mind it seems highly unlikely BP would find an existing power unit manufacturer prepared to leave an existing partner for the foreseeable future.
What could be possible is an acquisition. This could take a number of forms. An existing fuel and lubricant supplier could be looking to exit Formula One. They may look to sell their assets and technology in the sport to BP. With consumers looking increasingly to renewable energy sources the return on investment of motorsport engagement may no longer be what it once was so this is possible.
Another option could be BP acquiring, or being acquired. Both Shell and ExxonMobil have been reported to be considering growth through acquisition strategies. If this was the case, they may look to showcase the BP brand through their premier marketing platform. Equally if BP chose to merge or acquire Shell, Petronas, ExxonMobil, or Total, they may seek to promote the BP brand in F1. At this time it is not possible to entirely dismiss rumours of BP entering Formula One, but one thing is for certain, if a deal does transpire it will be a lot more complex than writing a cheque and putting a few stickers on a car.
Swiss Bank UBS are a key partner within Formula One. Working directly with the Mercedes AMG Petronas team and with Formula One Management the bank is heavily invested in the sport and will continue to be for some time to come. In an exclusive interview for JWGP, we explore what initially attracted UBS to the sport, how they measure success, and the future direction of the partnership and the sport in general.
A key point of interest in this interview is around the audience UBS are targeting or seeking to attract with the partnership. Whilst other banking partners within Formula One use the sport as a platform to attract a diverse audience, the UBS approach is geared heavily towards its Wealth Management customers and the audience demographic in that sector. This focused approach explains in some way why despite being one of the more significant partners to the Mercedes AMG Petronas team in terms of investment, branding on the car and with drivers is minimal.
- What initially attracted UBS to F1?
Formula 1 is a global sport that attracts over 400m unique viewers every season. It operates for nearly 12 months of the year and touches all major markets that UBS operate in
- Can you provide a background into how the UBS FOM and Mercedes Deal came about?
UBS entered Formula 1 in 2010 as a Global Partner, and has grown and diversified its investments in the sport since then. Formula 1 provides UBS with global brand awareness, an ability to invest in the creation of deeper client relationships through at-track client programs around the world, and a platform to both amplify brand stature and change brand perceptions. By adding the partnerships with the MERCEDESAMG PETRONAS Formula One Team and ex-Formula 1 legends, such as Sir Jackie Stewart, Mika Hӓkkinen and David Coulthard, UBS create and deliver truly unique at-track experiences for their clients. By working together with Formula 1 experts, such as James Allen, UBS produces engaging content that drives social media campaigns around topics such as strategy and insight. Further Formula 1 insiders such as Susie Wolff were also included to add even greater depth, diversity and appeal to the program.
- What is the target audience for the UBS F1 engagement model from a social media, print & online media, branding, and hospitality perspective?
The key audience is UBS Wealth Management customers, who can be classified into existing and new clients. On the one hand we aim to increase brand visibility in our key markets and on the other we try to enhance brand relevance by distributing insightful content to our target audience. The distribution of this content is purely via digital and social channels. Looking at the hospitality, it focuses more on existing clients, who are invited to a select number of events where we try to give exclusive access to the sport, the drivers and our ambassadors.
- The use of UBS branding within Formula One and the Mercedes AMG Petronas team is minimal. With limited on track signage and team branding featuring only on drivers and pit areas. Can you explain why, despite significant investment UBS have taken this route?
The partnership with the MERCEDES AMG PETRONAS Formula One team provides UBS with the opportunity to create truly unique at track experiences, as well as access to the team and their star drivers for content.
- What key performance indicators (KPI’s) do UBS have around the respective partnerships?
KPIs are set alongside the strategy, and continue to evolve year by year – metrics such as client satisfaction, brand exposure and brand equity all feed into an analysis of success.
- Have experiences from the F1 world influenced any aspect of UBS or vice versa?
It would be hard to say if there has been any direct influence, but UBS and Formula 1 share common traits. And these similarities are what UBS enjoys exploring for the fans and followers of the sport. Traits such as strategy, insight and thought leadership are common to both UBS and Formula 1 teams and the series.
- How would UBS assess the 2016 season so far?
As a partner of the MERCEDES AMG PETRONAS Formula One team we are pleased with the team’s success so far. With the top teams hot on their heels, it promises to become an exciting season.
- What’s next for UBS with Formula One Management and Mercedes AMG Petronas?
The experiential and content plans for 2016 are very exciting. UBS will continue to deliver insights into the sport, the strategies for success and how Formula 1 is pushing the boundaries in numerous disciplines to as broad an audience as possible.
- What is your view on the move of F1 coverage towards on the pay TV trend for F1 coverage in Europe?
The commercial side of the series has pursued a trend of moving from free-to-air broadcasting to pay-tv. This is a business decision which we cannot comment on. However, with the growth of social media in recent years, we feel more people than ever are watching the sport, commenting on it or are aware of race results.
The UBS relationship to Formula One as a partner is an interesting one. The bank has committed to a strategy of using the sport as a platform to reward and attract the wealthy. With the agreement heading into it’s 7th year it is clear all parties involved are seeing a return on the relationship. As a prestigious brand involved in the sport similar to Rolex, Chandon, or Emirates. UBS through their social media and digital interactions have developed a profile as an aspirational partner, the banking partner fans will think of when they reach a certain level of financial wealth in their private lives. They do this at the same time as rewarding those who have already achieved such success in a way which ensures customer loyalty.
It would be interesting to hear from other partners in the sport taking a similar approach.
Mercedes AMG Petronas have revealed that the current era of power unit technology in Formula One is heading towards, if not is already, the most powerful the sport has witnessed. In only the second year of the sports power unit regulations, Mercedes have confirmed the current 1.6 litre V6 Hybrid is up to 10% more powerful than the V8 units with KERS they succeeded and match the power output of the V10 engine era.
This has been achieved despite fuel flow limits effectively halving the fuel rate per hour to power units. Such strides in power unit developments have been achieved through a focus on thermal efficiency, effectively minimising any waste (heat loss) in the power unit, every aspect of the power unit design in focused on maximised efficiency.
Increasingly power unit development is turning to fuel and lubricant partners such as Petronas to maximise performance. Over the course of the 2015 season Petronas trialed more than 50 fuel and lubricant solutions, working through over 65,000 litres of fuel for development purposes alone. Looking towards 2016 more than 40 new compounds are already being evaluated. So integral have fuel and lubricant solutions become to the performance of F1 power units, the specification used is unique to power unit cycle. When Mercedes introduced updated power unit’s mid season the fuel and solution from Petronas would only operate with this power unit solution. This complexity is achieved whilst ensuring 99% of the compounds used in the fuel are identical to those seen in fuel used in road cars.
Whilst some may argue that through the original turbo era seen in F1 we saw machines with output in excess of 1400BHP, and in the mid 2000’s we saw drivers lapping up 2-3 seconds per lap faster than than the current era, these were period’s of excess, with qualifying engines designed to last 50KM and tyre technology more relevant to a lab than a road. The success of the current F1 power unit regulations is the road relevance. The sporting regulations are focused on efficiency, a topic of greater relevance than ever to the world in which we live. When you check out a car in a showroom or online today one of the first things you check is the efficiency, be it fuel consumption or CO2e, these factors do influence the decisions we make when buying a car. In the FIA prescribing Power Unit technology to focus in these areas road car relevance is assured, and hopefully in the not too distant future the heavily boosted low capacity technology seen in F1 will make its way to our road cars. Efficiently.